You have been hired by a new firm that is just being started. The CFO wants to finance with 60% debt, but the president thinks it would be better to hold the percentage of debt in the capital structure (wd) to only 10%. Other things held constant, and based on the data below, if the firm uses more debt, by how much would the ROE change, i.e., what is ROEHigher - ROELower? Do not round your intermediate calculations. Operating Data Other Data Capital$4,000 Higher wd60%ROIC = EBIT(1 - T)/Capital17.00% Higher interest rate13%Tax rate35% Lower wd10% Lower interest rate9%?
A. 10.31%
B. 11.59%
C. 10.43%
D. 9.15%
E. 10.54%
Answer: B
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FRI Phones Inc. always used the services of ad agency West, Smith, & Wiley to create advertising campaigns for its products. When a major competitor outsourced its promotional campaign to West, Smith, & Wiley, FRI Phones revoked its contract with the ad agency. Which of the following is most likely the reason for FRI Phones Inc.'s decision?
A. The Federal Trade Commission (FTC) prohibits two competing companies from using the services of the same ad agency. B. When an agency works for two competing clients, the quality of work is believed to decrease due to lack of personal attention. C. When customers realize that two competing companies use the services of the same ad agency, they will fail to differentiate the companies' products. D. Ad agencies are permitted to handle only one account at any given time. E. Ad agencies often have access to their client's confidential information, increasing the chances of sharing such information with competitors.
Answer the following statements true (T) or false (F)
1. The “wow” word of mouth can be just as valuable or even more valuable than negative word of mouth because it can be used as testimonials on the company’s website. 2. Service failures can be turned into service wows due to a positive service recovery and eventually those guests could be turned into evangelists. 3. Yellow and black flags is a system designed for airlines to notice possible service failures and to assign them yellow for caution, possible failure, and black for eminent failure. 4. Employees should be encouraged and even rewarded for soliciting and reporting service failures even if they are their own failure.
Interviews, statistical sampling, and company reports provide input data for quantitative analysis models
Indicate whether the statement is true or false
Who among the following once said, "THE EAR OF THE LEADER must ring with the voices of the people. Together they rise to the challenge of the day."?
A. Will Durant B. Kurt Lewin C. Woodrow Wilson D. George Patton E. None of these