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1. Firm A has $10,000 in assets entirely financed with equity. Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt (with a 10 percent rate of interest) and $5,000 in equity. Both firms sell 10,000 units of output at $2.50 per unit. The variable costs of production are $1, and fixed production costs are $12,000. (To ease the calculation, assume no income tax.)a. What is the operating income (EBIT) for both firms?b. What are the earnings after interest?c. If sales increase by 10 percent to 11,000 units, by what percentage will each firm’s earnings after interest increase? To answer the question, determine the earnings after taxes and compute the percentage increase in these earnings from the answers you derived in part bd. Why are the percentage changes different?
At today's spot exchange rates 1 US dollar can be exchanged for 9 Mexican pesos or for 111.04 Japenese yen. I have pesos that I would like to exchange for yen. What is the cross rate between the yen and the peso; how many yen would I recieve for ever..
Five million shares issued with a current market price of 6. Equity holders require a 9% return and $10 million face value of Corporate bonds outstanding.
At what debt ratio is the company's WACC minimized? Round your answer to two decimal places.
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Create a brief scenario in which you highlight the value of break-even and profitability analysis for a health care organization.
A stock has yielded returns of 6 percent, 11 percent, 14 percent, and -2 percent over the past 4 years, respectively. What is the standard deviation of these returns?
How much total cost would be allocated to the Assembly activity cost pool?
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