Determining the optimal capital structure
Understanding the optimal capital structure
Review this situation: Universal Exports Inc. is trying to identify its optimal capital structure. Universal Exports Inc. has gathered the following financial information to help with the analysis.
Debt Ratio
Equity Ratio
rdrd
rsrs
WACC
30% 70% 6.02% 9.40% 9.71%
40% 60% 6.75% 9.750% 9.55%
50% 50% 7.15% 10.60% 10.02%
60% 40% 7.55% 11.30% 10.78%
70% 30% 8.24% 12.80% 11.45%
Which capital structure shown in the preceding table is Universal Exports Inc.’s optimal capital structure?
A. Debt ratio = 70%; equity ratio = 30%
B. Debt ratio = 50%; equity ratio = 50%
C. Debt ratio = 30%; equity ratio = 70%
D. Debt ratio = 60%; equity ratio = 40%
E. Debt ratio = 40%; equity ratio = 60%
_________________________________________________
Consider this case:
Globex Corp. currently has a capital structure consisting of 40% debt and 60% equity. However, Globex Corp.’s CFO has suggested that the firm increase its debt ratio to 50%. The current risk-free rate is 2.5%, the market risk premium is 7.5%, and Globex Corp.’s beta is 1.10.
If the firm’s tax rate is 45%, what will be the beta of an all-equity firm if its operations were exactly the same?
A. 0.64
B. 0.92
C. 0.80
D 0.84
_________________________________________________
Now consider the case of another company:
U.S. Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 8%, and its tax rate is 45%. It currently has a levered beta of 1.10. The risk-free rate is 2.5%, and the risk premium on the market is 7.5%.
U.S. Robotics Inc. is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm’s level of debt will cause its before-tax cost of debt to increase to 10%. Use the Hamada equation to unlever and relever the beta for the new level of debt. What will the firm’s weighted average cost of capital (WACC) be if it makes this change in its capital structure? (Hint: Do not round intermediate calculations.)
A. 9.2%
B. 5.5%
C. 7.4%
D. 8.7%
_________________________________________________
Which of the following statements regarding a firm’s optimal capital structure are true? Check all that apply.
A. The optimal capital structure minimizes the firm’s cost of debt.
B. The optimal capital structure maximizes the firm’s EPS.
C. The optimal capital structure minimizes the firm’s cost of equity.
D. The optimal capital structure minimizes the firm’s WACC.
E. The optimal capital structure maximizes the firm’s stock price.

Answer:

Accounts receivable

Explanation:

Accounts receivable is an account that records money that customers owe a business. It represents money that a business expects to collect from customers for goods and services already delivered, but payment is not yet made.

Accounts receivable are treated as currents assets. The business expects to collect the money within the financial year. Account receivables arise when the business sells goods or services on credit.

When a firm reconfigures components of existing technology to enter into new markets, they are said to be employing architectural innovation. This type of innovation involves making significant changes to the structure or design of a product or system to create new market opportunities or meet the needs of different customer segments. It goes beyond incremental innovation, which refers to small, incremental improvements to existing products or processes. Architectural innovation, on the other hand, involves recombining or reconfiguring existing components or technologies in a novel way to create a fundamentally new offering.

Architectural innovation is characterized by the creation of new market spaces through the rearrangement or integration of existing technologies. Instead of inventing completely new technologies, firms focus on reconfiguring the components of existing technologies to create innovative solutions. By doing so, they can enter new markets or address unmet customer needs. This approach allows firms to leverage their existing knowledge and capabilities while introducing novel products or services. It requires a deep understanding of customer needs, the ability to identify potential technology combinations, and the capacity to manage the complexities of integrating different components effectively. Architectural innovation can provide firms with a competitive advantage by offering unique value propositions and opening up new growth opportunities.

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Gail Pearson's response letter to Dr. Loflin was criticized for lacking follow-up on correcting the errors. An improved response letter should emphasize the promised actions to correct the errors.

1. In Dr. Loflin's letter, she compliments Gail Pearson for her effective and efficient manner in handling their project, but complains about the report that was submitted to her as the report was filled with grammatical errors and inaccuracies.

2. Gail Pearson's response letter showed strength in its apologies and sincere acknowledgments of the errors made, as well as the promise to remedy the mistakes in future reports. However, it also showed a lack of follow-up regarding how the report would be corrected, and it included the note about Dr. Loflin's writing that was not necessary to the matter.

3. The improved response letter from Gail Pearson should emphasize the promised actions to correct the errors in the report, along with the details of how the corrections would be made. This letter should apologize to Dr. Loflin again for the inconvenience that was caused and should show empathy towards her, expressing an understanding of her frustration.

4. In view of this incident, Gail Pearson should take further action to ensure that the report is completely corrected and free of errors, and to ensure that a similar situation will not happen again. Gail should provide a plan or a detailed procedure on how they will review and correct the work, and they should include the steps that will be taken to avoid a similar mistake.

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Answer:

This affiliation allows specialist industries to thrive. And, the success can lead to job and wage/salary increases and an overall improvement to wealth and lifestyle

Answer:

C

Explanation:

so you at least work out for 1 hour a week because 20 min 3 times a week is 60 min which is an hour

Answer:

It's C

Explanation:

I took the test :)

Answer:5,4,and1

Explanation:

When selecting a business idea, why is the advice to "do what makes you happy" and "be true to yourself" so important because finding a skill you enjoy and are strong at is crucial. You should also consider whether your concept can address a market need.

What is the importance of selecting business idea?

Sales and profit are generated by the business idea, which also gives investors an incentive to invest. Sales and earnings provide the possibility of investing in new goods and services, allowing the company to expand. It embodies capitalism in its purest form. Having said that, you are more likely to face competition if your idea is a dud.

What are four importance of a business plan?

A business plan can help you as an entrepreneur clarify and concentrate on your business ideas and strategies. You focus on management challenges, human resource planning, technology, and adding value for your customers in addition to financial matters.

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"Disclosure authorization response." Consumer reports, Medical Information Bureau (MIB) reports, and Attending physician's statements (APS) are all sources of underwriting information for life or health insurance.

A consumer report typically contains information about an individual's credit history, payment habits, and public records, while an MIB report includes information about an individual's medical history and insurance applications. An APS is a statement completed by the attending physician of an individual who has applied for insurance and provides medical information relevant to the underwriting decision. However, a disclosure authorization response is not a source of underwriting information for life or health insurance. A disclosure authorization response is a confirmation that an individual has given permission for their personal information to be shared with an insurance company. It is an acknowledgment of consent rather than a source of underwriting information. Insurance companies need to obtain a disclosure authorization response from the individual before they can access their personal information for underwriting purposes. In summary, while consumer reports, MIB reports, and APS are sources of underwriting information for life or health insurance, a disclosure authorization response is not.

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Usually, a usage of cash results in a drop in an asset on the balance sheet. This is so that it is clear that cash has been spent to pay off or reduce the balance of an asset, such as accounts receivable or inventory.

when its value decreases. The same is true for a drop in fixed assets, such as property, plant, and equipment, which often denotes the usage of funds to either sell or retire these items. Hence, in the company's financial statements, the reduction in an asset is typically regarded as an usage of cash. A cash usage is the reduction of an asset on the balance sheet. This is true because a decline in asset value indicates that money was either spent buying another asset or paying down an asset's associated liabilities. As a result, the corporation has less money available for other purposes.

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IFRS 2-1: The format of a statement of financial or position under IFRS differ from a balance sheet presented under GAAP in terms of presentation of assets and liabilities, items such as property, plant, and equipment, and deferred taxes.

IFRS 2-2: The conceptual frameworks of IFRS and GAAP do differ in terms of the objective of financial reporting.

IFRS 2-3: The terms synonymous with common stock are "ordinary shares" or "equity shares" under IFRS.

IFRS 2-1: The format of a statement of financial position under IFRS often differs from a balance sheet presented under GAAP in several ways. Firstly, under IFRS, assets and liabilities are presented in order of liquidity rather than in order of maturity, which is typically followed under GAAP.

Additionally, IFRS allows for the presentation of certain items, such as property, plant, and equipment, using either a cost model or a revaluation model, whereas GAAP generally only allows for the use of the cost model. Finally, IFRS also requires the presentation of items such as deferred tax assets and liabilities separately from other assets and liabilities, which is not always required under GAAP.

IFRS 2-2: The conceptual frameworks of IFRS and GAAP do differ in terms of the objective of financial reporting. Under IFRS, the primary objective of financial reporting is to provide information that is useful to a wide range of users in making economic decisions. This includes both historical information as well as forward-looking information that is relevant to decision-making.

In contrast, under GAAP, the primary objective of financial reporting is to provide information that is useful in assessing the financial position, performance, and cash flows of an entity.

IFRS 2-3: Under IFRS, the terms commonly used that are synonymous with common stock are "ordinary shares" or "equity shares." Additionally, the balance sheet is commonly referred to as the "statement of financial position" under IFRS.

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Answer: Reasons

Explanation: Crystals are collected for jewelry, sugar, salt, computer chips. So if it shows you all those examples it would be collected for many reasons. I hope this helped!

Answer:

When a stock price falls, that means the company must sell additional shares of stock to raise the same amount of proceeds

Explanation:

Answer:

Why effective communication within a business is important to the management?

In order to attain your objectives, it is critical to communicate well during negotiations. Within the business, communication is also crucial. Effective communication can aid in the development of a positive working connection between you and your employees, which can enhance morale and productivity.

Explanation:

It Builds and Maintains Relationships: Positive interactions with people help to form and maintain relationships. Communication will be crucial in this process; without it, it would be difficult to build and maintain fruitful partnerships. Communication is an important component of any relationship. Two people cannot be friends until they begin to communicate with one another. A supervisor-underling relationship is similar, in that the boss should be able to explain how to do his job to a new office worker.

It Facilitates Innovation: Collaboration and innovation inside the unit or organisation can be improved when employees feel free to express themselves. Employees, for example, will be able to share their ideas on how to improve a company process. Furthermore, if employees are unable to communicate their ideas owing to a lack of communication skills, the idea is unlikely to be fully implemented.

Units are arranged in columns, with the element and guide leaders at the head of each column.

We call it the "column method" when we arrange the numbers, shapes, or items one on top of the other. In other terms, the column method is a mathematical technique where the numbers to be multiplied, divided, or added are arranged in columns above one another.

The column method is a mathematical computation technique where the numbers that need to be added or subtracted are arranged in columns above one another. When students first begin working with rising numbers, they are first taught the methods of column addition and column subtraction.

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The cost that is not relevant is the original cost of the asset that would be replaced

The complete cost of purchasing an asset is known as the original cost. The whole costs associated with purchasing and using an asset are taken into account when calculating its initial cost. The replacement cost, on the other hand, is the sum of money that a company would need to pay in order to buy an essential asset of equal or greater value, such as a piece of real estate, a security for investments, a lien, or another object.

The original cost of the asset that would be replaced is the cost that is irrelevant when deciding whether to keep or replace a piece of equipment since this cost is unaffected by a management decision.

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The market consists of 10 similar suppliers making the same bidding decision. To determine the market his offer of these 10 providers, multiply his 1 individual offer of the provider by 10.

The market consists of many buyers and sellers trading single commodities such as wheat, copper, and financial stocks. No single buyer or seller can significantly influence the current market price. The market is made up of many buyers and sellers trading at various prices rather than at a single market price.

Supply and demand in the market. A market is a place where buyers and sellers meet to facilitate the exchange and trade of goods and services. A marketplace can be physical, like a retail store, or virtual, like an e-merchant. Other examples include illegal markets, auction markets, and financial markets.

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A good email subject line is the one that is short, catchy, and descriptive of the content of the email. In general, the ideal length of the email subject line should be around 50 characters or less to ensure that it displays properly on all devices, including smartphones.

The subject line should convey the purpose or context of the email without being too vague or generic. It should be clear, concise, and informative, with a sense of urgency or relevance that prompts the recipient to open the email.Using capital letters, exclamation marks, or special characters can also help to draw attention to the subject line and increase the open rate. However, it is important not to overdo it as this may come across as spammy or unprofessional. Avoid using misleading or deceptive subject lines as this can lead to low open rates or even legal consequences. In summary, a good email subject line is short, descriptive, informative, and relevant to the recipient's needs or interests.

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If on january 1, 2016, ruby company purchased a piece of equipment with a list price of $60,000 and the terms of the purchase were 2/10, net 30. ruby paid for the purchase on january 8. freight costs of $1,000 were incurred. The acquisition cost of the equipment is $72,200.

Using this formula to determine or to find the acquisition cost of the equipment

Acquisition Cost = Net purchase cost + Freight inward cost + Repair cost + Cost of pollution control device + Architect's fees

Let plug in the formula

Acquisition Cost of equipment = ( $60,000 ×98%) + $1,000 + $4,000 + $2,500 + $5,900

Acquisition Cost of equipment  = $58,800 + $1,000 + $4,000 + $2,500 + $5,900

Acquisition Cost of equipment = $72,200

Therefore we can conclude that $72,200 is the acquisition cost.

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The complete question is:

on january 1, 2016, ruby company purchased a piece of equipment with a list price of $60,000. the following amounts were related to the equipment purchase: terms of the purchase were 2/10, net 30. ruby paid for the purchase on january 8. freight costs of $1,000 were incurred. a state agency required that a pollution control device be installed on the equipment at a cost of $2,500. during installation, the equipment was damaged and repair costs of $4,000 were incurred. architect's fees of $5,900 were paid to redesign the work space to accommodate the new equipment. ruby purchased liability insurance to cover possible damage to the asset. the three-year policy cost $8,000. ruby financed the purchase with a bank loan. interest of $3,000 was paid on the loan during 2016.

Required: Determine the acquisition cost of the equipment.

Answer: Enterprising

Explanation: Hands-on jobs are occupation that requires little education, it relate to the practice of learning from experience on the job rather than reading and learning from books. The career cluster of hands-on occupation includes; technicians, plumbers, woodwork, hygiene and catering workers etc.

Enterprising is characterized by great imagination and initiative with energetic to carry out work . Enterprising best fit hands-on career cluster.

Answer: A. stay outta debt

Answer:

A stay out of debt

Explanation:

A budget gives you an action plan and clear picture of where your money is ending up each month. Budgeting will help you achieve the goals you’re working toward whether that’s getting out of debt, saving for retirement, or just trying to keep your grocery bill from getting out of hand.

Answer:not much

Explanation:

If it's elastic then i switchs

When it comes to decision making, the farthest point in the future that is considered will vary depending on the situation and the individuals involved in the decision. Some may only consider the immediate future, while others may plan for years or even decades ahead. Ultimately, it is up to the decision makers to determine what time frame is appropriate for their particular situation and make informed choices based on that.

Some decisions may be short-term and immediate, focusing on the near future, while others may have longer-term implications and require considering potential outcomes several years or even decades ahead. For example, when it comes to strategic planning in businesses or governments, it is common to consider long-term scenarios that span several years or more.

However, it is worth noting that forecasting the future is inherently uncertain, and the accuracy of predictions tends to diminish as the time horizon extends. Therefore, while it is important to consider the potential consequences of decisions in the future, it is also prudent to review and adjust strategies as new information becomes available or as circumstances change.

Ultimately, the "farthest point in the future" considered in decision making will depend on the specific needs, goals, and circumstances of the decision-makers involved

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Answer:

A) $10,195

Explanation:

This can be calculated as follows:

Amount in Account "B" = $12,850.25

Remaining balance after moving $2,500 from Account "B" to account "A" = Amount in Account "B" - $2,500 = $12,850.25 - $2,500 = $10,350.25

Amount moved from account "B" to account "C" = Remaining balance after moving $2,500 from Account "B" to account "A" * 1.5% = $10,350.25 * 1.5% = $155.25

Balance after moving 1.5% of the remaining balance in account "B" to account "C" = Remaining balance after moving $2,500 from Account "B" to account "A" - Amount moved from account "B" to account "C" = $10,350.25 - $155.25 = $10,195

Therefore, the correct option is A) $10,195.

Answer:

the deferred income tax liability is $25,200

Explanation:

The computation of the deferred income tax liability is given below:

= Excess of depreciation as per tax over books × Tax rate

= ($370,000 - $250,000) × 21%

= $25,200

Hence, the deferred income tax liability is $25,200

We simply applied the above formula so that the correct value could come

And, the same would be considered

The correct option is D. New car tires.

New-car tires are considered a retail service.

Retail businesses sell items or services to customers for their consumption, use, or pleasure. They typically sell items and services in-store but some items may be sold online or over the phone and then shipped to the customer. Examples of retail businesses include clothing, drug, grocery, and convenience stores.

Retail customer service is like any other customer service: it's the act of providing customers with assistance, answering their questions and helping them solve problems. However, there are some factors specific to this industry that make it important to learn and hone retail customer service skills.

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Answer:

2/3P

$30

Explanation:

Here is the complete question

The manager of a local monopoly estimates that the elasticity of demand for its product is constant and equal to -3. The firm’s marginal cost is constant at $20 per unit.

 a. Express the firm’s marginal revenue as a function of its price.

b. Determine the profit-maximizing price.

A monopoly is when there is only one firm operating in an industry. there are usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.

An example of a monopoly is a utility company

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

If the absolute value of price elasticity is greater than one, it means demand is elastic.  

Marginal revenue = price x (\(\frac{1 + E}{E}\))

Where e = elasticity

MR = P x \(\frac{1-3}{-3}\)

MR = 2/3P

Answer:

a. Memorandum of Association

Explanation:

Memorandum of Association is the document also called the charter of the company. Memorandum of Association is  the document created and formed during the registration and the formation of a limited liability company. Memorandum of Association defines the overall relationship with all the shareholders of the company and it is used to showcase the legal existence of a company.