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ad-work [718]
3 years ago
5

Hotel Cortez is an all-equity firm that has 10,900 shares of stock outstanding at a market price of $37 per share. The firm's ma

nagement has decided to issue $66,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 8 percent. What is the break-even EBIT
Business
1 answer:
Stella [2.4K]3 years ago
6 0

Answer:

$32,264.07

Explanation:

The computation of the Break-even EBIT  is shown below:

(EBIT ÷ Number of shares) = (EBIT - Interest) ÷ Number of shares  

(EBIT ÷ 10,900) = (EBIT - $66,000 × 0.08) ÷ (10,900 - (66,000 ÷ $37))

(EBIT ÷ 10,900) = (EBIT - $5,280) ÷ (10,900 - 1,783.78)

(EBIT ÷ 10,900) = (EBIT - $5,280) ÷ (9116.22)

After solving this, the value of break-even EBIT is $32,264.07

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Presented below are incomplete manufacturing cost data.
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Answer and Explanation:

The computation of the missing amount is as follows:

As we know that

The total manufacturing cost = Direct Materials Used  + Direct Labor Used + Factory Overhead

So,

(1)

= $42,700 + $64,200 + $52500

= $159,400

(2)

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= $75,900

(3)

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8 0
3 years ago
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aleksandr82 [10.1K]
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5 0
3 years ago
Meryl, a training manager, is making a presentation to her company's business leaders. She says meeting the company's five-year
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Answer:

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4 years ago
Profit maximization occurs when:
lianna [129]

Answer:

The correct answer is option B.

Explanation:

Profit maximization refers to the situation when a firm is able to maximize the total profit that it could earn through the production of goods and services.  

The total profit is maximized when the marginal profit is zero or when the marginal revenue is equal to marginal cost. The marginal profit is the difference between marginal revenue and marginal cost.  

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In case, marginal revenue is less than the marginal cost the firm should stop producing more and reduce production till both are equal.

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