Exhibit 12 In Addition a Regression Analysis Indicates the Following Relationship Between

question 90

Multiple Choice

Exhibit 12.6
Use the Information Below for the Following Problem(S)
Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company.
$\begin{array}{lrr}\begin{array}{l}\\\\\text{GDP}\\\text{GDP growth}\\\text{Sales per share}\\\text{Operating profit margin}\\\text{Depreciation/Fixed Assets}\\\text{Fixed asset turnover}\\\text{Interest rate}\\\text{Total asset turnover}\\\text{Debt/Total assets}\\\text{Tax rate}\\\end{array}\\begin{array}{r}\\\text{Year 2003}\\\hline\text{11,000 Billion}\\\\ \$ 800 \\\\\\\\\\\\\\\\end{array}\\begin{array}{r}Estimated\\\text{Year 2004}\\\hline\\ 3.5 \% \\\\ 12 \% \\ 14 \% \\2\\3.5 \% \\ 0.7 \\45 \% \\36\%\end{array}\\end{array}$
In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is
%D Sales per share = 0.015 + 0.75(%∆GDP)
-Refer to Exhibit 12.6.Calculate the per share interest rate charge for the year 2004.

• A) $18.74
• B) $14.72
• C) $30.07
• D) $13.76
• E) $28.59

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Definitions:

Future Cash Inflows

Future cash inflows are the expected receipts of cash that a business anticipates receiving from operations, investments, or financing activities in the future.

Manufacturing Flexibility

The ability of a production system to quickly adapt to changes in the types and quantities of products demanded.

Qualitative Characteristic

Attributes that contribute to the usefulness of information presented in financial statements, including relevance and reliability.

Investment Analysis

The process of evaluating an investment for profitability and risk, ultimately leading to a decision on its appropriateness.