Questions from Financial Markets


Q: Stern’s Stews, Inc., is considering a new capital structure.

Stern’s Stews, Inc., is considering a new capital structure. Its current and proposed capital structure follows: Stern’s Stews’ president expect...

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Q: Faulkner’s Fine Fries, Inc. (FFF) is thinking about

Faulkner’s Fine Fries, Inc. (FFF) is thinking about reducing its debt burden. Given the information below and an expected EBIT of $50 million (plus or minus 10 percent) next year, sh...

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Q: Redo Problem 4, assuming that the less leveraged capital structure will

Redo Problem 4, assuming that the less leveraged capital structure will result in a borrowing cost of 10% and a common stock price of $40. Data from Problem 4: Faulkner’s Fine Frie...

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Q: A firm has sales of $10 million, variable costs of

A firm has sales of $10 million, variable costs of $4 million, fixed expenses of $1.5 million, interest costs of $2 million and has a 30 percent average tax rate. a. Compute its DOL, DFL, and DCL. b....

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Q: The income statements for Genatron Manufacturing for 2016 and 2017 are listed

The income statements for Genatron Manufacturing for 2016 and 2017 are listed in the text. Assuming one-half of the general and administrative expenses are fixed costs, estimate Genatron’s degree of o...

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Q: 1. Examples of automatic stabilizer programs that act on a continuing

1. Examples of automatic stabilizer programs that act on a continuing basis to stabilize disposable income and economic activity include which one of the following? a. Unemployment insurance program...

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Q: The Nutrex Corporation wants to calculate its weighted average cost of capital

The Nutrex Corporation wants to calculate its weighted average cost of capital. Its target capital structure weights are 40 percent long-term debt and 60 percent common equity. The before-tax cost of...

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Q: The balance sheets for the Genatron Manufacturing Corporation for the years 2016

The balance sheets for the Genatron Manufacturing Corporation for the years 2016 and 2017 are listed in the text. a. Calculate the weighted average cost of capital based on book value weights. Assume...

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Q: A country’s gross domestic product (GDP) is $20 billion

A country’s gross domestic product (GDP) is $20 billion and its money supply (MS) is $5 billion. a. What is the country’s velocity of money (VM)? b. If the MS stays at the same level next year while t...

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Q: Assume that the real output (RO) for a country is

Assume that the real output (RO) for a country is expected to be 2.4 million products. a. If the price level (PL) is $250 per product, what will be the amount of the gross domestic product (GDP)? b. N...

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