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Agency Costs Tom scott is the owner, president, and primary salesperson for scott manufacturing. Because of this, the companys profits are driven by the amount of work Tom does. If he works 40 hours each week, the companys EBIT will be $500,000 per year; if he works a 50-hour week, the company's EBIT WILL BE $625,000 per year. The company is currently worth 3.2 million. The company needs a cash infusion of 1.3 million, and it can issue equity or issue debt with an interest rate of 8 percent. Assume there are no corporate taxes
A. What are the cash flows to Tom Under each scenario? B. Under which form of financing is Tom likely to work harder? C. What specific new costs will occur with each form of financing.
1. Prepare a depreciation schedule for each deprecation method, showing asset cost, deprecation expense, accumulated depreciation, and asset book value.
Explain or illustrate how the direct costs of these special fund raising events atre to be reported. Also, may these nongovernment organizations report the special event using the net method?
Prepare a statement of changes in owner's equity and accompanying notes appropriate to the section. Record the necessary journal entries before attempting to calculate other comprehenisive income on Lee Corporation Equity Scenario.
Suppose you borrowed $20,000 at a rate of 8.5% and must repay it in 5 equal installments at the end of each of the next 5 years. How much would you still owe at the end of the first year, after you have made the first payment?
grieg landscaping began construction of a new plant on december 1 2014. on this date the company purchased a parcel of
.assume a manufacturer incurs 2000000 hours of direct productive labor in a year at a total direct labor cost of
Premium Corporation has two service departments whose direct department costs are $75,000 and $10,000, respectively, and two producing departments whose direct department costs are $60,000 and $250,000, respectively. What are the combined total de..
your city has decided to build a new library. the projected cost is 2 million. a bond issue for 1.2 million has been
Is the proposed change in asset life unethical, or is it simply a good business practice by an astute president?
products manufactures three types of remote-control devices economy standard and deluxe. the company which uses
Prepare the sales revenues section of the income statement based on this information.
What is the danger in allocating common fixed costs among product lines or other segments of an organization?
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