Frenza is planning an $160,000 expansion to launch a new product line. Frenza currently earns $100,000 in net income, and the new product line will yield $50,000 in additional income before any interest expense. Frenza has three options: (1) do not expand, (2) expand and issue $160,000 in debt that requires payments of 8% annual interest, or (3) expand and raise $160,000 from equity financing. For each option 1, 2, and 3, compute (a) net income and (b) return on equity (Net income ÷ Equity). Ignore any income tax effects. (Round "Return on equity" to 1 decimal place.) Show less 1 2 3 Don’t Expand Debt Financing Equity Financing Income before interest expense $92,000 Interest expense 0 12,800 0 Net income $100,000 Equity $400,000 $400,000 Return on equity % % %

Answers

Answer 1

Based on the current income to Frenza, and the proposed expansion amount, the net income and return on equity for the three options are:

Don't Expand:

Net income = $100,000.Return on equity = 25%.

Debt financing:

Net income = $137,200.Return on equity = 34.3%.

Equity financing:

Net income = $150,000.Return on equity = 26.8%.

What happens if Frenza doesn't expand?

Net income will remain at $100,000.

Return on equity would be:

= Net income / Equity

= 100,000 / 400,000

= 25%

What happens if Frenza uses debt financing?

Income goes to $150,000.

Net income:
= Income - interest

= 150,000 - (8% x 160,000)

= $137,200

Return on equity:

= 137,200 / 400,000

= $34.3%.

What happens if Frenza uses equity financing?

Income goes to $150,000.

No interest payment so net income is $150,000.

Return on equity:

= 150,000 / (400,000 + 150,000 new equity)

= 26.8%

Find out more on return on equity at https://brainly.com/question/1427854.


Related Questions

PLEASE HELP ME WITH THIS!!!!

Answers

Answer:

Triangles A and B

Step-by-step explanation:

Similar triangles have congruent corresponding angles. Triangles a and b both have angle measures of 90°, 23° and 67°. Triangle C has different angle measures therefore it cannot be similar to either triangle A and B.

Similar triangles also have similar side length ratios via corrsesponding sides. This is true for triangles A and B eg. have corresponding side length ratios of 24/12 , 26/13 and 10/5 which all equal 2

So we can conclude triangles A and B are similar

Determine the unknown side of the similar
triangle.
3 in
4 in
Q
12 in

Answers

Answer:

Q=9

Step-by-step explanation:

if we get the bottom lengths of both triangles and divide them by eachother we can find the scale factor. so 12/4=3 meaning the scale factor is 3 meaning the bigger triangle is 3 times bigger so if we have the smaller version of the length of Q we just have to multiply 3 by 3 to get the enlarged version so Q=9inch

(its a lot of words but i wanted to make sure you understand)

How do my child do this

Answers

It wouldn’t change because you would order them all out and one way you get in between 6 and 8 which would give you 7 and if you add 7 that is in the middle by itself

Matt bought 6 pie molds at a cost of $1.22 per mold. He also bought 6 pre-
made crusts at a cost of $0.97 per crust. How much did Matt spend on pie
molds?

Answers

Answer:

$13.14

Step-by-step explanation:

The answer is going to be 13.14 because you have to multiply six molds to the cost of molds and then multiply six crusts to the cost of crust, and then add the two totals together

6] divide -7 by -4/5
whats the answer

Answers

given:

[tex] - 7 \div \frac{ - 4}{5} [/tex]

solution:

[tex] \frac{ - 7}{1} \div \frac{ - 4}{5} [/tex]

[tex] =8.75[/tex]

( just keep the first fraction as it is, change the divide sign to a multiply and flip the second fraction upside down. )

Answer:

35/4 or 8 3/4.

Step-by-step explanation:

-7 / -4/5

Invert the second fraction and multiply:

= -7 * -5/4

=  35/4

= 8 3/4.

Given the line 2x - 3y - 5 = 0, find the slope of a line that is perpendicular to this line. ​

Answers

Answer:

The slope of the line would be -3/2.

Step-by-step explanation:

Let's get this equation into the proper slope form:

2x - 3y - 5 = 0

2x - 3y + 3y - 5 = 0 + 3y

2x - 5 = 3y

(1/3)(2x - 5) = 3y * 1/3

2/3x - 5/3 = y

Since the slope is 2/3, we need to find the negative reciprocal of that number, which is -3/2.

Given ↓The equation of the line 2x - 3y -5 = 0

To find ↓The slope of the line perpendicular to this line

Calculations ↓

First of all, we need to add 5 on both sides :

2x-3y=5

Now, subtract 2x on both sides ↓

-3y=5-2x

Or

-3y=-2x+5

Now we need to divide by -3 on both sides to get y all by itself ↓

y=-2/-3+5/-3

[tex]\boxed{\\\begin{minipage}{2cm}y=$\displaystyle\frac{2}{3} x-\frac{5}{3}$ \\ \end{minipage}}[/tex]

Now determining the slope is facile.

If lines are perpendicular to each other, they

Intersect at a 90º angleHave slopes that are opposite reciprocals

In order to find the opposite reciprocal of a fraction, we need to switch the numerator & the denominator places and then change the fraction's sign as follows ↓

(slope = 2/3)

Switch the numerator and denominator places ↓

3/2

Change the fraction's sign ↓

-3/2

Therefore the slope's -3/2

hope helpful ~

(23/7+61/3)_34/3
what the answer​

Answers

23/7+61/3 is done first due to PEMDAS
so the lcm of 7 and 3 is 21
So 23*3 + 61*7 divide the whole by 21 which is 7*3
The answer will come out to 496/21
Then outside the bracket the whole is times 34/3
So 34/3*496/21=
16864/64
We can’t simplify it more so that’s the answer

The results of a poll show that between 74% and 82% of consumers prefer Chip A to Chip B. What is the point estimate for the percent of consumers that prefer Chip A to Chip B?

74%

78%

82%

8%

Answers

Answer:

78%

Step-by-step explanation:

First of all, the point estimate is a value located in between the upper confidence limit and the lower confidence limit, it identifies a point in some parameter space.

This question provides us with an interval estimate which is a range of values used to estimate a population parameter.

Interval Estimate = 74% to 82%

74% = Lower confidence limit

82% = Upper confidence limit

Point estimate = middle value

= [tex]\frac{74+82}{2}=\frac{156}{2}[/tex]

= 78%

Find the equation of the parabola with a focus F (0, 3) and a directrix of y = -5.

Answers

Answer:

y=116⋅x2−1

Step-by-step explanation:

Find the area of the perimeter and the area of the following figure.

Answers

Area = (11x2)+(5x9) =67
Perimeter = (2+11+7+5+9+16)=50
perimeter = 50cm
area= 67cm squared

What is the measure of angle x?

Answers

Answer:

The answer is 47°

Step-by-step explanation:

Total angles in a triangle is 180°

so 31+x+102 = 180

x= 180-133

x=47°

If a bank offers to double your money in 8 years, what is the effective rate of interest? ​

Answers

Answer:

I think I would be 16 cause if 8 double it is 16

How to figure out how to do this problem

Answers

The circumference should be 37.68 because area= pi *r^2. So if area=pi*36, then the radius must be 6 which makes the diameter 12 and circumference=pi*diameter and 3.14*12= 37.68. So circumference of the circle is 37.68!

Marina bought a bag of 10 chocolate cookies, 35 vanilla cookies, and 30 peanut butter cookies.

If she selects a cookie from the bag without looking, what is the probability she selects a peanut butter cookie?

Answers

Answer:

[tex]\frac{2}{5}[/tex]

Step-by-step explanation:

1) Add all the values.

= 10 + 35 + 30

= 75

2) 75 will be the denominator and the one required will be the numerator.

Since there are 30 peanut butter cookies, the probability is [tex]\frac{30}{75}[/tex].
3) Simplify the fraction if necessary.

Divide both sides by 15.

= [tex]\frac{2}{5}[/tex]

find the simple interest due on a 270-day loan of $20,000 at an interest rate of 8.875%

Answers

Answer:

first you need to take way 20,000-88.75 =19,911.25 now you need to multiple 19,911.25×270=3,982345.go and see for your self

find the volume of number ten pls i know the answer is 449.57 the figure is to the left

Answers

Answer:

see below  ( I do not think 449.57 m^2 is correct for surface area)

    Surface area = 374.65 m^2     Volume = 448.83 = ~~ 449 m^3  

Step-by-step explanation:

Find the SURFACE AREA    (NOT the volume)

Height of cone =  sqrt ( 13^2 - 4.5^2) = 12.1963 m

  surface area equation for cone = pi * r  * (r+ sqrt (h^2+r^2) ) = 247.4 m^2

Sphere surface area =  4 pi r^2   =  254.5 m^2

   HEMIsphere is 1/2 of this = 127.235 m^2

Add the two surface areas = 374.65  m^2

For VOLUME:    cone   1/3 pi r^2 h = 257.979 m^3

                         HEMIsphere = 1/2  4/3 pi r^3  = 190.851 m^3

                Total VOLUME is then 448.83 m^3

2. Choose the graph that shows the solution of the inequality on the number line
c<-1
|||||||||
-6 -4 -2 0 2
|||||||→
-6
-4 -2 0 2
|||→
-6 -4 -2 0 2
++
6
-4 -20

Answers

Answer:

Number line 3 also known as [C]

Step-by-step explanation:

Given that:

c ≤ -1

Knowing that:

≤  = Less than or equal to

Now substitute into the equation:

C less than or equal to -1

Thus, it going left on a number line.

The only number line with left is [A] and [C]

Since ≤  = Less than or equal to -1

then, it including -1

also known as a closed circle means the number is included and an open circle means it is not.

Hence, it closed circle.

Thus, the answer is [C]

Kavinsky

n is a rational number.
m is an irrational number.
so can nm be a rational number?

Answers

Answer:

yes than can become a rational number!!

Find the circumference of a circle with diameter,
d
= 11.8cm.
Give your answer rounded to 3 SF.

Answers

Answer:6.8

Step-by-step explanation:

i dont know how to explain.

there are five geometric mean between a and b. if second and last mean are 2 and 16 respectively, find the value of a and b.​

Answers

Answer:

a = 1/2, b = 32.

Step-by-step explanation:

Second = a1r  and fifth = a1r^4   where  r = common ratio   and  a1 is the first mean after a.

So 1ar^4 / a1r = r^3 = 16/2

r^3 = 8

r = 2.

So a1 = 1.

The 5 means are 1, 2, 4, 8, 16

S0 a = 1/2 = 1/2 and b = 2*16 = 32.

i need a an A pls help

Answers

Answer:

it B

Step-by-step explanation:

B stands for ben

like talking ben?

Answer:

c. 7x-2=19

Step-by-step explanation:

1. add 2 to both sides 7x-2(+2)=19+2

2. divide by 7 on both sides7x/7=21/7

3. x=3

Sophia draws a game piece at random from a bag containing 54 game pieces. The bag contains only red pieces, blue pieces, and green pieces. If the 1 probability of Sophia drawing a red piece is how 9 many red game pieces are in the bag?

Answers

18 I think I might not be right tho.

HELE ME PLEASE!

Find the exact volume of the cylinder.
A)
4577 cm3
B)
90 cm3
C)
2257 cm3
D)
9001 cm3

Answers

Answer:

none of them are right not sure what's up with that.

Step-by-step explanation:

cylinder is base*height

base is pi*r^2, or 25pi

height is 9, so the volume is 225pi is about 707, so none of the answers are correct

Got stuck, need help for solving the measure of arc LP.

Answers

Answer:

-3 degrees

Step-by-step explanation:

13x + 78= 39 degree

-78 -78

(divide both sides by 13)

4.
Which statement best describes the figure shown below?

A The ray appears to be perpendicular to 2 line segments that appear to be
parallel
B The ray appears to be parallel to 2 line segments that appear to be
perpendicular.
C The line segment appears to be perpendicular to 2 lines that appear to be
parallel
D The line segment appears to be parallel to 2 lines that appear to be
perpendicular.

Answers

999999999999999999999999

PLEASE HELP!! I DON'T UNDERSTAND IT

Answers

Well from the looks i don’t know what X is in this situation, but you should have the sam degrees for both answers. So what ever X is add it to that 30 and the other angle sound be the same degrees as that angle.

From a hot-air balloon, Enola measures a 22 degrees angle of depression to a landmark that’s 310 feet away, measuring horizontally. What’s the balloon’s vertical distance above the ground? Round your answer to the nearest hundredth of a foot if necessary.

Answers

Answer:

  125.25 ft

Step-by-step explanation:

The geometry of the problem can be modeled by a right trianlge in which the side adjacent to the angle is 310 ft, and the side opposite the angle is the one we want to find. The relevant trig relation is ...

  Tan = Opposite/Adjacent

__

Solving for the Opposite side (the height of the balloon), we find ...

  Opposite = Adjacent · Tan

  height = (310 ft)·tan(22°) ≈ 125.25 ft

Enola's balloon is about 125.25 ft above the ground.

_____

Additional comment

If we assume Enola's angle measurement can have a possible error of ±0.5°, then the corresponding error in the balloon height is more than ±3 ft. It is a bit of nonsense to report the height to the nearest 0.12 inches, (0.01 ft).

FIND THE AREA PLEASE HELP ILL GIVE BRAINLIESTTTT

Answers

Answer:

28.8 yd^2

Step-by-step explanation:

The area of a triangle is calculated using the following formula:

1/2*b*h (b: base, h: height)

The height in this triangle is 6.4 yd and the base is 9 yd

1/2*9*(6.4) = 28.8

Can some one help me with this ASAP

Answers

4x - 2y = 12

x + 2y = 8

(to cancel 2y, solve by adding)

4x - 2y = 12

+

x + 2y = 8

4x + x = 5x

-2y + 2y = 0

12 + 8 = 20

5x = 20

÷5

x = 4

Substitute x=4 to one of the equation:

x + 2y = 8

4 + 2y =8

-4

2y. = 4

÷2

y. = 2

Check:

4 + (2x2) does give you 8

Hope this helps!

please. im begging can you help me on this ?

Answers

Answer:

I think its B (x-5=13)

Step-by-step explanation:

if its x-5=13

Pedro bought 13 and 5

so 13+5 = 18 (x)

so rearrange the equation to be x-5=13

so imagine x=18 and it would work:

18-5=13

Answer: B. x - 5 = 13

Step-by-step explanation:

     Since Pedro bought the picture frames for his mother, we will see what she does with them. 5 go to her sister and 13 are kept for herself. Let x be the number of picture frames Pedro buys.

        5 + 13 = x

      This is not one of the answer choice, but x - 5 = 13 is. If we subtract 5 from both sides of the equation we created above, this proves to be our answer.

         B. x - 5 = 13

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