Your firm is currently 100% equity financed. The CFO is considering a recapitalization plan under which the firm would issue long-term debt with an after-tax yield of 9% and use the proceeds to repurchase some of its common stock. The recapitalization would not change the company's total investor-supplied capital, the size of the firm (i.e., total assets), and it would not affect the firm's return on investors' capital (ROIC), which is 15%. The CFO believes that this recapitalization would reduce the firm's WACC and increase its stock price. Which of the following would be likely to occur if the company goes ahead with the recapitalization plan?
A. The company's net income would increase.
B. The company's earnings per share would decline.
C. The company's cost of equity would increase.
D. The company's ROA would increase.
E. The company's ROE would decline.
Answer: C
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Which of the following best describes how biomimicry derives solutions from nature?
a. Solutions can mimic nature's forms, processes and ecosystems. b. Solutions are best derived from one category of organism at a time, as overlapping categories inhibit a company's ability to mimic. c. Solutions are derived only from living organisms. d. Solutions are extracted through a careful "hands-off" approach. e. Solutions are derived separately from the relationships in nature by studying the biology of a single organism at a one point in time.
Which of the following happens when a general partner withdraws from a limited partnership?
A) The partnership must be sold. B) The partnership is transferred. C) The partnership is dissolved. D) The partnership operates normally.
It is most important that a project manager:
A) Focuses on meeting daily challenges head on. B) Focuses on meetings. C) Remembers the overall picture, or goals, that define the project. D) Operates on the boundary between strategy and tactics.
In medieval England, the law merchant doctrine focused on all of the following except
A. promises. B. the sale and exchange of goods. C. payment. D. the sale and exchange of real estate.