1) Which one of the following is correct? -since the cost of debt is generally fixed, increasing the debt ratio tends to stabilize net income. ---When a company increases its debt ratio the costs of equity and debt both increase. Therefore the WACC must also increase. ----All else equal, an increase in the corporate tax rate
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Which business structure would you choose if you were to set up your own CPA practice: a partnership, proprietorship, or corporation? Why? Explain what factors affect your decision. See Chapter 7 of Advanced Accounting.
Why is it important to keep paid-in capital separate from earned capital? As an investor, is paid-in capital or earned capital more important? Explain why. As an investor, are basic or diluted earnings per share more important? Explain why. Please include references.
From an employee perspective, what are the advantages and disadvantages of working in a matrix structure? Three limitations of transformational leadership.
10 short answer questions pertaining to the material from chapters 1-13 in the text book Organizational Behavior (5th Edition) by McShane, S. & Von Glinow, M. I can upload the chapters if needed. Please refer to the pdf file for the questions. From an employee perspective, what are the advantages and disadvantages of worki
Attached is the 2010 annual report for Petsmart, Inc. What can you say about the company's current capital structure mix in terms of % of debt, % of commons stock and % of preferred stock. What's the firm's future financing limitations ? What kind of strategy do you suggest for the firm to finance its future project? Any
Antitrust authorities at the Federal Trade Commission are reviewing your company's recent merger with a rival firm. The Federal Trade Commission is reviewing your company's recent merger with a rival firm. The FTC is concerned that the merger of two rival firms in the same market will increase market power. A hearing is scheduled for your company to present arguments that your firm has not increased its market power through this merger. Can you do this? How? What evidence might you bring to the hearing?
Antitrust authorities at the Federal Trade Commission are reviewing your company's recent merger with a rival firm. The Federal Trade Commission is reviewing your company's recent merger with a rival firm. The FTC is concerned that the merger of two rival firms in the same market will increase market power. A hearing is schedule
In February 2011, Nokia announced an internal reorganization and it was widely reported. Investors.nokia.com (2011) reported the press release about this change. Research this Nokia reorganization and answer the following Questions: Question 1: How would you describe Nokia's new organizational structure? Question 2: Does it
C14 P2 You are an entrepreneur starting a biotechnology firm. If your research is successful, the technology can be sold for $30 million. If your research is unsuccessful, it will be worth nothing. To fund your research, you need to raise $2million. Investors are willing to provide you with $2 million in initial capital in ex
Need some assistance and guidance in answering the folowing two questions. Trying to define what is meant by functional structure, and describe how to use this functional structure to implement the cost leadership strategy. How does Wal-Mart's structure as it relates to its international business.
Triangle Enterprises has no debt but can borrow at 9 percent. The firm's WACC is currently 14.7 percent and there is no corporate tax. If the firm converts to 70 percent debt, what will its cost of equity be? a) 20.67 percent b) 22.95 percent c) 24.47 percent d) 26.39 percent e) 28.00 percent
Delta Mowers has a debt-equity ratio of 1.2. Its WACC is 10.1 percent and its cost of debt is 7.5 percent. There is no corporate tax. What is the firm's cost of equity capital? a) 12.60 b) 13.22 c) 13.83 d) 14.29 e. 14.80 I am having difficulty solving this because I am unsure of what the M&M Proposition II equation re
Kline Construction is an all-equity firm that has projected perpetual earnings before interest and taxes of $879,000. The current cost of equity is 18.3 percent and the tax rate is 34 percent. The company is in the process of issuing $6.2 million of 8.5 percent annual coupon bonds at par. What is the levered value of the firm?
Katz is an all equity development company that has 36,000 shares of stock outstanding at a market price of $25 a share. The firm's earnings before interest and taxes are $29,000. Katz has decided to issue $200,000 of debt at a rate of 6 percent and use the proceeds to repurchase shares. What should Faith do if she owns 500 shar
Please help with the following problem. I am working on creating a fictional internet based company, called Jellies and Jams. The company will sell homemade jams and jellies via their website. I am making the company a small, family owned business, with 15 employees. I need assistance with setting up the company's organizati
How has the structure of today's organization changed from the organization of the past? What is the most significant event in the evolution of organizational structure? Defend your response
13-12. Executive Cheese has issued debt with a market value of $ 100 million and has outstanding 15 million shares with a market price of $ 10 a share. It now announces that it intends to issue a further $ 60 million of debt and to use the proceeds to buy back common stock. Debt holders, seeing the extra risk, mark the value of the existing debt down to $ 70 million. a. How is the market price of the stock affected by the announcement? b. How many shares can the company buy back with the $ 60 million of new debt that it issues? c. What is the market value of the firm (equity plus debt) after the change in capital structure? d. What is the debt ratio after the change in structure? e. Who (if anyone) gains or who loses?
13-12. Executive Cheese has issued debt with a market value of $ 100 million and has outstanding 15 million shares with a market price of $ 10 a share. It now announces that it intends to issue a further $ 60 million of debt and to use the proceeds to buy back common stock. Debt holders, seeing the extra risk, mark the value of
16.1 Shapland Inc. has fixed operating costs of $500,000 and variable costs of $50 per unit. If it sells the product for $75 per unit, what is the break-even quantity? 16.2 Counts Accounting has a beta of 1.15. The tax rate is 40% and Counts is financed with 20% debt. What is Counts's unlevered beta? 16.3 Ethier Enterprise
You have considered expanding your line of equipment and apparel for high school athletic teams to include soccer teams and gathered information on the increase in sales for your division and the investment needed in new manufacturing equipment without having to hire additional manufacturing personnel. After this, you arrange a
How does the capital structure of a firm compare to the capital structure of an individual? In what ways are they similar? Can you provide an example of how individuals use debt and equity in their personal financial lives that parallels the basic capital structure decisions made by a firm?
In the "Structure of Venture Capital" example, why does the Limited Partner only earn a 14% IRR when the investments are assumed to earn 20% per year over the 10-year life of the fund? In what ways could the Limited Partner improve their results?
A. suppose taco bells equity is currently selling for $55 per share, with 4 million shares outstanding. Firm also has 7000 bonds outstanding, which are selling at 94 percent of par, what are the firms current capital structure weights? b. suppose that taco Bell was considering an active change to their capital structure so
Suppose that Lil John Industries' equity is currently selling for $37 per share and that there are 2 million shares outstanding. If the firm also has 50 thousand bonds outstanding, which are selling at 103 percent of par, what are the firm's current capital structure weights?
Consider three companies: Borders, Clorox, and Amazon. Reflect on the nature of the business of these three companies. You are recommended to also get to the web site of one company in each of these categories. You might also check what the beta of each of these companies is. What would you recommend should the capital struc
Which of the following is true regarding the efficient market hypothesis? It argues that efficient markets are not volatile throughout a trading day. It suggests that an efficient market can only consider historical information when determining current security prices. It proves that market inefficiencies do not exist in either the short-run or the long-run. It implies that all investments in an efficient market have a net present value of zero. Which of the following statements is true regarding systematic risk? Select all that apply: is diversifiable is the total risk associated with surprise events it is not project or firm specific is measured by beta
The historical returns on large-company stocks, as reported by Ibbotson and Sinquefield, are based on: the largest 20 percent of the stocks traded on the NYSE. the stocks of the largest 10 percent of the publicly traded firms in the U.S. all of the stocks listed on the NYSE. the stocks o
Answer the questions below: please provide thorough, qualitative answers including some examples. 1. In practice, how can a firm determine whether it is operating at (or near) its optimal capital structure? 2. Under what circumstances should a firm use: a) more debt in its capital structure than is used by the "average
How can the structure of your company impact reaction speed in response to the customer? Suggest a modification to the structure that will remedy the impact of structure on responsiveness.
(Capital Structure weights). The required return on debt (before taxes) is 7.50%, the required return on equity is 15%, and the cost of capital is 10%. If the marginal income tax rate is 40%, what are the proportions of debt and equity financing?
Details: Consider the following scenario and respond to the questions that follow. A new firm, Bit Technology Inc., is deciding where to locate its facilities internationally. 1. If this firm is a high-tech manufacturing firm, what resource and operational factors should be considered in this decision? 2. How might the organization's identity influence its structure? 3. Explain the legal factors that must be considered when a company decides to locate its operations in a foreign country.
Details: Consider the following scenario and respond to the questions that follow. A new firm, Bit Technology Inc., is deciding where to locate its facilities internationally. 1. If this firm is a high-tech manufacturing firm, what resource and operational factors should be considered in this decision? 2. How might t
Using your knowledge about the determinants of an optimal capital structure, discuss the choice of capital structure of the three companies: Anheuser Busch, Cisco and Disney (attached are their Balance Sheet Ratios). To keep your work focused on the problem, please consider the following topics: Capital structure: relativ
Based on the information below, what is the firm's optimal capital structure? a. Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50. b. Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90. c. Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20. d. Debt = 80%; Equity = 20%; EPS = $3.42; Stock price