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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?
Home Grown Tomatoes stock returned 28.7 percent, 2.6 percent, 13.1 percent, 12.2, and 11.8 percent over the past five years, respectively. What is the arithmetic average return for this period? not sure which one?
Give a logical brief explanation, based on reinvestment rates and opportunity costs, as to why the NPV method is better that the IRR method when the firm's cost of capital is constant at some value such as 10%.
Why should investors who identify positive-NPV trades be skeptical about their findings if they don't inside information or a competitive advantage? What return should the average investor expect to receive?
1.suppose a corporationrsquos bonds have 8 years remaining to maturity. in addition suppose the bonds have a 1000 face
Explain Capital budgeting involves calculation of modified internal rate of return and What is the project's modified internal rate of return
Determine the maximum loan taken by an employee of a C corporation.
1.under what conditions would you use a t-test as opposed to a z-test? can you use the t-table to determine the
The Muck and Slurry merger has fallen through but World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim and Axle Company. You are given the following facts:
is it true that an option can never sell for lessthan you can make by exercising the option
Compute the discount rate. (Do not round intermediate calculations. Input your answer as a percent rounded up to the nearest whole percent.)
Computation of receivables collection period and leverage effect of the debt and What is times interest earned
Data on Mertz Co., for the most recent year are shown below, along with the payables deferral period (PDP) for the firms against which it benchmarks. The firm's new CFO believes that the company could delay payments enough to increase its PDP ..
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