Explain how consolidating an industry can increase a firm's market power.
What will be an ideal response?
Answers will vary. Some of the factors include:
Bringing together their assets
Enhancing control and leverage
Enhancing scale and scope of each company
The combined company would increase its power by providing a "one-stop shop"
Creating the potential for pooled negotiating power vis-à-vis its customers and suppliers
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The journal entry for adjustment of underallocated manufacturing overhead includes a ________.
A) credit to Finished Goods Inventory B) credit to Manufacturing Overhead C) debit to Work-in-Process Inventory D) credit to Cost of Goods Sold
Larissa is a concert promoter who works for singer Kanye West. She works very hard to make sure most of Kanye's concerts are sold out because she understands the concept of perishability, which means
A. because the concert is not tangible, customers will have a difficult time judging its quality in advance. B. the production of the concert and the consumption of the concert by the fans cannot be separated so tickets must be sold. C. a high level of interaction will exist between the customers and the musicians, which makes the customers' presence necessary. D. that if the tickets are not sold, seats will remain empty and they can never be sold to anyone again. E. that each concert is different and customers will miss a unique experience if they are not present at the concert.
Mr. Jason realized a gain on sale of a residential apartment complex that he had placed in service in 1994. Accumulated MACRS depreciation on the complex was $311,800. The entire gain is characterized as Section 1231 gain.
Answer the following statement true (T) or false (F)
A firm has outstanding debt with a coupon rate of 8%, seven years maturity, and a price of $1,000. What is the after-tax cost of debt if the marginal tax rate of the firm is 35%?
A) 5.2% B) 5.5% C) 5.7% D) 6.0%