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Scott Equipment Organization is investigating various combinations of short- and long-term debt in financing assets. Assume the organization has decided to employ $10 million in current assets and $15 million in fixed assets in its operations next year, and EBIT for next year is $8 million. The organization's income tax rate is 40%. Stockholders' equity will be used to finance $15 million of assets, with the remainder financed by short- and long-term debt. The organization is considering implementing one of the policies below. Current Assets: $10 million Fixed Assets: $15 million Total Assets : $25 million Stockholders' Equity: $15 million Total Amount of Assets to be financed by debt: $10 million Tax Rate: 40% Total EBIT: $8 million Aggressive Strategy Short Term Debt: $8 million, 6% interest rate Long Term Debt: $2 million, 8% interest rate Moderate Strategy Short Term Debt: $5 million, 5.5% interest rate Long Term Debt: $5 million,7.5% interest rate Conservative Strategy Short Term Debt: $3 million, 5.25% interest rate Long Term Debt: $7 million, 7.25% interest rate Determine the following for each policy: • Net Income • Expected rate of return on stockholders' equity (Net Income/Equity) • Net working capital position (Current Assets - Current Liabilities) • Current ratio (Current Assets/Current Liabilities) • Would you rate them low, medium, or high with respect to profitability? • Would you rate them low, medium, or high with respect to risk? • What is your recommendation to management? Why?
A college professor told her students, "The purpose of a management course is to teach students about management, not to teach them to be managers." Do you agree or disagree with t
Bloomsday Outfitters produces T-shirts for road races. They need to acquire some new stamping machines to produce 30,000 good T-shirts per month. Their plant operates 200 hours per
Explain how probability is used in that situation.
A bridge that is used to connect an Ethernet network with a FDDI network must be practicing what type of bridging. a. a cut-through mode bridging b. source-route bridging
Pick an administrative agency of either the federal or a state government. Find where the current and proposed regulation changes for that agency are located on the Internet. (i.e.
General Model of the Operations Function This figure illustrates the basic concept of the operations function. Firstly inputs are transformed (converted) to outputs with the m
How do the two alternative process technologies (Chemling and AFU) differ in terms of their scale and automation? What are the implications of this for Rochem?
In which of the following situations would consideration of the minimum efficient scale of operation suggest that the market should be served by a large number of small firms to mi
Define the term productivity (a) Productivity implies more number of goods (output) from the same amount resources (input) (b) Management can play an important role in pro
What are your thoughts around quantitative vs qualitive research methods? Can you list pros and cons for each one?
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