X-1 Corp's Total Assets at the End of Last Year

question 87

Multiple Choice

X-1 Corp's total assets at the end of last year were $365,000 and its EBIT was $52,500.What was its basic earning power (BEP) ratio?

• A) 14.10%
• B) 14.67%
• C) 17.40%
• D) 13.23%
• E) 14.38%

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Definitions:

Annual Cash Inflows

The total amount of money, often from sales, investments, or financing, that flows into a company over a year.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument, in order to determine its present value.

Salvage Value

The expected end-of-life residual value of an asset.

Net Present Value

Net present value is the calculation to determine the present value of a series of future cash flows minus the initial investment cost, used to assess the profitability of investments.