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AAFM CWM_LEVEL_2 Exam - Topic 3 Question 45 Discussion

Section C (4 Mark)Read the senario and answer to the question.Raman's company has made plans for the next year for a new project. It is estimated that the company will employ total assets of Rs. 900 lakh, 75% of the assets being financed by borrowed capital at an interest cost of 6% per year. The direct costs are estimated at Rs. 530 lakh. All other operating expenses are estimated at Rs. 95 lakh. The goods will be sold to customers at 150% of the direct costs. Income tax rate is assumed to be 30%. Calculate net profit margin and return on owners' equity.
B) 11.40%, 40.29%
A) 12.13%, 44.34%
C) 10.75%, 43.37%
D) 13.32%, 42.38%

AAFM CWM_LEVEL_2 Exam - Topic 3 Question 45 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam
Question #: 45
Topic #: 3
[All CWM_LEVEL_2 Questions]

Section C (4 Mark)

Read the senario and answer to the question.

Raman's company has made plans for the next year for a new project. It is estimated that the company will employ total assets of Rs. 900 lakh, 75% of the assets being financed by borrowed capital at an interest cost of 6% per year. The direct costs are estimated at Rs. 530 lakh. All other operating expenses are estimated at Rs. 95 lakh. The goods will be sold to customers at 150% of the direct costs. Income tax rate is assumed to be 30%. Calculate net profit margin and return on owners' equity.

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Suggested Answer: B

by Erick at Jul 22, 2022, 04:51 PM

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Janey
8 months ago
30% tax rate is a big hit, hope they planned for it!
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Rosalind
8 months ago
I think B is more realistic, but I see the appeal of A.
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Olen
8 months ago
Wait, 150% markup? That seems a bit high, right?
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Carey
9 months ago
I'm leaning towards option A, those margins seem solid.
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Emile
9 months ago
Looks like a heavy reliance on borrowed capital!
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Aliza
9 months ago
This seems tricky, but I'm confident I can work through it. I just need to focus on the key information provided and apply the right formulas.
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Brock
9 months ago
Okay, I think I've got a plan. First, I'll calculate the total revenue, then subtract the direct costs and other expenses to get the pre-tax profit. Then I'll apply the tax rate to find the net profit, and use that to calculate the margins and return on equity.
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Cecilia
9 months ago
Hmm, I'm a bit unsure about how to approach this. I'll need to break it down step-by-step and make sure I don't miss any important details.
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Verdell
10 months ago
This looks like a straightforward financial analysis problem. I'll need to calculate the revenue, expenses, and taxes to find the net profit margin and return on equity.
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Tran
10 months ago
I think I might lean towards option A based on my calculations, but I need to double-check my work on the tax implications.
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Jose
10 months ago
I feel a bit confused about how to factor in the interest costs when calculating the net profit margin. I hope I remember the steps correctly!
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Lashawna
10 months ago
This question seems similar to one we did in class about asset financing. I think the net profit margin should be around 12%, but I can't recall the exact numbers.
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Wayne
10 months ago
I remember we practiced calculating net profit margin, but I'm not sure about the exact formula for return on owners' equity.
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Ling
10 months ago
This seems like a straightforward question about which tool displays the status counts for multimedia contacts. I'll carefully review the options and think through what each one might do.
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Tamekia
10 months ago
Okay, I see the key points here. We need to watch out for any vendor lock-in issues with Cloud Y, and also account for the new ongoing costs of using their resources. Gotta weigh all that against the performance benefits.
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Rory
10 months ago
I'm a little confused by the wording of the question. Does "append the campaign results to campaign specs" mean we need to add new columns from the results table, or just combine the rows? I'll need to clarify that before deciding on the join type.
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Chaya
10 months ago
I'm a bit confused by the wording of the choices. I'll have to re-read them a few times.
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Anisha
10 months ago
I think the code will compile fine, but I'm unsure about what the output will actually be.
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