Use the following information to answer #7 and #8 An investment banker is analyzing two companies as possible investments, but is concerned abou the impact that each company's cost structure might have on its profitability. The following CVP income statements are available for Chantal Corp. and Mantle, Inc. Chantal Corp. Mantle, Inc. Sales revenue $700,000 $700,000 Variable costs 350,000 487,500 Contribution margin 350,000 212,500 Fixed costs 225.000 87,500 Net income $125,000 $125,000 If sales decrease by 20% for each company, the impact on net income will be: a decrease of 10% for Chantal and a decrease of 14% for Mantle. O a decrease of 20% for Chantal and a decrease of 20% for Mantle. a decrease of 56% for Chantal and a decrease of 34% for Mantle. a decrease of 56% for Chantal and a decrease of 78% for Mantle.

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A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations.) Sales Net operating income. Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ Company A 400,000 Company B $ 690,000 $ Company C 670,000 $ 37,000 $ 154,000 $ 142,000 24 % 17% % 13 % % 10 % $ 44,000 $ 5,000

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Complete this question by entering your answers in the tabs below. Profit Margin Investment Turnover Compute investment turnover for each center. Which center has the better investment turnover? Investment Turnover Numerator: / Denominator: Investment Center Electronics Sporting Goods Which center has the better investment turnover?

Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of Garida Co.: Garida Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year 4 Unit sales 3,500 4,000 4,200 4,250 Sales price $38.50 $39.88 $40.15 $41.55 Variable cost per unit $22.34 $22.85 $23.67 $23.87 Fixed operating costs $37,000 $37,500 $38,120 $39,560 This project will require an investment of $20,000 in new equipment. Under the new tax law, the equipment is eligible for 100% bonus deprecation at t = 0, so it will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project's four-year life. Garida pays a constant tax rate of 25%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be under the new tax law. Which of the following most closely approximates what…