Chapter 5 – Mankiw SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. The price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good‚ computed as the percentage change in quantity demanded divided by the percentage change in price. When demand is inelastic (a price elasticity less than 1)‚ a price increase raises total revenue‚ and a price decrease reduces total revenue. When demand is elastic (a price elasticity greater than 1)‚
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Question 1 (1 mark) The methods that a firm can use to evaluate a potential investment: 1) ‘Discounting’ Methods: Net Present Value (NPV): the present value of the future after-tax cash flow minus the investment outlay made initially. The decision rule for the NPV as follows: invest if NPV> 0‚ do not invest if NPV< 0 Internal Rate of Return (IRR): calculates the interest rate that equates the present value of the future after-tax cash flows equal that investment outlay;
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Chapter 10 The Cost of Capital LEARNING OBJECTIVES After reading this chapter‚ students should be able to: • Explain what is meant by a firm’s weighted average cost of capital. • Define and calculate the component costs of debt and preferred stock. • Explain why retained earnings are not free and use three approaches to estimate the component cost of retained earnings. • Briefly explain why the cost of new equity is higher than the cost of retained earnings‚ calculate the
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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Because common shareholders are entitled to the profits that remain after all of a corporation ’s 1) _______ other obligations have been met‚ common shareholders are known as A) debt owners. B) temporary owners. C) owners of last resort. D) residual owners. 2) An individual who invested $100‚000 in average stocks early in the year 2000 would
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Krystle Johnson 2/17/2013 Chap 8- Segmentation and Targeting Market 1. Describe the specific type of consumer that the Coca-Cola Company is targeting with each of the following products: Diet Coke‚ Coke Zero‚ Diet Coke Plus‚ Coca-Cola Blak‚ and Full Throttle Blue Demon. What types of demographic segmentation is each product’s marketing most likely to include? Diet Coke (Women who want to lose weight)‚ Coke Zero (Men)‚ Diet Coke Plus (young male)‚ Coca-Cola Blak (Older men)‚ Full Throttle
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a number of ways by the Australian Prudential Regulatory Authority (APRA) and the Reserve Bank of Australia (RBA). Considerations of capital structure have the effect of reducing the cost of capital and so in turn increase the value of the firm (Ross‚ S. 2011). APRA and the RBA together impose certain requirements on all Authorised Deposit-taking Institutions (ADIs) in relation to their capital make-up and their financing operations. Differences in Capital Structure ADIs are the only institutions
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includes the solutions for questions related to the material covered in class for Chapters 11‚ 12 and 13. Thus‚ you are not required to return this last problem set. Your work on the problem sets is over!!!! During last week of classes we will go over questions on the final exam. Please‚ do not forget to complete the teaching evaluations on-line at https://sete.unt.edu/ Corporate Finance: The Core (Berk/DeMarzo) Chapter 11 - Optimal Portfolio Choice Use the information for the question(s) below
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In search of political and social order Confucius (551-479 B.C.E.) and his school Confucius Educator and political advisor Sayings were compiled in the Analects by his disciples Confucian ideas Fundamentally moral and ethical in character Thoroughly practical: how to restore political and social order Concentrated on formation of junzi--"superior individuals" Edited and compiled the Zhou classics for his disciples to study Key Confucian values Ren--a sense of humanity‚ kindness‚ benevolence
Free Han Dynasty Confucianism
CASE STUDY ON CASH BUDGETING Party Favours Limited (PFL) distributes party supplies and novelties through a network of independent‚ dedicated sales people across Canada. PFL plans to expand its network of sales distribution network into western Canada and consequently forecasts sales to total $5.6 million and $5.8 million in calendar years 2011 and 2012 respectively. PFL has been in operation for over ten years‚ and therefore has a strong understanding of the seasonal sales cycle that party
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1. Calculate TRUST’s company after-tax WACC. The risk-free rate was 4.21%‚ the market risk premium was 6% and the company tax rate was 30%. The WACC should be rounded to four decimal places. After-tax WACC = rD (1-Tc) D/V + rE E/V rE = rf + βequity(rm – rf) rE = 0.0421 + 0.81(0.06) rE = 0.0907 E = number of outstanding shares x current share price E = 60 million x $3.43 E = $205.8 million D = $44 million bank loans + $1.2 million short-term hire purchase commitments D = $45.2 million
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