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1.Firm A has $10,000 in assets entirely financed with equity. Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt and $5,000 in equity. Both firms sell 10,000 units of output at $2.50 per unit. The variable costs of production are $1, and fixed production costs are $12,000.a. What is the operating income (EBIT) for both firms?b. What are the earnings after interest?c. If sales increase by 10 percent to 11,000 units, by what percentage will each firm’s earnings after interest increase? To answer the question, determine the earnings after taxes and compute the percentage increase in these earnings from the answers you derived in part b.d. Why are the percentage changes different?
Donaldson & Son has an ROA of 10%, a 2% profit margin, and a return on equity equal to 15%. What is the companys total assets turnover? What is the firms equity multiplier?
. Elucidate what ratio you picked also Elucidate how you computed it for your company's latest financials also for your company's prior financials for its competitor.
Sammy is endowed with $10,000,000 and is considering whether to invest in a business venture. Perfect capital markets, interest rate of 6%.
Degree of operating leverage Grey Products has fixed operating expenses of $380,000, variable operating expenses of $16 per unit, and a selling price of $63.50 per unit.
1. what percentage of the total does each of the four customer groups represent? round to the nearest hundredth of a
Assume that the firm has a tax rate of 35 percent. Compute the cash flows to investors from operating activity.
Also, the new project's sales would be counter-cyclical in the sense that they would be high when the overall economy is down and low when the overall economy is strong. On the basis of this information, which of the following is true?
If the relevant tax rate is 35 percent, what is the after tax cash flow from the sale of this asset?
You have just negotiated a six-year, 6.84%, $45,000 new car loan with the manager of a local auto dealer. While he goes back to the loan arranger to bring you the payment details, you decide to figure them out for yourself.
Five million shares issued with a current market price of 6. Equity holders require a 9% return and $10 million face value of Corporate bonds outstanding.
You find a certain stock that had returns of 16 percent, -9%, 23%, and 24% for four of the last five years. The average return of the stock over this period was 14.40 percent.
Assume you have a portfolio that consists of stock A and B. The total value of your portfolio is $150,000. Out of the total rates, $97,500 was invested in stock B and the rest in stock A.
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