2 Butters Corporation has a profit marginal percent and its return on assets investment 15 25.2 percent What is its assets turnover? 3. If the Butters Corporation has a debt-to-total-assets ratio of 50 percent, what would the firm's return on equity be? 4. What would happen to return on equity if the debt-to-total-assets ratio decreased to 35 percent? Short-term versus longer-term borrowing Sauer Food Company has decided to buy a new computer system with an expected life of three years. The cost is $150,000. The company can borrow $150,000 for three years at 10 percent annual interest or for one year at 8 percent annual interest How much would Sauer Food Company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over treborrowed) each year at the same 8 percent rate? Compare this to the 10 percent three-year loan What if interest rates on the 8 percent loan go up to 13 percent in year 2 and 18 percent in year 3? What would be the total interest cost compared to the 10 percent, three-year loan? Economic ordering quantity Nowin Pipe & Steel het projected sales of 72,000 pipes this year, an ordering cost of $6 per order, and carrying costs of$2.40 per pipe. 1. What is the economic ordering quantity 2. How many orders will be placed during the year? 3. What will the average inventory be? Break even point and degree of leverage Healthy Foods Inc soll 50-pound bags of grapes to the military for $10 a bag. The fixed costs of this operation are $80,000, while the variable couts of grapes are $0.00 per pound 1. What is the break even point in bagn? b. Calculate the profit or loss on 12,000 bags and on 25,000 bags 2. What is the degree of operating leverage at 20,000 bags and at 25,000 bags? Why does the degree of operating leverage change as the quantity sold Increase? 3. Healthy Foods him an annual interest expense of $10.000, calculate the degree of financial leverage at both 20000 and 25,000 bags 4. What is the degree of combined leverage at both sales levels