question archive Im stuck on return on investment question
Subject:BusinessPrice: Bought3
Im stuck on return on investment question. where my initial investment is 10,000000 target income 2m. 2,000,000 +4,140,000/ (7-4.5)
6,140,000 /2.5
2,456,000 (total target income) this becomes when the quantity of bricks sold is the above. But stuck when im asked Operating Profit on Different Stimulated Volume. Please find the ROE in %. In the different volume of sales. For Example, you may calculate profit on THREE different volume like
Sales in 'ooo' brick 2400 3200 4000
Capacity utilization
60% 80% 100%
Please calculate revenue as per the price given in your question (Rs 7,000 per '000 bricks). Similarly, calculate the variable cost (Rs 4,500 per '000 brick).
Then find out the contribution margin and profit under each volume of sales.
Finally, find the ROE of equity which is mentioned in the case.