How are spot rates related to forward rates?
What will be an ideal response?
Forward rates and spot rates are related because forward rates can be derived from spot rates. Forward rates are expected future spot rates that may differ from the actual spot rates that occur in the future. Spot rates can be used to compute the forward rate (or expected future spot rate) for any time in the future for any investment horizon.
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What might drive a company to create international divisions or subsidiaries? Discuss the three ways these divisions can be organized
What will be an ideal response?
Smith and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. The firm's current after-tax cost of debt is 6 percent, and it can sell as much debt as it wishes at this rate. The firm's cost of preferred stock is 11 percent and its cost of retained earnings is 14 percent. The firm expects to generate $15,000 in retained earnings this year. Compute the weighted average cost of capital (WACC) break point associated with issuing new common stock.
A. $17,500 B. $15,000 C. $30,000 D. $37,500 E. $150.000
Opening a retail charge account is one way of establishing a credit record
Indicate whether the statement is true or false
Brong Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for March. Fixed Element per MonthVariable Element per Container RefurbishedActual Total for MarchRevenue $5,900$108,300Employee salaries and wages$49,500 $900$66,000Refurbishing materials $500$9,500Other expenses$40,300 $39,800?When the company prepared its planning budget at the beginning of March, it assumed that 22 containers would have been refurbished. However, 18 containers were actually refurbished during March.?The variance for net operating income in the Revenue and Spending Variances
column of a report comparing actual results to the flexible budget for March would have been closest to: A. $16,200 U B. $16,200 F C. $1,800 F D. $1,800 U