A company wants to reinvest 60% of their $60,000 profit for the year in their business and use the rest to pay down the principal on its loan and dividends to their common shareholders. The company expects to invest 70% of their retained earnings in non-current assets and 30% in working capital. The company's revenue is $600,000.
On the basis of this information, calculate how much the managers would keep in their business for growth reasons and how much would be used to pay off their loan and the amount that would be invested in non-current assets and in working capital.
Retained earnings: $_____________ Loan and dividends: $_____________
Non-current assets: $_____________ Working capital: $_____________

Question

A company wants to reinvest 60% of their $60,000 profit for the year in their business and use the rest to pay down the principal on its loan and dividends to their common shareholders. The company expects to invest 70% of their retained earnings in non-current assets and 30% in working capital. The company's revenue is $600,000.
 On the basis of this information, calculate how much the managers would keep in their business for growth reasons and how much would be used to pay off their loan and the amount that would be invested in non-current assets and in working capital.
 Retained earnings: $_____________ Loan and dividends: $_____________
 Non-current assets: $_____________ Working capital: $_____________

Quizplus · Accepted Answer

The Answer of A company wants to reinvest 60% of their $60,000 profit for the year in their business and use the rest to pay down the principal on its loan and dividends to their common shareholders. The company expects to invest 70% of their retained earnings in non-current assets and 30% in working capital. The company's revenue is $600,000.
 On the basis of this information, calculate how much the managers would keep in their business for growth reasons and how much would be used to pay off their loan and the amount that would be invested in non-current assets and in working capital.
 Retained earnings: $_____________ Loan and dividends: $_____________
 Non-current assets: $_____________ Working capital: $_____________

A Company Wants to Reinvest 60% of Their $60,000 Profit