Why can the distinction between fixed costs and variable costs be made in the short run? Distinction between fixed costs and variable costs can be made in the short run because a change in degree can be made. Also, a firm's plant capacity is fixed in short run and can use its existing plant capacity more or les intensively in
A recent opinion poll shows the majority of respondents favor a flat tax of 20 percent on all income, subject to a $35,000 exemption. (The first $35,000 of income would be untaxed.) An independent politician adopts this flat-tax proposal. His opponent is a Democrat who favors increasing the top marginal tax rate to 42 percent.
Corporate Finance: Capital Structure, Modigliani-Miller Proposition, NPV, Working Capital, Accelerated Depreciation, corporate bankruptcies, LBO, currencies
1) You're trying to figure out why the chairman of the Board of Directors fired you as CEO of a small corporation. You never missed an interest payment and the firm had a cash ratio of 2, the highest of any firm in their peer group. Because of this financial safety net, the firm's debt was considered very safe by industry stan
Can someone please describe the following project evaluation processes for me: Payback, NPV, PI, IRR. Is any one evaluation process better the others? Why?
Accounting - Relevant cash flows/NPO Terminal Value. See attached file for full problem description. ABC Company is considering replacing an existing hoist with one of the two newer more efficient pieces of equipment. The existing hosit is three years old, cost is $32,000 and is being depreciated under MACRS using a
Howard is deciding if he should pursue a restricted or relaxed current asset investment policy. His annual sales are $200,000; its fixed assets are $50,000; debt and equity are each 50 percent of total assets. EBIT is $18,000, the interest rate on the firm's debt is 05 percent, and his company's tax rate is 20 percent. With a restricted policy, current assets will be 7.5 percent of sales. Under a relaxed policy, current assets will be 12.5 percent of sales. What is the difference in the projected ROEs between the restricted and relaxed policies?
Howard is deciding if he should pursue a restricted or relaxed current asset investment policy. His annual sales are $200,000; its fixed assets are $50,000; debt and equity are each 50 percent of total assets. EBIT is $18,000, the interest rate on the firm's debt is 05 percent, and his company's tax rate is 20 percent. With a re
1. Do you think GM or Ford could have been more on top of market trends? How much is just foreign competition and how much is just bad management? Also, how much of it is government policy? Foreign producers do not pay health costs--over $1000 per US made vehicle--because foreign government fund health care, not the industry, fo
A farmer's payoff matrix per plot is: Good Rain Year Bad Rain Year Coffee 140 27 Corn 64 50 Probability 1/4 3/4 Assume that the farmer has no access to insurance a
Suppose that you are economic adviser to President Bush, "propose two actions that the administration should take if the budget is in surplus that will protect the surplus. Propose two actions if the budget is in deficit to bring it out of deficit. What would be the impact on the U.S. economy for each of your recommendations?"
In 1999, the Congressional Budget Office projected forecasts of the budget surplus to be somewhere between 2 and 3 percent of GDP in the next ten years. Now, the economy has entered a recession, and the government has pledged to flight a prolonged war on terrorism. How is the forecast likely to change?
For furniture business, or your work group, prepare a list of all possible costs. For each, indicate if it is fixed or variable. If it is variable, indicate if it can be controlled within three months time. Does this firm have full control of its selling price, partial control, or must it accept the price that already exists in
Is it realistic to separate costs into fixed and variable components? Can it be done realistically? Can computer analyses do an easier job?
1. If X is a normal good, then a fall in price must lead to a rise in consumption, but if X is an inferior good then a fall in price may lead to a rise in consumption. Answer TRUE or FALSE and justify your answer in terms of income and substitution effects. 2. Suppose that George's utility function is given by u(w) = 1000w -
Given the following information, complete the cash budget: a. Collections occur one month after the sale b. January's credit sales were $80,000 c. The firm has a certificate of deposit for $40,000 that matures in April e. The monthly mortgage payment is $25,000 f. Monthly depreciation
Current Balance Sheet Assets $100 Debt $10 Equity $90 Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital 0% 8% 12% ? 10% 8% 12% ? 20% 8% 12% ? 30% 8% 13% ? 40% 9% 14% ? 50% 10% 15% ? 60% 12% 16% ? What is the firm's weighted-average cost of capital at various combinations of debt and equ
Health Care Reform Project I chose flexible spending for prescription drugs. I have only found 1 website. Please help. Part I - Students will select a current health care economic issue such as managed care, health care spending, prescription drugs, impact of current legislation on health care, medical care for aging popul
11. The relevant range of activity refers to the a. geographical areas where the company plans to operate. b. activity level where all costs are curvilinear. c. levels of activity over which the company expects to operate. d. level of activity where all costs are constant. 12. The financial budgets include
(See attached file for full problem description) --- 1. Define the three classes of manufacturing costs. 2. Distinguish between product and period costs. 3. List the five components of cost-volume-profit analysis. 4. Budgeting can be an important management tool if implemented properly. Ident
I cannot find any help in the textbook for this problem. As I'm taking an online course, finding alternative forms of help proves difficult. Here's the problem: Bar T Ranches, Inc. is considering buying a new helicopter for $350,000. The company's old helicopter has a book value of $85,000, but will only bring $60,000 if it
I have a friend who owns a ski lodge and wants to add 5 new chairlifts at the cost of 2 million per lift. One new lift will allow 300 additional skiers, and there are only 40 days days of ticket sales, and each customer 55 dollars a day. Running the new lift will cost him 500 dollars a day for the 200 days his lodge is open.
5 questions: IRR,NPV, discount payback - file attached
Break-Even EBIT. Duval Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Duval would have 600,000 shares of stock outstanding. Under Plan II, there would be 300,000 shares of stock outstanding and $10 million in debt outstanding. The interest ra
Smith and Jones Widget company has total capital, consisting of long-term debt and common equity of $80 million. Thirty-two million of total capital is in the form of long-term debt, which carries a cost of 12 percent. The company's equity carries a cost of 19.50 percent. If the company's tax rate is 38 percent, what is the W
10.) Mills Mining is considering an expansion project. The proposed project has the following features: ? The project has an initial cost of $500,000 - this is also the amount which can be depreciated using the following depreciation schedule: (see attached chart) ? If the project is undertaken, at t=0 the company will
5.) Foxglove Corp. is faced with an investment project. The following information is associated with this project: (see chart in attached file) The project involves an initial investment of $100,000 in equipment that falls in the 3-year MACRS class and has an estimated salvage value of $15,000. In addition, the company exp
Describe how the master budget and its components are developed for a manufacturing firm
JetSet Machinations, Inc; expects to become very successful in the manufacture and sales of its fuel-efficient high speed airplane, the S2S-900. This plane will be sold at about $70 million per plane. JMI executive staff has asked you to provide them a slide presentation in the next staff meeting which gives calculations for
Do you agree or disagree with the following statements? A. Continuous budgets are not a good idea for project managers. They never know how much they should be spending and this gives them the freedom to do whatever they want, whenever they want. B. Project managers' budgets should not have as much flexibility in them and
Why is budgeted performance better than past performance as a basis for judging actual results? Explain giving suitable real-world cases.
In the face of stable (or declining) enrollments and increasing costs, many colleges and universities, both public and private, have found themselves in progressively tighter financial dilemmas. This has led to a basic reexamination of the pricing schemes used by institutions of higher learning. One proposal advocated by the Com