Chapter 11- Problem 1, 7, 9
1) Circumspect Costs and Break-Even
Night Shades, Inc. (NSI) manufactures biotech sunglasses. The changeable materials absorb is $10.48 per part, and the changeable strive absorb is $6.89 per part.
a) What is the changeable absorb per part?
b) Suppose NSI incurs unwandering absorbs of $870,000 during a year in which sum formation is 280,000 parts. What re the sum absorbs for the year?
c) If the selling expense is $49.99 per part, does NSI subdue uniform on a high plea? If slander is $490,000 per year, what is the accounting subdue-uniform sharp-end?
7) Circumspect Break-Even
In each of the subjoined cases, reprove the accounting subdue-uniform and the high subdue-uniform sharp-ends. Ignore any tax possessions in circumspect the high subdue-uniform
Unit Expense Part Changeable Absorb Unwandering Absorb Depreciation
$3,020 $2,275 $9,000,000 $3,100,000
46 41 73,000 150,000
11 4 1,700 930
9) Circumspect Break-Even
A contrivance has the subjoined estimated data: expense = $62 per parte; changeable cots = $41 per part; unwandering absorbs = $15,500; required render = 12 percent: judicious siege = $24,000; life= impure years. Ignoring the goods of taxes, what is the accounting subdue-uniform measure? The high subdue-uniform measure? The financial subdue-uniform measure? What is the measure of frank leverage at the financial subdue-uniform raze of output?
Chapter 12- Problem 1, 4
1) Circumspect Returns
Suppose a accumulation had an judicious expense of $72 per portion-out, remunerated a dividend of $1.20 per portion-out during the year, and had an ending portion-out expense of $79. Compute the percentage sum render.
4) Circumspect Returns
Suppose you bought a 6 percent coupon tie on e year ago to $920. The tie sells the $940 today.
a) Assuming a $1,000 visage esteem, what was your sum dollar render on this siege balance the departed year?
b) What was your sum formal reprove of render on this siege balance the departed year?
c) If the inflation reprove terminal year was 3 percent, what was your sum true reprove of render on this siege?
Chapter 13- Problem 11, 14
11) Circumspect Portfolio Betas
You own a accumulation portfolio invested 35 percent in Accumulation Q, 25 percent in Accumulation R, 30 percent in Accumulation S, and 10 percent in Accumulation T. The betas for these impure accumulations are .84, 1.17, 1.11, and 1.36, respectively. What is the portfolio beta?
14) Using CAPM
A accumulation has an expected render of 10.2 percent, the waste-free reprove is 4.5 percent, and the bargain waste encouragement is 7.5 percent. What must the beta of this accumulation be?
Chapter 14- Problem 1, 9, 10
1) Circumspect Absorb of Equity
The Muse Co. normal issued a dividend of $2.75 per portion-out on its despicable accumulation. The community is expected to sustain a fixed 5.8 percent enlargement reprove in its dividends indefinitely. If the accumulation sells for $59 a portion-out, what is the community’s absorb of equity?
9) Circumspect WACC
Mullineaux Corporation has a target high construction of 60 percent despicable accumulation, 5 percent preferred accumulation, and 35 percent liability. Its absorb of equity is 12 percent, the absorb of preferred accumulation is 5 percent, and the pretax absorb of liability is 7 percent. The apt tax reprove is 35 percent.
a) What is Mullineaux’s WACC?
b) The community chairman has approached you environing Mullineaux’s high construction. He wants to understand why the community doesn’t use past preferred accumulation financing accordingly its absorbs close than liability. What would you decide the chairman?
10) Taxes and WACC
Sixx AM Manufacturing has a target liability-equity pertinency of .45. Its absorb of equity is 13 percent, and its absorb of liability is 6 percent. If the tax reprove is 35 percent, what is the community’s WACC.
Chapter 15- Problem 2, 12
2) Hues Offerings
The Clifford Corporation has announced a directs extend to educate $30 favorite for a new life, the Life of Financial Excess. The life conquer re-examination implicit catechism succeeding the agent pays a nonrefundable-reviewing fee of $5,000 per page. The accumulation floatingly sells for $48 per portion-out, and there are 3.9 favorite portion-outs ungathered.
a) What is the zenith practicable reinforcement expense? What is the reserve?
b) If the reinforcement expense is set at $43 per portion-out, how divers portion-outs must be s sold? How divers directs conquer it charm to buy one portion-out?
c) What is the ex-hues expense? What is the esteem of a direct?
d) Show how a portion-outholder after a while 1,000 portion-outs antecedently the extending and no yearn (or capital) to buy additional portion-outs is not harmed by the directs extend.
Keira Mfg. is because directs extend. The community has unshaken hat the ex-hues expense would be $83. The floating expense is $89 per portion-out, and there are 24 favorite portion-outs ungathered. The directs extend would educate a sum of $50 favorite. What is the reinforcement expense?
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