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Homework answers / question archive / 1) Dapper Design Outlet has a capital intensity ratio of 0

1) Dapper Design Outlet has a capital intensity ratio of 0

Finance

1) Dapper Design Outlet has a capital intensity ratio of 0.83 at full capacity. Currently, total assets are $48,685 and current sales are $52,349. At what level of capacity is the firm currently operating?

 

2) 

This set of problems is designed to be calculated using the Excel or financial calculator. You can also use algebraic formulas. Do not use financial tables to calculate these problems.

 

A firm's dividends have grown over the last several years. 6 years ago the firm paid a dividend of $1. Yesterday it paid a dividend of $3. What was the average annual growth rate of dividends for this firm?

 

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

3) 

In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period.

 

Find the amount of time needed for the sinking fund to reach the given accumulated amount. (Round your answer to two decimal places.)

$5500 yearly at 6% to accumulate $100,000.

  •  yr

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1) 

Computation of Level of Capacity that the firm is currently operating:

Given,

Current Annual sales= $52,349

Total Assets= $48,685

The entity is operating at only 83%

 

Capital Intensity Ratio = Total Assets /Full Capacity Sales

Full Capacity Sales = $48,685 / 0.83 = $ 58,656.63

 

Current Level of Operating Capacity = Current Sales / Full Capacity Sales

= $52,349 / $58,656.63

= 0.8925

Current Level of Operating Capacity = 89.25%

 

2) 

Computation of Growth Rate using Rate Function in Excel:

=rate(nper,pmt,-pv,fv)

Here,

Rate = Growth Rate = ?

Nper = 6 years

pmt = 0

PV = $1

FV = $3

Substituting the values in formula:

=rate(6,0,-1,3)

Rate or Growth Rate = 20.09%

 

3) 

Computation of Time using NPER Function in Excel:

=nper(rate,pmt,pv,-fv)

Here,

Nper = Number of Periods or Time = ?

Rate = 6%

PMT = $5,500

PV = 0

FV = $100,000

Substituting the values in formula:

=nper(6%,5500,0,-100000)

NPER or Number of Periods or Time = 12.66 years

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