Question

1. Cheese company currently operates at 97% of fixed asset capacity. Current sales are $890,000. How fast can sales grow before any mew fixed assets are needed?

select one:

a) 3.1%

b) 4.1 %

c) 3.4%

d) 3.3%

2. RTF inc common stock sells for $22 a share and pays an annual dividend that increase by 3.8% annually. The market rate of return on this stock is 8.2% What is the amount of the last dividend paid?

Select one:

a) $0.90

b) $ 0.97

c) $ 0.93

d) 0.88

Answer 1

Answer 1:

The correct option is (a).  

Explanation -

Current sales at 97% capacity is $8,90,000.

The sales which will be at 100% capacity

= ($8,90,000 * 100)/ 97 = $9,17,525

The percentage of sales which can grow before any new fixed assets are needed :

= [ ($9,17,525 - $8,90,000) * 100 ] / $8,90,000

= 3.1%