The essence behind management by objectives (MBO) is that performance goals are used to direct and motivate behavior
Indicate whether the statement is true or false.
Answer: TRUE
Explanation: MBO involves employees and managers in goal-setting that will direct and motivate behavior.
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Readable Materials Inc., a manufacturer of coated freshet and coated ground-wood paper used in catalogs, magazines, and commercial printing applications, has three bond issues outstanding. The following table describes these issues:
In addition, the firm’s 100,000 preferred shares of stock pay $0.75 per share quarterly and currently have a market price of $30 per share and a book value of $20 per share. The flotation costs for debt, preferred, and common equity are 3%, 5%, and 7%, respectively. The current price per share of the firm’s 200,000 shares of common stock is $50, but they have book value of $30 per share. The firm expects an average common dividend growth rate of 3% indefinitely and a dividend yield of 12% for the next year. The firm’s beta coefficient is 1.5 and its marginal tax rate is 40%. If the current risk free rate and market risk premium are 3% and 7% respectively, answer the following:
a) What are the book and market value weights for each source of capital?
b) What are the component costs of capital (i.e., debt, preferred equity, retained earnings, and new common equity)? Use the weighted average of the bond market values to determine the cost of debt and the arithmetic average of the dividend discount model and CAPM model for the cost of retained earnings.
c) What is the weighted average cost of capital using both the market and book value weights?
A statute of repose is a special type of statute of limitations
Indicate whether the statement is true or false
An important feature of wholly owned subsidiaries is that:
A. they offer higher profits, clearer communications, and shared visions to a multinational company (MNC). B. they involve reduced risk and involvement for a multinational company (MNC). C. they face a low risk with large investments in one area. D. they are very efficient with entering multiple countries or markets.
Serial bonds require payment of the full principal amount of the bond at a single maturity date.
Answer the following statement true (T) or false (F)