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Equity Theory

Difference between operating and financial leverages

Discuss the difference between operating and financial leverage. Can there be too much financial leverage in a firm? Why or why not? Which portion of the WACC calculation is impacted by taxes? How can a company reduce its cost of capital? How is WACC used in financial planning to optimize capital structure?

Strategic Financing Decisions - Cost of Retained Earnings

Schweser Satellites Inc. produces satellites earth stations that sell for $ 100,000 each. The firm's fixed costs. F, are $2 million; 50 earth stations are produced and sold each year; profits total $ 500,000; and the firm's assets (all equity financed) are $5 million. The firm estimates that it can change its production process,

Multiple Choice Questions

1. Which of the following statements is most correct? a. The tax preference theory states that, all else equal, investors prefer stocks that pay low dividends because retained earnings can lead to capital gains that are taxed preferentially. b. An increase in the cost of equity capital (rs) when a company announces an increa

Health Care Organizations and Bankruptcy

The following discussion leads to 3 questions below, each requiring no more than a 50-100 word response. Use the attached material to help answer the questions. Many believe that modern capital structure theory began when Professors Modigliani and Miller (better known as the first M&M) published their 1958 paper, "The Cost of

Organizational Behavior Issues

I AM HAVING DIFFICULTY UNDERSTANDING THIS. CAN YOU PROVIDE THIS TO ME IN SIMPLE TERMS? BUSINESS IS A WHOLE DIFFERENT ANIMAL TO ME. What would a problem of Organizational Behavior issues Be Exactly? Example? What would be the relevant facts and circumstances related to the problem and how the culture of of an organiza

The Nature of Work Motivation

From the motivational theories of Expectancy and Equity, why might the United Airways employees have NOT seemed to care. The main factor is they have gone through downsizing, salary cuts, etc.

Work Motivation - Procedural Justice Theory

A procedural justice theory: A process theory about work motivation that focuses on employees' perception of the fairness of the procedures used to make decisions about the distribution of outcomes What are the implications of transferring top users of sick leave to less busy firehouse companies from a procedural justice per

Proprietary theory- entity theory- Residual theory

Examine the following documents: Revenues---------------------------------------------------------------- $1,000,000 Operating expenses -Cost of good sold ------------------------ $400,000 -Depreciation------------------------------ $100,000 - Salaries and Wages----------------------$200,000 Bond interest (80%debentures so

Weighted Average Cost of Capital Case Study

Please see attached problem... Prepare responses to the questions posed by the "What's on the Web?" exercises 12.1, 12.2 (in 12.2 you can find the beta for Dell by going to the web site under Stock Price History), 12.3 (for simplicity assume that the company's long-term debt consists of $200 million in long

How individual investors make investment decisions

This assignment is concerned with your understanding of the key issues relative to portfolio analysis and investment. In completing this assignment you are to limit your scope to the US stock markets only. Use the Internet, and course resources to write a 2-page essay which you will use with new clients of your financial planni

Financial statement

Calculate and complete the boxes noted with "?". Make a recommendation of one of the two options. Why do you believe the selected option is preferred over the other? Would their be additional information that you might with to have to support your decision? If so, what? Which alternative carries a higher risk. Review colle

General Questions on How Captital Markets Work

I need to produce something about the general theory of how capital markets work. To explain how capital markets work, I would like to provide definitions and practical examples of the concepts of adaptive expectations, rational expectations, optimal forecast, random walk, and mean reversion. Assumption - The historical

United States v. WRW Corporation: prepare an analysis of the case

Can there be a case analysis provided for the case below. United States v. WRW Corporation 986 F.2d 138 (1983) United States Court of Appeals, Sixth Circuit PECK, Circuit Judge In 1985, civil penalties totaling $90,350 were assessed against WRW Corporation (WRW), a Kentucky corporation, for serious vio

Business Finance

This problem belongs to Financial Management Theory and practice 11e by Eugene F. Brigham, Chapter 14. ---- JAS Corporation has a December 31, 2005 balance sheet as given below. All amounts shown are in $ millions: Cash $ 10 Accounts payable $ 15 Accounts re

Economic Balance Sheet of Harley Davidson

Using the GAAP balance sheet, for each item, determine where it should be classified in the economic balance sheet (i.e., core operations, nonoperating net assets, debt claims, other capital claims, or equity claims). Create a two-column table in Word to show the corresponding accounts. Determine whether any other items shoul

Debt-equity comparisons considering WACC, corporate tax, leverage, cost of debt

The book I am using is Fundamental of Corporate Finance, 4e a) Why is debt a comparatively cheaper form of finance than equity? b) If debt is cheaper than equity, why do companies approach the equity markets? c) How can one minimize WACC when there is a constraint on raising debt? if so, how? d) What are the effects of a c


Please show work and any formulas Examine the following document: Revenues $ 1,000,000 Operating Expenses - Cost of goods sold $ 400,000 - Depreciation 100,000 - Salaries and wages 200,000 Bond interest (8% debentures sold at maturity value of $1,000,000) 80,000 Dividends declared on 6% preferred stock (

Accounting Theory

I am having difficulty with Accounting Theories....could you provide me with some assistance with this problem? --- 1. Determine the income under each of the following equity theories: o Proprietary theory. o Entity theory (orthodox view) o Entity theory (unorthodox view) o Residual theory 2. Would any of your answer

Case Studies of Work Motivation

Both Jane in the Communications Taskforce (Case 1) and Samantha in The Human Resource Strategies Branch (Case 2) were being denied accommodations in organizational practices that could become very de-motivating for them. Answer both of the following questions regarding these two situations. 1. Compare and contrast the de-mo

general description of the theory, current examples

Beta of course measures the systematic risk of a given portfolio. I would; however, like additional feedback regarding a general description of this theory, current examples of the theory, and the way in which the theory impacts the business decisions of either the domestic or global financial manager so that I may garner a grea

Risk assessment analysis

Scenario: You are a financial analyst in the finance division of Strident Marks, a manufacturing company that has recently gone through the initial public offering (IPO) process and has become a public company. Strident Marks has annual sales revenue of approximately $50 million and makes seven unique and distinct products (wh

Residual theory of dividends: pay dividends if equity is less

According to the residual theory of dividends, if the firm's equity need is less than the amount of retained earnings, the firm would ___________ borrow to pay the cash dividend, declare a dividend equal to the remaining balance, pay no cash dividends, or not need to consider its dividend policy