The Silverside Company is considering investing in two alternative​ projects: Project 1 Project 2 Investment ​$400,000 ​$280,000 Useful life​ (years) 5 5 Estimated annual net cash inflows for useful life ​$90,000 ​$65,000 Residual value ​$25,000 ​$12,000 Depreciation method Straight−line Straight−line Required rate of return ​10% ​6% What is the payback period for Project​ 1?

Answers

Answer 1

Answer:

The Silverside Company

Project 1's Payback Period

= Initial Investment/Annual cash flows

= $400,000 / $90,000

= 4.44 years.

Explanation:

Project 1:

Initial Investment = $400,000

Useful life = 5 years

Annual cash inflows for useful life = $90,000

The Silverside Company's payback period calculates the time or number of years that it would take the company to recover from its initial investment in Project 1.  This is the simple payback period calculation.  There is also the discounted payback period calculation.  This method discounts the annual cash inflows to their present values before the calculation is carried out.  This second method gives a present value perspective on the issue.


Related Questions

At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
Cash balance, September 1 (from a summer job) $8,220
Purchase season football tickets in September 110
Additional entertainment for each month 290
Pay fall semester tuition in September 4,400
Pay rent at the beginning of each month 400
Pay for food each month 220
Pay apartment deposit on September 2 (to be returned December 15) 600
Part-time job earnings each month (net of taxes) 1,020
a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.
b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
c. Priscilla can see that her present plan will not provide sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $ short at the end of December, with no time left to adjust.

Answers

Answer:

a) Priscilla Wescott's

Cash budget

                                                                  Months

                                        Sept.            Oct.             Nov.           Dec.

beginning balance          8,220         3,220          3,330          3,340

football tickets                -110

other entertainment       -290            -290            -290            -290

semester tuition             -4,400

rent                                  -400            -400            -400            -400

food                                 -220            -220            -220            -220

apartment deposit          -600                                                     600

part time jobs earnings   1,020          1,020           1,020           1,020

ending balance                3,220         3,330           3,340          4,150

b) This is a static budget because it is being prepared in advance. A flexible budget adjusts a static budget to the real cash outflows and inflows.

c) The spring semester tuition costs $4,400 and she will only have $4,150, that means she will be $250 short.

A retired customer has an existing stock portfolio held in a cash account. He has heard that "leveraging" his portfolio can increase his return. The portfolio holds blue chip stocks that pay current dividends. He wants to transfer the positions to a margin account and use them as collateral to buy more stocks of the same blue chip companies. Which statement is TRUE

Answers

Answer: C. This is not an appropriate strategy because the customer's income will decline

Explanation:

A. The options for the question are:

This is an appropriate strategy that will increase the customer's income

B. This is not an appropriate strategy because the customer's tax liability will increase if the securities appreciate and are sold

C. This is not an appropriate strategy because the customer's income will decline

D. This is an appropriate strategy because the customer has the potential for larger capital gains

From the information that have been provided in the question, we can see that the customer needs income but based on the information that have been provided in the question, the interest that will be charged will eat up the dividend paid by the the stock.

Therefore, this is not an appropriate strategy because the customer's income will decline.

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in accrued expenses is added to operating expenses other than depreciation.

a. True
b. False

Answers

Answer:

True

Explanation:

To determine cash payments under direct method the decrease in accrued expenses is added to the operating expenses payable . Accrued expense mean expenses incurred but not yet paid. A decrease in accrued expenses would suggest that accrued expenses have been paid therefore there has been an outflow of cash which will be added to cash paid for operating expenses.

Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $70,000 and $56,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:2. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000. a. Determine the division of $148,000 net income for the year. Schedule of Division of Net Income Farley Clark Total Salary allowance $ $ $ Remaining income Net income $ $ $ b. Provide journal entries to close the (1) revenues and expenses and (2) drawing accounts for the two members. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answers

Answer:

a) Farley should get  $83,200

Clark should get $64,800

b) December 31, closing entry income summary account

Dr Income summary 148,000

    Cr Farley, Martin, capital 83,200

    Cr Clark, Ashley, capital 64,800

Explanation:

Martin Farley:

$70,000 salary allowance

60% of remaining income

Ashley Clark:

$56,000 salary allowance

40% of remaining income

if net income = $148,000, then:

Farley should get $70,000 + (60% x $22,000) = $83,200

Clark should get $56,000 + (40% x $22,000) = $64,800

How your organization starts its risk mitigation process depends entirely on the type of organization you are working in.

Answers

Answer: False

Explanation:

Risk mitigation simply has to do with the strike that are taken by an economic agent such as an individual, firm or the government in order to prevent risk and reduce it to its minimal level.

It should be noted that risk mitigation is identical for every organization as the same process is being followed. Therefore, the question is false.

Suppose we have the following scenario: Multiplier: 1.2 Tax Rate: 16% Increase in spending: $175 Billion Total Deficit in the previous year: $1 Trillion Based on the information provided what is the deficit that arises from the increase in spending from the government

Answers

Answer:

Deficit = $141.4 billion

Explanation:

Multiplier (K) = ΔY {GDP(income)} / ΔI {Govt spending}

ΔY = K * ΔI

ΔY = 1.2 * $175 billion

ΔY = $210 billion (income)

Tax applicable on income that generate revenue:

Revenue = 210 billion * 16%

Revenue = 210 billion * 0.16

Revenue = $33.6 billion

Deficit = Government spending - Revenue

Deficit = $175 billion - $33.6 billion

Deficit = $141.4 billion

A company makes cat food. Management is considering whether the hard cardboard box for packing a case of canned cat food should be made internally or purchased from another company. The costs of producing the cardboard boxes include:_________.
Variable cost per box $0.39
Total fixed costs of the factory $59,030 per year
Total boxes needed annually 21,962
Quote from the supplier, per box $0.22
How much will the company save (or lose) IN TOTAL if they accept the supplier's quote? If they lose money, put a negative sign in front of your answer. If they save money, just put in the number without any sign in front of it.

Answers

Answer:

Total relevant cost of     21,962 * $0.39   = $8,565.18

making internally

Less: Total relevant        21,962 * 0.22     = $4,831.64

cost of purchasing

Savings in cost                                            $3,733.54

Conclusion: Manufacturing the hard cardboard box internally will save cost of $3,733.54 as compared to cost of purchasing the same quantity of box needed from supplier.

Note: Fixed costs is not relevant cost as it is unavoidable.

Determine which of the following situations describe games and which describe decisions. In each case, indicate what specific features of the situation caused you to classify it as you did. (a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase (b) A pair of teenage girls choosing dresses for their prom (c) A college student considering what type of postgraduate education to pursue (d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year (e) A presidential candidate picking a running mate

Answers

Answer:

Situation which describes:

1. Game:

(a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase

(Because of the attribute of each shopper choosing a flavor of yogurt.)

2. Decisions:

(b) A pair of teenage girls choosing dresses for their prom. (The prom which date and time has been fixed already)

(c) A college student considering what type of postgraduate education to pursue. (Because of decision to be educated)

(d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year. (Due to the various financial ability of its reader)

(e) A presidential candidate picking a running mate ( Due to the election that is upcoming)

Explanation:

A car dealership union negotiates a contract that dramatically increases the salaries of all salesmen. If one of the salesmen is thinking of changing careers to be a hardware salesman, his opportunity cost:___________.
a. Would not be affected
b. Of becoming a hardware salesman would decrease
c. Of becoming a hardware salesman would increase
d. None of the above

Answers

Answer:

c. Of becoming a hardware salesman would increase

Explanation:

Opportunity cost defines that when a person gets to benefit from another than he received. So, that person takes another benefit from where he gets more benefit or we can say that he will choose the best alternative.

According to the given situation, A car dealership association is negotiating a contract that significantly increases all salesmen 's wages. Now, the Opportunity cost when one of the salespersons feels that shifting the path to hardware is of becoming a hardware salesperson that would increase.

Hence, the right answer is C

In this module, you learned about the risks or costs associated with financial goals. What are the risks or costs associated with your goal, and how can you overcome these challenges

Answers

Answer with Explanation:

My goal is to start a business totally based on a new idea with great potential to influence the lives of the people of America. For this I had worked on a startup idea for couple of years and continuously reforming it.

The biggest risks associated with this goal is funding problems, business risks, market research, innovation issues and Software designing issues.

Now these are some risks that I face but I overcome these challenges by:

Risks                        Solution

Funding Risk:           By presenting my startup idea on a international                                                     competition by writing business proposal based on well researched market, product innovation and the financial prospect of the business. There are numerous accelerator programs operated by the state and other organizations that encourage startups and helps with numerous facilities. So I will also present my idea here to secure funding from a wider number of investors.

Business Risks:        Giving special considerations to business risks and their mitigation strategies.

Innovation:               The products will be innovative enough to generate handsome amount of profit and must be capable of giving tough time to its competitors.

Market Research:     The best performing businesses know who their customers are and what they are desiring from them. So market research would capable of identifying my potential customers and that it must be representative of the sample taken.

Software Designing: The software design must be user friendly and must effectively resolve users issues. Furthermore, it must be continuously updated with better features and friendly functioning.

Entries for Investments in Bonds, Interest, and Sale of Bonds Kalyagin Investments acquired $220,000 of Jerris Corp., 7% bonds at their face amount on October 1, 20Y2. The bonds pay interest on October 1 and April 1. On April 1, 20Y3, Kalyagin sold $80,000 of Jerris bonds at 103.

Journalize the entries to record the following:

a. The initial acquisition of the Jerris Corp. bonds on October 1, 20Y2.
b. The adjusting entry for three months of accrued interest earned on the Jems Corp. bonds- or December 11, 20Y2.
c. The receipt of semiannual interest on April 1. 20Y3.
d. The sale of 580,000 of Jerris Corp. bonds on April, 20Y3, at 103.

Answers

Answer:

a. Investments in Jerris Corp. bonds (Dr.) $220,000

Cash (Cr.) $220,000

b. Interest Receivable (Dr.) $3,850

Interest received (Cr.) $3,850

c. Cash (Dr.) $7700

Interest Received (Cr.) $3,850

Interest Receivable (Cr.) $3,850

d. Cash (Dr.) $80,000

Investment in Jerris Corp. bonds (Cr.) $80,000

Explanation:

Interest received is the amount interest that is accrued on the bond over the period of time.

Interest accrued = Amount of investment * Coupon rate * time proportion

Interest accrued = 220,000 * 7% * 3/12

Interest accrued = $3,850.

You are going to form a portfolio with stocks A & B with the following information: Stock Expected Return Standard Deviation wi A 10% 30% 0.2 B 20% 40% 0.8 What is the portfolio’s standard deviation

Answers

Answer:

portfolio's standard deviation = 0.3256

Explanation:

Stock       Expected Return       Standard Deviation            Wi

A                 10%                                30%                               0.2

B                 20%                               40%                               0.8

covariance = [(10% - 10%) x (20% - 20%)] / (2 - 1) = 0

portfolio's standard deviation = (stock A's Wi² x variance) + (stock B's Wi² x variance) + (2 x covariance x weight A x weight B)

portfolio's standard deviation = √{(0.2² x 0.09) + (0.8² x 0.16) + 0} = √(0.0036 + 0.1024) = √0.106 = 0.3256

Central Systems desires a weighted average cost of capital of 12.7 percent. The firm has an aftertax cost of debt of 4.8 percent and a cost of equity of 15.4 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

a. 0.37
b. 0.44
c. 0.42
d. 0.56
e. 0.34

Answers

Answer:

e. 0.34

Explanation:

Let debt be $D

Equity be $E

Total=(D+E)

WACC = Respective cost * Respective weight

12.7 = {(D*4.8)/(D+E)} + {(15.4*E)/(D+E)}

12.7*(D+E)=4.8D+15.4E

12.7D+12.7E=4.8D+15.4E

D=(15.4-12.7)E /(12.7-4.8)

D = 2.7E / 7.9

D = 0.0341772

D = 0.34 E

Hence, debt-equity ratio=debt/equity  

=0.34

Smiley Corporation sold equipment costing with of accumulated depreciation for cash. Which of the following journal entries should be​ prepared?

a. debit Cash for $10, 000, credit Equipment for $6000 and credit Gain on Sale of Equipment for $4000
b. debit Cash for $10, 000, debit Accumulated Depreciation - Equipment for $66, 000, credit Equipment for $72000 and credit Gain on Sale of Equipment for $4000
c. debit Cash for $10, 000 and credit Gain on Sale of Equipment for $10, 000
d. debit Accumulated Depreciation - Equipment for $66, 000 and credit Equipment for $66, 000

Answers

The question is incomplete as the figures are missing. The complete question is,

Smiley Corporation sold equipment costing $72, 000 with $66, 000 of accumulated depreciation for $10, 000 cash. Which of the following journal entries should be prepared?

A. debit Cash for $10, 000, credit Equipment for $6000 and credit Gain on Sale of Equipment for $4000

B. debit Cash for $10, 000, debit Accumulated Depreciation - Equipment for $66, 000, credit Equipment for $72000 and credit Gain on Sale of Equipment for $4000

C. debit Cash for $10, 000 and credit Gain on Sale of Equipment for $10, 000

D. debit Accumulated Depreciation - Equipment for $66, 000 and credit Equipment for $66, 000

Answer:

Option B is the correct answer.

Explanation:

To calculate the gain or loss on disposal of the equipment, we first need to determine the book value of the equipment on the date of sale.

Net Book Value = Cost - Accumulated depreciation

Net Book value = 72000 - 66000   = $6000

The gain/(loss) on disposal = Sales Proceeds - Net Book value

The gain/(loss) on disposal = 10000 - 6000 = $4000 Gain

The entry to record this transaction will be,

Cash                                                              $10000 Dr

Accumulated depreciation - Equipment     $66000 Dr

          Equipment                                                   $72000 Cr

          Gain on sale-Equipment                             $4000 Cr

In a company's annual report, the section called Management Discussion and Analysis provides critical information for interpreting the financial statements and assessing the future of the company.
A. True
B. False

Answers

Answer:

A. True

Explanation:

The section called Management Discussion and Analysis in an annual report analyzes the performance of a company, includes comments from the management about the financial statements to allow the readers to understand the information in a better way and includes the future objectives and plans. According to this, the answer is that the statement that indicates that in a company's annual report, the section called Management Discussion and Analysis provides critical information for interpreting the financial statements and assessing the future of the company is true.

If a bank has required reserves of $27,000,000, excess reserves of $41,000,000, and deposits of $90,000,000 with a required reserve ratio of 30 percent, how much can the bank lend out?

Answers

Answer:

$41,000,000

Explanation:

Excess reserves can be described as the amount of money that is kept by a bank. This amount of money can be given out to individuals or different organisations in the form of a loan, this is done to generate more profits as a certain amount of interest is being added to the amount of cash that will be given out.

In the scenario described above, the bank has an excess reserve of $41,000,000. Therefore, the bank will be willing to lend out $41,000,000 as loan.

Suppose Income Summary received a debit of $75,000 and a credit of $100,000. The net income or net loss for the period must have been:

Answers

Answer: Net income of $25000

Explanation:

Suppose Income Summary received a debit of $75,000 and a credit of $100,000, there will be a net income of $25000.

This is because we've a credit of $100,000 and a debit of $75,000 and since the credit is higher than the debit, it shows that there will be a net income.

During the year, Bramble Corp. made an entry to write off a $31400 uncollectible account. Before this entry was made, the balance in accounts receivable was $413000 and the balance in the allowance account was $34500. The accounts receivable amount expected to be collected after the write-off entry was

Answers

Answer:

The accounts receivable amount expected to be collected after the write-off entry is $378,500

Explanation:

Allowance for bad debt = $34,500

Bad debt written off = $31,400

Credit balance in allowance for bad debts = Allowance for bad debt - Bad debt written off

= $34,500 - $31,400

= $3,100

The balance in receivables account = ($413,000 - $31,400) - ($34,500 - $31,400)

= $381,600 - $3,100

= $378,500

Stellar Corporation has a cumulative temporary difference related to depreciation of $542,000 at December 31, 2017. This difference will reverse as follows: 2018, $37,000; 2019, $225,000; and 2020, $280,000. Enacted tax rates are 35% for 2018 and 2019, and 40% for 2020. Compute the amount Stellar should report as a deferred tax liability at December 31, 2017. Deferred tax liability at December 31, 2017

Answers

Answer:

$203,700

Explanation:

                                           2018          2019           2020

Temporary difference $37,000    $225,000    $280,000

Tax rate                               35%           35%             40%

Deferred tax liability $12,950        $78,750     $112,000

Deferred tax liability​ to be reported at December 31, 2017 = $12,950 + $78,750 + $112,000 = $203,700

Take a real business activity example and relate with the concept of commission depreciation and simple and compound interest rate?

Answers

Answer & Explanation: Commission: This is a percentage earned on total sales. Using a health insurance company as an example, brokers earn commission on premium received by the company.

Depreciation: This relates to the wear and tear of an asset. The health insurance company fixed assets such as motor vehicle, furniture and equipments will be depreciated and expensed periodically.

Simple and compound interest rates: Simple interest rate is a rate charged directly on the principal amount deposited. If the health insurance company decides to invest in fixed income or call deposits with a bank for a period of 1 year. The bank can put a specific rate that will be paid to the company as an interest earned.

Compound interest rate on the other hand is beneficial to the financier. It is a rate charged on both the principal amount and the interest earned. For instance if the company decides to take a loan with the bank, the bank can charge a compound interest rate.

If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is a

Answers

Answer:

quantity variance

Explanation:

Quantity variance is a variance that compares standard quantity of materials that should have been used to the actual materials used. This type of variance is used by firms to know the difference between actual usage of materials and it's expected usage.

Where the actual usage is more than the expected usage, it is adverse ; while it is favorable if the expected usage is more than the actual usage.

Jacob Corcoran bought 10,000 shares of Grebe Corporation stock two years ago for $24,000. Last year, Jacob received a nontaxable stock dividend of 2,000 shares in Grebe Corporation. In the current tax year, Jacob sold all of the stock received as a dividend for $18,000.


Required:

a. Complete the letter to Jacob describing the tax consequences of the stock sale.

b. Prepare a memo for the tax research file describing the tax consequences of the stock sale.

c.

Answers

Answer:

Jacob purchased 10000 shares form Grebe corporation two years ago for $24000

last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation

In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000

The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share

profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year

Explanation:

Jacob purchased 10000 shares form Grebe corporation two years ago for $24000

last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation

In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000

The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share

profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year

Janitor Supply produces an industrial cleaning powder that requires 31 grams of material at $0.30 per gram and 0.40 direct labor hours at $10.00 per hour. Overhead is applied at the rate of $16 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card

Answers

Answer:

Total standard cost per unit will be $19.7

Explanation:

The standard cost card of the product will be,

                                                $

Material (0.3 * 31)                   9.3

Direct Labor (0.4 * 10)            4

Overheads (0.4 * 16)             6.4

Total cost per unit                 19.7

Thus, the standard cost per unit will be $19.7

It is March 31, 2014. What is the latest reported number of E-Bay shares beneficially owned by the company’s CEO? Please provide your answer without comma separator or decimal (Ex: 23456326563)

Answers

Answer: 2663844

Explanation:

According to page 22 of eBay's March 2014 Definitive Proxy statement on the SEC's website, the President and CEO Mr John J. Donahoe, beneficially owned 2,663,844 shares in the company. This includes,  2,083,628 shares that he can acquire pursuant to some Options and 35,306 in Restricted stock units.

Tom Company reports the following data.

Sales $385,187
Variable costs 200,887
Fixed costs 87,300

Required:
Determine Tom Company's operating leverage. Round your answer to one decimal place.

Answers

Answer: 1.9

Explanation:

The Operating Leverage is calculated by;

Operating leverage = Contribution margin / Operating income

Contribution Margin

= Sales - Variable Costs

= 385,187 - 200,887

= $184,300‬

Operating Income

= Contribution Margin - Fixed Costs

= 184,300 - 87,300

= $97,000

Operating Leverage = 184,300‬/ 97,000

= 1.9

12.The competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making A. entails little or no strategy coordination across countries. B. usually involves cross-subsidizing the prices in those markets where there are significant country-to-country differences in the product attributes that customers are most interested in. C. involves selling a mostly standardized product worldwide, but varying a company's use of distribution channels and marketing approaches to accommodate local market conditions. D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. E. involves having strongly differentiated product versionsfor different countries and selling them under distinctly different brand names (one for each country or group of neighboring countries) so that there will be no doubt in customers' minds that the product is more local than global.

Answers

Answer:

D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.

Explanation:

A think global act local is a strategic business approach or concept which is aimed at achieving a low cost, effective cost, efficiency and focused strategy theme in all the locations where the firm has its operations but nonetheless avails local managers the opportunity and ability to adjust product

specifications, distribution and marketing channels to better satisfy local consumers, as well as effectively and efficiently match local market conditions.

Hence, the competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.

What is the expected yield on the market portfolio at a time when Treasury bills are yielding 6%, and a stock with a beta of 1.5 is expected to yield 18%

Answers

Answer:

8%

Explanation:

According to CAPM :

expected stock yield =risk free rate + (beta x market yield)

6% + 1.5 x market yield = 18%

18% - 6% = 1.5market yield

solving for market yield gives

market yield = 8%

One of the necessary conditions for a contestable market is that new firms entering the market have a cost advantage over the existing firms.
A. True
B. False

Answers

Answer: False

Explanation:

A contestable market is a market whereby there is entry and exit for the companies and such companies usually have low sunk costs. Such companies have access to same technology and skills.

Therefore, the conditions for a contestable market that new firms entering the market have a cost advantage over the existing firms is not true.

Firms with high capital intensity ratios have found ways to lower this ratio permitting them to achieve a given level of growth with fewer assets and consequently less external capital. For example, just-in-time inventory systems, multiple shifts for labor, and outsourcing production are all feasible ways for firms to reduce their capital intensity ratios. True or False

Answers

Answer: True

Explanation:

The capital intensity ratio of a company

is used to measure the amount of capital that is required per dollar of revenue. The capital intensity ratio is calculated when the total assets that a company has is divided by its sales.

It should be noted that firms that has high capital intensity ratios have found ways to lower this ratio which allows them to achieve a given level of growth with fewer assets and consequently less external capital.

"A customer invests $50,000 in a non-qualified variable annuity. Over the years, it has grown in value to $110,000. The customer’s cost basis in the annuity contract is::"

Answers

Answer:

The customer's cost basis in the annuity contract is $50,000.

Explanation:

The customer's cost basis in the annuity contract is the initial payments or premiums made in an annuity amounting to $50,000.  This amount is usually taxed at the initial point.  This implies that the $110,000 which the annuity has accumulated to will no longer be taxed.  The customer will enjoy her lump sum and withdrawals undisturbed by the Internal Revenue Service.

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