Will Smith will receive $80,000 on December 31, 2019 (5 years from now), from a trust fund established by his father. Assuming the appropriate interest rate for discounting is 12% (compounded semiannually), what is the present value of this amount today?
Accounting Ch. 7 Operating leverage = CM / profit or net income BE units = fixed costs / Unit CM CM ratio = CM / sales CM = sales – variable costs Net income = fixed cost – CM BE sales = fixed costs / CM ratio Margin safety = sales – break even sales Relevant costs Occurs in future Differs between decisions Irrelevant costs Sunk costs- already paid Costs that are always the same Special Order Decisions 1 time order accept special order o profitable o has capacity o long term relationship cautions o economic consideration o is it worth it Make or buy decision better off doing it themselves or paying people to do it more profitable to outsource
