Questions from Financial Management

Q: Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the

Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows: a. If you combine Sinclair&aci...

Q: DeSoto Tools Inc. is planning to expand production. The expansion

DeSoto Tools Inc. is planning to expand production. The expansion will cost $300,000, which can be financed either by bonds at an interest rate of 14 percent or by selling 10,000 shares of common stoc...

Q: A small amount of preferred stock is participating. What would your

A small amount of preferred stock is participating. What would your reaction be if someone said common stock is also participating?

Q: Edsel Research Labs has $27 million in assets. Currently,

Edsel Research Labs has $27 million in assets. Currently, half of these assets are financed with long-term debt at 5 percent and half with common stock having a par value of $10. Ms. Edsel, the vice p...

Q: The Lopez-Portillo Company has $10.6 million in

The Lopez-Portillo Company has $10.6 million in assets, 80 percent financed by debt, and 20 percent financed by common stock. The interest rate on the debt is 9 percent and the par value of the stock...

Q: Mr. Gold is in the widget business. He currently sells

Mr. Gold is in the widget business. He currently sells 1.5 million widgets a year at $6 each. His variable cost to produce the widgets is $4 per unit, and he has $1,550,000 in fixed costs. His sales-t...

Q: Delsing Canning Company is considering an expansion of its facilities. Its

Delsing Canning Company is considering an expansion of its facilities. Its current income statement is as follows: The company is currently financed with 50 percent debt and 50 percent equity (commo...

Q: Therapeutic Systems sells its products for $13 per unit. It

Therapeutic Systems sells its products for $13 per unit. It has the following costs: Separate the expenses between fixed and variable costs per unit. Using this information and the sales price per u...

Q: Eaton Tool Company has fixed costs of $255,000,

Eaton Tool Company has fixed costs of $255,000, sells its units for $66, and has variable costs of $36 per unit. a. Compute the break-even point. b. Ms. Eaton comes up with a new plan to cut fixed cos...

Q: Shawn Pen & Pencil Sets Inc. has fixed costs of $

Shawn Pen & Pencil Sets Inc. has fixed costs of $80,000. Its product currently sells for $5 per unit and has variable costs of $2.50 per unit. Mr. Bic, the head of manufacturing, proposes to buy new e...