MGFB10H3 Final: (3) B09+Test+08+Fall

In the Month of March, Digby received orders of 107 units at a price of $15.00 for their product Dome. Digby uses the accrual method of accounting and offers 30 day credit terms. Digby delivers 107 units in April. They received payment for 54 units in March, and 54 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands)

Select: 1 $1,605 , 0 0, $803 $803 , $803 0, $1,605

Use the cash flows and competitive spreads shown in the table below.

Assume the dividend payout ratio each year is 100%.

a. Calculate the year-by-year book and economic profitability for investment in polyzone production. Assume straight-line depreciation over 10 years and a cost of capital of 6%. (Negative answers should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your income answers in millions rounded to 2 decimal places and enter the rate of return as a percent rounded to 2 decimal places.)

b-1. What is the economic rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Economic rate of return %

b-2. Now compute the steady-state book rate of return (ROI) for a mature company producing polyzone. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

ROI %

Valuation of Assets. Using the information provided in the following table, find the value of each asset.

Cash Flow

Asset End of year Amount Appropriate requited return

A 1 $5,000 18%

2 5,000

3 5,000

B 1 Through ∞ $ 300 15%

C 1 $0 16%

2 0

3 0

4 0

5 35,000

D 1 Through 5 $ 1,500 12%

6 8,500

E 1 $ 2,000 14%

2 3,000

3 5,000

4 7,000

5 4,000

6 1,000