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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 paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper i
How do organization predict the short and long- term future? Explain in detail how a downturn in the economy affects not-for- profit organizations, as opposed to for-profit ones.
How do the BI needs of business professionals and medical professionals differ?
Product or Service Design and Process Selection Can the products/services be designed to satisfy the needs of both the market and the producers/providers? For example, it may
Last week employees at Renee's Fashions worked 360 hours to produce 128 garments. Of these, 8 were seconds which were sold at the outlet store for $90 each. The remaining 120 garme
"A Closer Look" Please respond to the following: •Compare and contrast benefit-cost, cost-effectiveness, and cost-utility analysis and determine which is the most useful to assess
What is the problem, opportunity, or challenge addressed in the article? Executive Summary Manipal Hospital is situated in Bangalore, known as the Garden city of India.
Look into the future. Consider trends in society, technology, economics, environmentalism, and politics that can influence the future of W. L. Gore & Associates (Case 24) and Googl
Giving examples, how does CPM handle the trade-offs between time and cost in the scheduling of a project.
(1) Firstly, consider the changes in employment by sector over the period charted in the figure (1850 - 2000). What factors do you think contributed to the reduction in employment
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