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Analyzing alternative plans for raising money) First Bank Financial Services is considering two plans for raising $800,000 to expand operations. Plan A is to borrow at 10%, and plan B is to issue 200,000 shares of common stock at $4.00 per share. Before any new financing, First Bank Financial Services has net income of $600,000 and 200,000 shares of common stock outstanding. Assume you own most of First Bank Financial Services’ existing stock. Management believes the company can use the new funds to earn additional income of $800,000 before interest and taxes. First Bank Financial Services’ income tax rate is 25%. Requirements 1. Analyze First Bank Financial Services situation to determine which plan will result in higher earnings per share. 2. Which plan results in the higher earnings per share? Which plan allows you to retain control of the company? Which plan creates more financial risk for the company? Which plan do you prefer? Why? Present your conclusion in a memo to First Bank Financial Services board of directors.
At the beginning of 2011, there was $2,000 of materials on hand. During the year, the company purchased $305,000 of materials; however, it paid for only $292,500. Explain how much inventory was requisitioned for use on jobs during 2011?
an individual taxpayer in the 35% marginal bracket, also owns 25% of Marmont's stock. Compare and contrast the treatment of the dividend by Otter Corporation and Gerald.
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The General Fund transferred $100,000 to the Motor Pool Internal Service Fund to be used for general operating purposes
A department's three-variance overhead standard costing system reported volume variances and unfavorable spending. The activity level selected for allocating overhead to product was based on 80 percent of practical capacity
Description of various terms like product cost , period costs, direct and indirect costs - the account that is debited when the Work in Process Inventory account is credited.
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