Answered

Westonci.ca is the ultimate Q&A platform, offering detailed and reliable answers from a knowledgeable community. Connect with a community of experts ready to provide precise solutions to your questions on our user-friendly Q&A platform. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

Tinsley Plastics manufactures plastic bottles used for beverages and household cleaners. The average net book value (NBV) of assets during the quarter is estimated as $510,000. If the required rate of return is 12% on average assets and the firm wants to have residual income (RI) of $101,000 for this quarter, what must its profits be?

Sagot :

marvineetesh3

The profits of the Tinsley Plastics to manufactures plastic bottles is $162,000.

What is profit?

A profit is defined as the monetary profit. It is particularly the difference between the amount earned, and the amount spent on purchasing, operating, or creating anything.


The formula of profit is:

[tex]\text{Profits} =\text{ NBV} *\times \text{Required Rate of Return + Residual Income (RI)}[/tex]

Computation of profit:

According to the given information,

Net Book Value (NBV) =  $510,000,

Rate of Return = 12%

Residual Income (RI) = $101,000

Now, apply the given values in the formal of profit,

[tex]\text{Profits} =\text{ NBV} *\times \text{Required Rate of Return + Residual Income (RI)}\\\\\text{Profits} = \$510,000 \times 12\% + \$101,000\\\\\text{Profits} =\$162,000[/tex]

Therefore, the firm's profits must be $162,000.

Learn more about the profits, refer to:

https://brainly.com/question/15036999

#SPJ1

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.