Problem 1: Gina Dare, who wants to be a millionaire, plans to retire at the end of 40 years. Gina's plan is to invest her money by depositing into an IRA at the end of every year. What is the amount that she needs to deposit annually in order to accumulate $1,000,000? Assume that the account will earn an annual rate of 11.5%. Round off to the nearest $1.
a. $1,497
b. $5,281
c. $75
d. $3,622
Problem 2: What is the present value of $150 received at the beginning of each year for 16 years? The first payment is received today. Use a discount rate of 9%, and round your answer to the nearest $10.
a. $1,360
b. $1,480
c. $1,250
d. $1,210
Table: (use for Problems below)
Average selling price per unit $16.00
Variable cost per unit $11.00
Units sold 200,000
Fixed costs $800,000
Interest expense $ 50,000
Problem 3: Based on the data in Table above, what is the break-even point in units produced and sold?
a. 130,000
b. 140,000
c. 150,000
d. 160,000
Problem 4: Based on the data contained in Table above, what is the degree of operating leverage?
a. 1.00 times
b. 2.00 times
c. 3.00 times
d. 4.00 times
e. 5.00 times
Problem 5: Based on the data contained in Table, what is the contribution margin?
a. $5.00
b. $4.00
c. $3.00
d. $2.00
Problem 6: Based on the data contained in Table, what is the degree of financial leverage?
a. 3.33 times
b. 2.50 times
c. 1.50 times
d. 1.33 times