The following data is to be used in questions number 28-30. As of December 31, data...
The following data is to be used in questions number 28-30.
As of December 31, data from an insurance company has a minimum required
rate of return of 14% as follows:
Capital and surplus: 5,400,000
Operating expense: 425,000
Property and equipment: 95,000
Policy benefit: 675,000
Other assets: 180,000
Economic Value Added: 60,000
Investment income tax: 15.0%
Return on Revenue: 16.7%
28. Determine the value of the capital charge (choose the closest):
A. Less than or equal to 100,000
B. More than 100,000 and less than or equal to 150,000
C. More than 150,000 and less than or equal to 200,000
D. More than 200,000 and less than or equal to 250,000
E. More than 250,000
29. Determine the value of investment turnover (choose the closest):
A. Less than or equal to 1.2
B. More than 1.2 and less than or equal to 1.3
C. More than 1.3 and less than or equal to 1.4
D. More than 1.4 and less than or equal to 1.5
E. More than 1.5
30. If the company successfully runs a cost saving program and can reduce the cost by 5% operational (without affecting sales and controllable investment). Determine the ROI value
(choose the closest):
a. Less than or equal to 14%
b. More than 14% and less than or equal to 16%
c. More than 16% and less than or equal to 18%
d. More than 18% and less than or equal to 20%
e. More than 20%
Homework Answers
1) The value of capital charge is more than 250000
An amount of money equal to how much a business has tied up in assets multiplied by the weighted average cost of those assets. The computation of the economic profit of a business by its finance department involves subtracting its capital charge from its net operating profit
2) The value of investiment turnoverr is more than 1.5
You can calculate the investment turnover ratio of a company by dividing the net sales value by the sum of shareholder equity and outstanding debt.
3) ROI = Net Profit / Total Investment * 100. Less than or equal to 14%
ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. To calculate roi the benefit of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
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could you plz help me with question number 5, I did question 1
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is in excel pic
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