Question
Last year, Neptune Corporation had sales of $890,000 and paid taxes of $77,000. Because of the low interest rate environment, the firm also borrowed some
Last year, Neptune Corporation had sales of $890,000 and paid taxes of $77,000. Because of the low interest rate environment, the firm also borrowed some money from the local bank and paid $70,000 in interest expense. In addition, the firm incurred Variable Costs and Fixed Costs of $267,000 and $214,000 respectively. If sales increase by 5%, what should be the percentage change in operating income? SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. IF YOUR ANSWER IS 7.7011%, FOR EXAMPLE, ENTER 7.70.
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