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ABC textile's long-term debt on its balance sheet is $25 million, the coupon rate of this debt is 8.5% with yield to maturity of 8%. The market value of this debt is considered to be $27 million. The company has 10 million shares of common stock with the book value of $5.00 per share. The company's stock are being traded at 20$, Shareholders require 12.25% return on thier investment, while firm's tax rate is 40%. The company is considering to change its target capital structure wherein it should have 35% debt and the remaining capital being financed through common stocks. You are required to Calculate company's WACC based on the book value, market value, and target capital structures, and then find the sum of these three WACCs.

(Consider This) Past costs that are not affected by new decisions are known as:

variable costs

fixed costs

marginal costs

sunk costs.

As the development of the Alberta oil sands proceeds, Indigenous communities continue to face the negative effects of the resource curse. Parlee (2015) concludes that “at the same time, there are opportunities to address these symptoms, such that Indigenous communities can be better off as a result of the oil sands boom”. Do you agree with this argument? Why or why not?

Although a profit-maximizing firm in a competitive industry may earn negative profit the short run producer surplus will always be non-negative .True False? Explain.

Amy and Diane must prepare a presentation for their economics class. As part of their presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It would take Amy 10 hours to do the required calculations and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides.

a. How much time would it take them to complete the project if they divided the tasks equally?

b. How much time would it take them to complete the project if Diane specializes in calculations and Amy specializes in preparing slides?

c. If Diane and Amy have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize in calculating or preparing slides?

Suppose a firm makes purchases of Rs 10.95 million per year under terms of 2/10, net 30, and takes discounts.                                                                                                                

10. What is the average amount of accounts payable net of discounts? (Assume the Rs 10.95 million of purchases is net of discounts—that is, gross purchases are Rs 11,173,469.40, discounts are Rs 223,469.40, and net purchases are Rs 10.95 million.)
11. Is there a cost of the trade credit the firm uses?

• If the firm did not take discounts but did pay on the due date, what would be its average payables and the cost of this nonfree trade credit?

1. What would be the firm’s cost of not taking discounts if it could stretch its payments to 40 days?

Denton Company plans to engage in an IPO and will issue 4 million shares of stock. It is hoping to sell the shares for an offer price of $14. It hires a securities firm, which suggests that the offer price for the stock should be $12 per share to ensure that all the shares can easily be sold. Explain the dilemma for Denton Company. What is the advantage of following the securities firm’s advice? What is the disadvantage? Is the securities firm’s incentive to place the shares aligned with that of Denton Company?

Common stock value: Variable growth Home Place Hotels, Inc., is entering into a 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that time, but when it is complete, it should allow the company to enjoy much improved growth in earnings and dividends. Last year, the company paid a dividend of $3.40. It expects zero growth in the next year. In years 2 and 3, 5% growth is expected, and in year 4, 15% growth. In year 5 and thereafter, growth should be a constant 10% per year. What is the maximum price per share that an investor who requires a return of 14% should pay for Home Place Hotels common stock?

US Airways owns a piece of land near the Pittsburgh International Airport. The land originally cost US Airways $375,000. The airline is considering building a new training center on this land. US Airways determined that the proposal to build the new facility is acceptable if the original cost of the land is used in the analysis, but the proposal does not meet the airline's project acceptance criteria if the land cost is above $850,000. A developer recently offered US Airways $2.5 million for the land. Should US Airways build the training facility at this location?

Assume that the current euro-dollar exchange rate (E$/€) is $1.10 per euro. Further suppose that the dollar interest rate (R$) is 10 percent and the euro interest rate (R€) is 5 percent. You expect that the exchange rate (Ee$/€) would be $1.165 per euro in a year and that you have $1,000,000 to invest in either a dollar or a euro denominated asset. Calculate the dollar rate of return of either asset. Which of these deposits offer the higher dollar rate of return and why? We have a number of assumptions including that 1. We assume perfect capital mobility meaning that investors can invest in either dollar-denominated assets or euro-denominated assets. 2. International investments and capital flow are free of costs. 3. We further assume that taxes are uniform across countries. The dollar-denominated asset (for example, the U.S. government security) offers 10% rate of return . What will be the expected dollar return on euro-denominated asset?

Intel can issue floating rate debt at LIBOR +1 percent or fixed rate debts at 9%. Microsoft can issue floating rate debt at LIBOR+2.2 percent or fixed rate debt at 10%. Suppose Intel issues floating rate debt and Microsoft issues fixed rate debt. They are considering a swap in which Intel will make a fixed rate payment of 7% to Microsoft, and Microsoft will make a payment of LIBOR to Intel. What are the net payments of Intel and Microsoft if they engage in the swap? Will Microsoft be better off to issue floating rate or to issue fixed rate debt and engage in the swap?

Bumper crops (i.e., abundant crops) for wheat and corn have historically reduced the number of wheat and corn farmers. A price floor set by government above the equilibrium price for those crops would:

A. help keep prices lower than equilibrium for farmers due to excess supply.

B. help keep prices higher than equilibrium for farmers due to excess supply.

C. help keep prices lower than equilibrium for farmers due to excess demand.

D. help keep prices higher than equilibrium for farmers due to excess demand.

Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashies decreases by 20%, the quantity of raskels sold decreases by 22% and the quantity of mookies sold increases by 7%. Your job is to use the cross-price elasticity between splishy splashies and the other goods to determine which goods your marketing firm should advertise together.

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market.

Refer to the table above. What is the market demand for wine when the price is $3?

a.) 50 units

b.) 66 units

c.) 35 units

d.) 28 units

In the market for widgets, demand is represented by the following equation:

Qd= 170 - P

If you observe that 100 units are sold, what would you expect the price to be?

The poverty rate would be substantially lower if the market value of in-kind transfers were added to family income. The largest in-kind transfer is Medicaid, the government health program for the poor. Let’s say the program costs $10,000 per recipient family.

a. If the government gave each recipient family a $10,000 check instead of enrolling them in the Medicaid program, do you think that most of these families would spend that money to purchase health insurance? Why? (Recall that the poverty level for a family of four is about $23,000.)

b. How does your answer to part (a) affect your view about whether we should determine the poverty rate by valuing in-kind transfers at the price the government pays for them? Explain.

Your City Council (in Los Angeles, it is the Metropolitan Transportation Authority or MTA) raises the bus fare from 75 cents to $1.00, and rider-ship (or the number of bus riders) subsequently falls by 40 percent.

3Bi. Calculate the price elasticity demand for bus rides.

Next, suppose that the bus schedule is changed so that buses are 10 percent more frequent and that rider-ship subsequently rises to the level that existed before the fare increase. In other words, the fare increase has a negative impact on rider-ship, but the increase in the number of buses leads to an increase, or a positive impact, in rider-ship.

3Bii. What is the frequency elasticity? In other words, what is the effect of more frequent buses on the number of bus riders?

3Biii. How would you reconcile both frequency and price elasticity values you have calculated? [Note: Question 3Bii, recall how price elasticity is determined, then the frequency elasticity is similarly calculated. Question 3Biii, I am looking for the appropriate interpretation for policy when both elasticity values are considered together. Remember you have to make a presentation to the City Council or the MTA Board of Directors, and those folks are clueless about your methodology. They just want to vote on the proposed policy, which is based on your presentation]

In the short run according to Keynes, a(n) ______________ in saving could _________________ aggregate demand by ____________________ investment.

A. decrease; raise; increasing

B. decrease; reduce; decreasing

C. increase; raise; increasing

D. increase; reduce; decreasing

11) Which of the following is a short-run adjustment?

A) A firm hires six new workers.

B) The number of farms in Kansas increases by 10%.

C) Three new firms enter the computer chip industry.

D) A firm opens two new plants.

E) All of the above.

The market for qbits is initially competitive and the market demand is: P = 400 - 0.4QD . The combined marginal costs of the firms in the qbit industry are: MC = 50 + 0.6Q

Draw the demand, and marginal cost curves. Calculate and show how much these firms will sell and what they will charge.

16) Assume that the market price of new housing is $100,000 in Las Vegas, and local government officials modify regulations which increase the cost of building new homes. The higher costs cause supply to drop by 18%, the price elasticity of demand is 1.5 and the price elasticity of supply is if 3.0. The resulting equilibrium price of new housing in Las Vegas is:

A) $96,000.

B) $98,000.

C) $100,000.

D) $104,000.

E) none of the above.

The horizontal demand curve parallel to x axis implies that the elasticity of demand is:

a.Zero
b.Infinite
c.Equal to one
d.Greater than 0 but less than infinity

"In 2009 China overtook the United States as the world's largest market for new automobiles and the trend is not going away." What impact does this have in the market for rubber?

http://www.theatlantic.com/china/archive/2013/05/that-stink-is-the-smell-of-money-chinas-new-rubber-farming-dilemma/275578/

1. A restrictive monetary policy by the Fed should lead to:

A. A decrease in investment and an increase in aggregate demand.

B. Leave investment unchanged but decrease aggregate demand.

C. An increase in investment and an increase in aggregate demand.

D. A decrease in investment and a decrease in aggregate demand.

2. When the Federal Reserve uses open market operations (OMO) in an expansionary monetary policy:

A. The Fed will purchase stocks from banks, increasing the monetary base.

B. The Fed will buy bonds from banks, increasing bank reserves and increasing the monetary base.

C.The Fed will lower taxes and increase government spending.

D. The Fed will decrease the discount rate, decreasing the monetary base.

3. A primary goal of monetary policy is to:

A. Eliminate trade barriers from other nations.

B. Maintain high interest rates.

C. Reduce the size of the banking sector.

D. Prevent high rates of inflation.

4. The major tools of monetary policy available to the Federal Reserve System involve:

A. Reserve requirements and tax policy.

B. Reserve requirements and open-market operations.

C. The discount rate and exchange rates.

D. Open-market operations and changing government spending,

A news magazine offers students a discount on the regular subscription rate. The total number of subscriptions is optimal, and, at the current prices, the marginal revenue from the last subscription sold to a student is $6, while the marginal revenue from the last subscription sold to a regular customer is $10.

In order to maximize profit, the magazine should

Question options:

a. stop offering students a discount on the regular subscription rate

b. offer students a higher discount (lower the price to students)

c. offer students a lower discount (raise the price to students)

d. offer all customers the same discount received by the students

1) Describe the environmental Kuznets curve. How does it potentially apply to Latin America?

2) How could the reduction of trade barriers increase the level of pollution in the world? Has this happened in the case of NAFTA?

3) Describe the potential changes in climate in Latin America in the twenty-first century. How will these affect economic growth?

A DI has assets of $20 million consisting of $6 million in cash and $14 million in loans. It has core deposits of $14 million. It also has $3 million in subordinated debt and $3 million in equity. Increases in interest rates are expected to result in a net drain of $2 million in core deposits over the year. a-1. If the cost of issuing new short-term debt is 5.4 percent, what is the cost of offsetting the expected drain if the DI increases its liabilities? (Enter your answer in dollars not in millions.) a-2. What will be the total asset size of the DI from this strategy after the drain? (Enter your answer in millions.)

A couple will retire in 50 years; they plan to spend about $30,000 a year (in current dollars) in retirement, which should last about 25 years. They believe that they can earn 8% interest on retirement savings. The inflation rate over the next 75 years is expected to average 5%. 

a. What is the real annual savings the couple must set aside? Assume they will discontinue saving when they retire.

b. How much do they need to save in nominal terms in the first year?

c. How much do they need to save in nominal terms in the last year?

d. What will be their nominal expenditures in the first year of retirement?

e. What will be their nominal expenditures in the last year of retirement?

. A college bookstore is attempting to determine the optimal order quantity for a popular book on Economics. The store sells 5,000 copies of this book a year at a retail price of Rs 125, and the cost to the store is 20 percent less, which represents the discount from publisher. The store figures that it costs Rs 1 per year to carry a book in inventory and Rs 100 to prepare an order for new books. a. Determine the total inventory costs associated with ordering 1, 2, 5, 10, and 20 times a year. b. Determine the economic order quantity. c. What implicit assumptions are being made about the annual sales rate?

Tom plans to save $79 a month, starting today, for 14 years. Dick plans to save $79 a month for 14 years, starting one month from today. Both Tom and Dick expect to earn an average return of 4.21 percent APR on their savings and both will make the same number of deposits. At the end of the 14 years, how much more (in $) will Tom have than Dick? Answer to two decimals.

A company produces and sells a consumer product and is able to control the demand for the product by varying the selling price. The approximate relationship between price and demand is:

P = $38 + (2,700/D ) - (5000/D^2), for D>1

where p is the price per unit in dollars and D is the demand per month. The company is seeking to maximize its profit. The fixed cost is $1,000 per month and the variable cost (Cv) is $ 47 per unit.

(a) What is the price for the product if the number of units to be produced is to maximize profit?
(b) What is the break-even point for the price in part (a)?

Suppose there exist a manufacturer and a retailer in the market. Retailer has to pay p* per unit of output it purchases from the manufacturer and sells to the market at a price 𝑝. Let the market demand be 𝑄 = 10 − 𝑝 and the marginal cost (MC) of the manufacturer is 𝑐 = 2.

a) Find the prices set by the manufacturer (p*) and by the retailer (𝑝) and find their profits.

b) If they decide to merge, what will be the joint profit? Compare this with the total profit you found in part a.

Times-Interest-Earned Ratio The Morris Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris's annual sales are $3 million, its average tax rate is 40%, and its net profit margin on sales is 4%. If the company does not maintain a TIE ratio of at least 3 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio? Round intermediate calculations to two decimal places. Round your answer to two decimal places.

Your pharmacy provides services to Medicare and PPO patients. You estimate a price elasticity of demand of -1.2 for Medicare patients and -4.3 for PPO patients. Your marginal and average cost for dispensing a prescription is $2. Why might the price elasticities of demand differ? What is the profit-maximizing dispensing fee for Medicare and PPO patients?

I really need help

An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond L matures in 12 years, while Bond S matures in 1 year. a. What will the value of each bond be if the going interest rate is 6%, 8%, and 12%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 12 more payments are to be made on Bond L. b. Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change?

You are planning your retirement in 10 years. You currently have $120,000 in a bond account and a $500,000 in a stock account. You plan to add $5,000 per year at the end of each of the next 10 years to your bond account. The stock account will earn a return of 10.5 percent and the bond account will earn a return of 7 percent. When you retire, you plan to withdraw an equal amount for each of the next 25 years at the end of each year and have nothing left. Additionally, when you retire, you will transfer your money to an account that earns 6.25 percent. How much can you withdraw each year?

Part 2: Executive Summary Write a 2-3 page executive summary of how the Federal Reserve's monetary policies may affect economic growth, both from a corporate and a personal finance perspective. In order to ensure that your response is complete, please be sure to include commentary on the following concepts: The banking industry TVM Personal and corporate saving rates Equity financing vs. debt financing Financial analysis

Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets 2019 2018 Assets Cash and equivalents $80 $65 Accounts receivable 275 300 Inventories 375 250 Total current assets $730 $615 Net plant and equipment 2,300 1,490 Total assets $3,030 $2,105 Liabilities and Equity Accounts payable $150 $85 Accruals 75 50 Notes payable 130 55 Total current liabilities $355 $190 Long-term debt 450 290 Common stock 1,225 1,225 Retained earnings 1,000 400 Total liabilities and equity $3,030 $2,105 Income Statements 2019 2018 Sales $2,285 $1,585 Operating costs excluding depreciation 1,250 1,000 EBITDA $1,035 $585 Depreciation and amortization 100 75 EBIT $935 $510 Interest 63 46 EBT $872 $464 Taxes (25%) 218 116 Net income $654 $348 Dividends paid $54 $48 Addition to retained earnings $600 $300 Shares outstanding 100 100 Price $25.00 $22.50 WACC 10.00% The balance in the firm's cash and equivalents account is needed for operations and is not considered "excess" cash. What is Rosnan's 2019 net operating working capital (NOWC)?

Shaken Corp. issued a 30-year, 12% semiannual bond 8 years ago. The bond currently sells for 109% of its face value. The company's tax rate is 32%. The book value of the debt issue is $19 million. In addition, the company has a second debt issue, a zero coupon bond with 8 years left to maturity. The book value of this issue is $83 million and bonds sell for 77% of par. What is your best estimate of the aftertax cost of debt?