Inse Corporation uses time and material pricing. The repair department expects 20,000 direct labor hours of activity and has the following selected data: Labor and fringe benefit costs$800,000 Overhead Costs (excludes material handling and storage) 480,000 Target profit 220,000 The company's time charge per hour is:
A. $64.
B. $11.
C. $24.
D. $75.
E. $40.
Answer: D
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Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? A B Price$25 $25 Expected growth (constant)10% 5% Required return15% 15%
A. Stock A has a higher dividend yield than Stock B. B. Currently the two stocks have the same price, but over time Stock B's price will pass that of A. C. Since Stock A's growth rate is twice that of Stock B, Stock A's future dividends will always be twice as high as Stock B's. D. The two stocks should not sell at the same price. If their prices are equal, then a disequilibrium must exist. E. Stock A's expected dividend at t = 1 is only half that of Stock B.
Westbrook's Painting Co. plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00% annual coupon, paid semiannually. The company's marginal tax rate is 25%, but Congress is considering a change in the corporate tax rate to 15%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?
A. 0.57% B. 0.63% C. 0.70% D. 0.77% E. 0.85%
According to Porter, companies that wish to dominate broad markets should operate using a ________ strategy.
A. Cost leadership with a low cost. B. Differentiation with a low cost. C. Cost leadership with a high cost. D. All of these.
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