Use the Information Below to Answer the Following Questions:
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question 53

Multiple Choice

Use the information below to answer the following questions:
On 1 January 2010, Peter Ltd signed a contract worth $64 000 000 to construct the Cycling Stadium. The stadium was to be built over three years, with progress payments as follows:
$$\begin{array} { r r } & \$ \\\text { 31 December 2010 } & \$ 15000000 \\\text { 31 December 2011 } & \$ 20000000 \\\text { 31 December 2012 } & \$ 29000000\end{array}$$
Estimated costs were $50 000 000. The project was 35% complete at the end of 2010, 75% complete at the end of 2011, and 100% complete at the end of 2012. Revenues and costs were as estimated.
-What profit was earned during 2012 if the percentage of completion method was used?

• A) $3 500 000
• B) $5 600 000
• C) $6 343 750
• D) $14 000 000.

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Definitions:

Debt-to-Equity Ratio

A measure of a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.

Year 2

Typically refers to the second year in a designated time frame, often used in financial and performance analysis.

Times Interest Earned Ratio

A financial metric that measures a company’s ability to meet its interest obligations based on its current earnings before interest and taxes.

Equity Multiplier

A financial leverage ratio that measures the portion of a company’s assets that are financed by its shareholders' equity.