Warren loves to go to the beach on his vacation but hates to have to worry about the possibility of hurricanes. As Warren looked for where he should go on vacation this summer, he consulted a publication called Smart Money and learned the islands of Aruba, Bonaire and Curacao are not in the hurricane belt. Now he will only consider these island resorts as possible vacation destinations. This group of resort islands is called Warren's:
A. involvement set
B. evaluative set
C. evolved set
D. evoked set
E. intuitive set
Answer: D
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What type of activities should be considering for crashing?
a. Critical activities b. Noncritical activities c. Both critical and noncritical activities d. Neither critical nor noncritical activities
Which intervention answers the following question: « How can work be structured so that it is performed effectively and, at the same time, jobholders find the work personally rewarding and satisfying? »
a. Confrontation meetings b. Role negotiation c. Work redesign d. Workout
Courts sometimes apply the doctrine of promissory estoppel to enforce a promise. This doctrine
a. is grossly unfair. b. requires consideration to be applicable. c. sometimes allows enforcement of a promise even when an offeree gives no consideration for an offeror's promise. d. is a popular legal remedy.
The Kansas City Southern Railroad (KCSR) currently has a levered capital structure, but it is considering a proposal to issue new equity (@$15/share) and use the proceeds to retire its debt
Selected financial information for KCSR is provided in the table below. Assume that KCSR generates perpetual annual EBIT at a constant level. Assume that all cash flows occur at the end of the year and we are currently at the beginning of a year. Assume that taxes are zero. Assume that all of net income is paid out as a dividend. Assume that the debt is perpetual with an annual coupon rate of 4% (and yield of 4%). Assume that individual investors can borrow and lend at the same interest rate (and with the same terms) as corporations. Charlie Jones, an engineer for the railway, owns 100 shares of KCSR. Charlie receives annual dividend income of $260 under the current capital structure. Charlie likes the lower risk and the return on investment that he could earn under the proposed all-equity capital structure, but Kansas City Southern has announced that it will not go forward with the change in capital structure. If Charlie sells 40 shares and lends the proceeds, then what is his return on investment? Capital Structure Capital Structure Levered All Equity EBIT $300,000 $300,000 Debt, D $1,000,000 $0 Cost of Debt, kd 4% N/A Shares Outstanding 100,000 200,000 Stock Price $15.00 $15.00 Earnings per share $2.60 Dividend per share $2.60 A) 10.00% B) 12.00% C) 12.33% D) 15.50% E) 17.33%