Reference no: EM133111528
1. In the chapter introduction we learned that AT&T (T) borrowed $3 billion by issuing bonds in the public bond market. Although this may sound like a lot of money, AT&T owed almost $65 billion in corporate debt at the end of 2011. The company had over $270 billion in total assets in 2011. How much will the new bond issue increase AT&T's debt to total assets ratio?
2. Define the term operating leverage. What type of effect occurs when the firm uses operating leverage?
3. (Break-even point and selling price) Simple Metal Works, Inc. will manufacture and sell 300,000 units next year. Fixed costs will total $350,000, and variable costs will be 65 percent of sales.
The firm wants to achieve a level of earnings before interest and taxes of $250,000. What selling price per unit is necessary to achieve this result?
Set up a pro forma income statement to verify your solution to part (a).
4. (Break-even point and operating leverage) Footwear Inc. manufactures a complete line of men's and women's dress shoes for independent merchants. The average selling price of its finished product is $85 per pair. The variable cost for this same pair of shoes is $58. Footwear Inc. incurs fixed costs of $170,000 per year.
What is the break-even point in pairs of shoes sold for the company?
What is the dollar sales volume the firm must achieve to reach the break-even point?
What would be the firm's profit or loss at the following units of production sold: 7,000 pairs of shoes? 9,000 pairs of shoes? 15,000 pairs of shoes?
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Find the amount of the dividend
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What is the price of the bond
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How much will she have at the end of four years
: Sarah will receive from her investment cash flows of $2,800 in one year, $3,100, How much will she have at the end of four years
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Define the term operating leverage
: 1. In the chapter introduction we learned that AT&T (T) borrowed $3 billion by issuing bonds in the public bond market. Although this may sound like a lot o
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How much extra financing will be needed
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What is the current yield on this bond
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Yield to maturity of a two-year zero-coupon bond
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What is the bond yield to call
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