In Its First Year of Operations,2001,the Gourmet Cheese Shoppe Had

question 54

Multiple Choice

In its first year of operations,2001,the Gourmet Cheese Shoppe had earnings per share (EPS) of $0.26.Four years later,in 2005,EPS was up to $0.38,and 7 years after that,in 2012,EPS was up to $0.535.It appears that the first 4 years represented a supernormal growth situation and since then a more normal growth rate has been sustained.What are the rates of growth for the earlier period and for the later period?

• A) 6%;5%
• B) 6%;3%
• C) 10%;8%
• D) 10%;5%
• E) 12%;7%

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Definitions:

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours set for the production level achieved.

Incremental Cost Approach

A decision-making process focusing on the costs that change with the level of production or the introduction of a new process.

Net Present Value

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows.

Discount Rate

The discount rate employed in the evaluation of discounted cash flow (DCF) to ascertain the current worth of prospective cash flows.