formulas

Question 1

total costs

Answer 1

TC=F+( V x X

Question 2

break- even

Answer 2

0=sx-vx-F

Question 3

Revenue at desired profit level

Answer 3

R= (F+In) /CMRw

Question 4

Pretax income

Answer 4

Ib=In/ (1-t)

Question 5

Benefit of lockbox system

Answer 5

B=C / I x T

b: break-even amount
c: bankc charg per item
I : daily interest rate
T: change in time

Question 6

B=C / I x T

Answer 6

B: break-even amount
C: bankc charg per item
I : daily interest rate
T: change in time

Question 7

Ib=In/ (1-T)

Answer 7

Ib:pretax income
In: net income
T: tax rate

Question 8

R= (F+In) /CMRw

Answer 8

R: revenue at desired profit level

Question 9

Effective interest rate for current assets financed by current liabilities

Answer 9

Cash discount Days in year

————– X ——————
invoice amount- Diff in discount period
Cash discount

Question 10

EIR for short- term bank loans

Answer 10

loan- compensating amount

Question 11

owners wealth or value

Answer 11

Wo= DIVo + Vo (DIV t)

Question 12

future value

Answer 12

FV= PV ( 1 + i)N

Question 13

present value

Answer 13

PV= FV
——–
( 1 + i )N

Question 14

accounting rate of return

Answer 14

ARR= average annual project income / average investment

aapi=project income / years
avrg inv= project cost + salvage value

Question 15

payback period

Answer 15

pp= project cost / annual cash flow

Question 16

net present value

Answer 16

NPV= PV of future cash flows - initial investment

Question 17

Profitability index

Answer 17

P.I = PV of future cash flows / initial investment