Mountain Retreat and Resort is undergoing a major expansion. The expansion will be financed by
issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070
each.
The firm's flotation expense on the new bonds will be $50 per bond. The firm's marginal tax
rate is 35%. What is the relevant cost of the new bonds for capital budgeting purposes?
A) 5.14% B) 8.45% C) 5.69% D) 4.82%
C
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The Bears Corporation has provided you the following information: Increase in accounts receivable balance 50,000 Net sales 500,000 Gross profit as a percentage of net sales 40%Increase in the inventory account 45,000 Accounts payable balance decreased 17,000 Accounts receivable writeoffs 7,500 Bad debt expense 10,000 Required: Determine the cash collected from customers.Determine the cash paid to suppliers.
What will be an ideal response?
Mini-Case Question. As the market for this product matures, Coller may need to rethink its pricing in order to optimize profits as the market growth slows
If the objective is to optimize profits, is it a good idea for Coller Inc to decrease the price by 10% in an attempt to increase market share to 6%? A) Yes, because sales revenues will increase by $16 million. B) Yes, because margin per unit will increase by $200. C) Yes, because gross profit will increase by $16 million. D) No, because gross profit will decrease by $16 million. E) No, because variable costs will increase by 10%.
Salvage value is:
A. A factor relevant to determining an asset's useful life. B. An estimate of the asset's value at the end of its benefit period. C. Not a factor relevant to determining depletion. D. A factor relevant to amortizing an intangible asset with an indefinite life. E. A factor relevant to determining depreciation under MACRS.
A common ethical dilemma faced by the management of Spencer Hydraulics Corporation involves the effect that its decision will have on
a. one group as opposed to another. b. the firm's competitors. c. the government. d. the U.S. Chamber of Commerce.