LLV Inc Originally Forecasted the Following Financial Data for Next Year

question 129

Multiple Choice

LLV Inc. originally forecasted the following financial data for next year: sales = $1,000, cost of goods sold = $675, and interest expense = $90. The firm believes that COGS will always be 67.5 percent of sales. Due to increased global demand, the firm is now projecting that sales will be 20 percent higher than the original forecast. What is the additional net income (as compared to the original forecast) the firm can expect assuming a 35 percent tax rate?

• A) $59.45
• B) $195.00
• C) $42.25
• D) $74.00

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

HBO Subscriptions

A paid service offered by HBO, a television company, allowing consumers access to a wide range of television shows, movies, and other content.

Incomes of Buyers

Refers to the earnings received by consumers which influence their purchasing power and demand for goods and services.

Quantity Demanded

The amount of a good or service that consumers are willing and able to purchase at a specific price.