Finance Questions
Not what you're looking for?
1. The price of a product is $1 a unit. A firm can produce this good with variable costs of $0.50 per unit and total fixed costs of $100. What is the break even level of output?
2. If increasing the use of financial leverage (debt financing) increases the return on equity (roe), why would a company not simply continue to use ever- increasing cost of debt financing?
3. a. Given the following schedules,
Debt/Assets Cost of Debt Cost of Equity Cost of Capital?
0% 7% 14% ?
10 7 14 ?
20 7 14 ?
30 8 14 ?
40 8 16 ?
50 10 18 ?
60 12 20 ?
What is firm's cost of capital at the various combinations of debt and equity?
Determine the firm's optimal capital structure by completing the balance sheet below to show the optimal combination of debt and equity financing
Balance Sheet for Firm X as of XX/XX/XX
Assets $100 Debt ?
Equity ?
$100
4. A firm has two investment opportunities. Each costs $1,000, and the firm's cost of capital is 10 percent. The cash inflow of each investment is as follows:
cash inflow A B
year
1 300 100
2 300 200
3 300 400
4 300 500
a. Calculate the net present value (NPV) for A and B and determine which investment the firm should make?
b. What is the internal rate of return for investment A?
c. What is the payback period for each investment A and B?
5. A firm's annual sales total is 7,890 units. The cost of placing an order is $100 and the per unit carrying costs are $2 a unit. What is the EOQ?
Purchase this Solution
Solution Summary
Step by step solutions with a word and an excel file.
Education
- MBA (IP), International Center for Internationa Business
- BBA, University of Rajasthan
Recent Feedback
- "Thank You so much! "
- "Always provide great help, I highly recommend Mr. Sharma over others, thanks again. "
- "great job. I will need another help from you. "
- "first class!"
- "Thank you for your great notes. Will you be willing to help me with one more assignment? "
Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.