1. Mark decides to open a lemonade stand. To start, she needs $50 for a licence, $30 for materials (such as cups, lemons, sugar, ice), and $20 for a stand. He expects to sell 100 cups of lemonade at $1 each per day. Mark plans to operate the stand for 30 days. He estimates the daily costs for materials will be $10. Mark Is considering whether to take a $100 loan with a 10% Interest rate or use his savings.

Required:

Should Mark use his savings or take the loan? Justify your answers with calculations of profits for each scenario.

2. A company has current assets of $5,400, net fixed assets of $28,100, current liabilities of $4,100, and long-term debt of $10,600. What is the value of the shareholders' equity account for this firm? How much is net working capital?

3. B company has sales of $742,000, cost of 316,000, depreciation expense of $39,000, interest expense of $34,000, and a tax rate of 21 percent. What is the net income for this firm?

Answer rating: 100% (QA)

1 Decision on Using Savings or Taking Loan Using Savings Total initial investment License cost Mater... View the full answer