12. Key Question The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data.
Year Nominal GDP Billions, Price Index (1996 = 100) Real GDP, Billions
1960 $ 527.4 22.19 $____
1968 911.5 26.29 $____
1978 2295.9 48.22 $____
1988 4742.5 80.22 $____
1998 8790.2 103.22 $____
2. Suppose an economy's real GDP is $30,000 in year 1 and $31,200 in year 2. What is the growth rate of its real GDP? Assume that population is 100 in year 1 and 102 in year 2. What is the growth rate of GDP per capital?
11. If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation? What is the "rule of 70"? How long would it take for the price level to double if inflation persisted at (a) 2, (b) 5, and (c) 10 percent per year?
E3.6. LO 3
ROI analysis using DuPont model.
A. Firm D has net income of $27,900, sales of $930,000, and average total assets of $465,000. Calculate the firm's margin, turnover, and ROI.
B. Firm E has net income of $75,000, sales of $1,250,000, and ROI of 15%. Calculate the firm's turnover and average total assets.
D. Firm F has ROI of 12.6%, average total assets of $1,730,159, and turnover of 1.4. Calculate the firm's sales, margin, and net income.
2-B2 Basic CVP Exercises
Each problem is unrelated to the others.
1. Given: Selling price per unit, $20; total fixed expenses, $5,000; variable expenses per unit, $15.
Find break-even sales in units.
2. Given: Sales, $40,000; variable expenses, $30,000; fixed expenses, $7,500; net income, $2,500. Find break-even sales in dollars.
3. Given: Selling price per unit, $30; total fixed expenses, $33,000; variable expenses per unit, $14.Find total sales in units to achieve a profit of $7,000, assuming no change in selling price.
4. Given: Sales, $50,000; variable expenses, $20,000; fixed expenses, $20,000; net income, $10,000. Assume no change in selling price; find net income if activity volume increases 10%.
5. Given: Selling price per unit, $40; total fixed expenses, $80,000; variable expenses per unit, $30.
Assume that variable expenses are reduced by 20% per unit, and the total fixed expenses are increased by 10%. Find the sales in units to achieve a profit of $20,000, assuming no change in selling price.