Income Statement by Profit Centers
For the Month Ended April 30, 20__
On the basis of this information, compute the increase in monthly income from operations that may be expected to result from each of the following actions:
(b) Closing the Equipment Sales Department and allowing the Video Rentals Department to expand is expected to increase the revenue of the Video Rentals Department by $105,000 per month. This action also is expected to increase fixed costs traceable to the Video Rentals Department by $40,000 per month. $_______________
Mason Co. is evaluating two alternative investment proposals. Below are data for each proposal:
The following information was taken from present value tables:
Compute the following for each proposal (round payback period to the nearest tenth of a year and round return on average investment to the nearest tenth of a percent):
Proposal A Proposal B
(a) Annual net cash flow: $ $
(b) Payback period (in years):
(c) Average investment: $ $
(d) Return on average investment: % %
(e) Net present value: $ $
(f) Based on your analysis, which proposal appears to be the best investment?
Metro Video case study is examined. A two proposal analysis is used.