Answer:
A) repay the short-term obligations out of the sales revenue.
Explanation:
Tidewater should use their profits to try to lower their total debts, specially short term obligations. The problem with short term obligations is that the company continuously needs an inflow of cash to repay them.
It is not something unusual for retailers to take 1-3 month credits to purchase and resell merchandise, but they always have the risk of not being able to sell enough merchandise one month to cover their costs and their debt payments.
Long term debt is always more manageable since you have more than a year to pay them back and the interest rates are usually lower.
Answer:
A. strategic decisions have long-term consequences.
Explanation:
Due to path dependence <u>strategic decisions have long-term consequences.</u>
Path dependence: It is the dependence on strategic outcome that has impact in the past, however, it is no more relevant in the current situation. It describes a process in which the options one faces in a current situation are limited by decisions made in the past. These decision has enduring influence on the decision made today. Path dependence rests on the notion that time cannot be compressed at will.
Answer:
Paraguas should borrow at LIBOR + 2.000% and swap for fixed rate debt.
Lluvia should choose funding in floating rate
Explanation:
Paraguas wants the security of fixed rate borrowing; thus it should borrow at LIBOR + 2.000% and swap for fixed rate debt, in which Libor is 5.500%; their total cost at 7.5% is still lower than Fixed rate 12.0%
Lluvia prefer the flexibility of floating rate borrowing, and its rating is better; then it can enjoy lower cost of borrowing at 5%. However it may face the increase if LIBOR increase later; vice versa if LIBOR decrease, its cost of borrowing is able to reduce also.
Answer:A. Net proceed $13,700,000
($20*700,000)-$300,000
B. Earnings per share $2.17
$6500,000/3,000,000 shared
C. Earnings per share $1.76
$6,500,000/3,700,000 shares
