In its 2012 annual report, Vanilla Ice^2. reports the following (in millions): 2
ID: 2625792 • Letter: I
Question
In its 2012 annual report, Vanilla Ice^2. reports the following (in millions):
2012
2011
Total revenue
$200,000
$180,000
Property, plant, equipment, gross
18,000
16,000
Asset disposals
0
0
If revenue is projected to increase by 11% in 2013, projected 2013 capital expenditures would be - Please show formula used and method to complete:
a. $2,220
b. $2,000
c. $2,200
d. $0
e. None of the above
2012
2011
Total revenue
$200,000
$180,000
Property, plant, equipment, gross
18,000
16,000
Asset disposals
0
0
Explanation / Answer
In its 2012 annual report, Vanilla Ice^2. reports the following (in millions):
2012
2011
Total revenue
$200,000
$180,000
Property, plant, equipment, gross
18,000
16,000
Asset disposals
0
0
If revenue is projected to increase by 11% in 2013, projected 2013 capital expenditures would be - Please show formula used and method to complete:
Last Year Revenue Increase = 200000 -180000 = 20000
Equivalent Capital Expenditure Increase = 18000-16000 = 2000
Percentage of Capital Expenditure to Revenue Increase = 2000/20000 = 10%
In 2013 , Revenue Will Increase = 200000*11% = 22000
Therefore Capital Expenditure Increase= 22000*10% = 2200
Answer:
c. $2,200
2012
2011
Total revenue
$200,000
$180,000
Property, plant, equipment, gross
18,000
16,000
Asset disposals
0
0