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1. Harbor Co had sales of $1,500,000 for the year ended in 20x4 an asset turnover ratio of 2 for the same period, and a return on invesment of 6%. What was Harbor's net income and investment base?

Assets Net income
a. $500,000 $30,000
b. 750,000 45,000
c. 1,000,000 60,000
d. 1,500,000 90,000

2. Scrimpy corporation buys materials form Frugal Enterprises. Frugal offers discount terms of 2/10, net 30. Assuming a 360 day year, the annual percentage rate associated with Scrimpy's failure to take advantage o fthe discount terms offered by Frugal is:

a. 2%
b. 3.3%
c. 36%
d. 36.7%

3. An analyst is reviewing a start up company with no net earnings. If the analyst wants to use a price earnigs approach to valuation rather than a discounted cash flow method, the anaylst would most likely select:

a. p/e ratio projections
b. PEG ratio projections
c. price-sales ratio projection
d. return on residual p/e ratio

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Solution Summary

This post shows how to calculate net income and investment base. It shows how to calculate annual percentage rate.

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1. Asset = Sales /Asset turnover ratio = 1,500,000/2=750,000
Net Income = ...

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