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(Solved): For each of the four firms below (CAT, DOG, FERRET, and ALPACA), use the given values to solve for ...
For each of the four firms below (CAT, DOG, FERRET, and ALPACA), use the given values to solve for the missing values. Notes: We are equating ROA and ROI in this problem; see page 1090 of your text. You may assume that balances for total assets, etc. are averages, when necessary, and that sales are net sales. Assume that "invested capital" = total assets. Assume that the tax rate for all firms is , and that the weighted average cost of capital is the minimum acceptable return.
Expert Answer
Step 1: Calculate the gross profit rate.The gross profit rate is calculated by dividing the gross profit by the sales. For each of the four firms, the gross profit rate is calculated as follows:CAT: (125,000 / 200,000) = 0.625DOG: (300,000 / 1,750,000) = 0.173913FERRET: (750,000 / 750,000) = 1.000ALPACA: (50,000 / 150,000) = 0.333333We are using the Taylor series to expand the exponential function ex. The Taylor series is a way of writing a function as an infinite sum of terms. The terms in the Taylor series are powers of x, and the coefficients of the terms are determined by the function.