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worty [1.4K]
4 years ago
9

Shoe Box Stores is currently an all-equity firm with 25,000 shares of stock outstanding. Management is considering changing the

capital structure to 35 percent debt. The interest rate on the debt would be 8 percent. Ignore taxes. Jamie owns 600 shares of Shoe Box Stores stock that is priced at $22 a share. What should Jamie do if she prefers the all-equity structure but Shoe Box Stores adopts the new capital structure?
Business
1 answer:
notka56 [123]4 years ago
8 0

Answer: d. Sell 210 shares and loan out the proceeds at 8 percent

Explanation:

Because the Firm wants to use a Debt to Equity Capital structure instead of an All Equity structure, she can lend money out at the company interest rate to NEGATE the conversion.

She can do this by selling 35% of her portfolio and loaning it out at 8%

35 % of her Portfolio would be,

= 0.35 * 600

= 210 shares

So she can sell 210 shares and loan at the proceeds at 8% to offset the Company's conversion

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In the context of the strategies for reaching global markets, a(n) _____ is a firm that is offered the right to produce and mark
VladimirAG [237]

A licensing firm is a firm that is offered the right to produce and market another firm's products if it agrees to specific operating requirements.

<h3>What is a licensing firm?</h3>

A firm, which does not have a product of its own, but specializes in production and marketing of its client firms' products by the way of obtaining a licensed agreement, it is known as a licensing firm.

For example, in India, Varun Beverages Ltd. is a licensing firm that has been offered the rights to produce and market the products for PepsiCo.

Hence, the significance of a licensing firm is aforementioned.

Learn more about a licensing firm here:

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4 0
2 years ago
During February 2018 its first month of operations, the stockholders of Bonita Enterprises invested cash of $49500. Bonita had c
hichkok12 [17]

The balance in Cash at February 28 = $44900

<u>Explanation:</u>

Given:  

Cash invested by stockholders of Bonita Enterprises = $49500

Cash revenues of Bonita = $10100

Expenses paid by Bonita = $14700

Calculation of balance in cash as follows:

The balance in Cash at February 28 = Cash Invested + Cash Revenues - Paid Expense=$ 49,500 + $ 10100 - $ 14,700= $ 44900

Hence the correct answer is $44900

5 0
3 years ago
____________ involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy th
serg [7]

Answer:

Business analysis

Explanation:

A product can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks, etc.

Business analysis refers to a strategic process that typically involves a review of the sales, costs, and profit projections for a new product in order to find out whether the product is in tandem with the objectives of the company.

This ultimately implies that, many organizations and business owners use business analysis to measure the level of satisfaction with respect to the company's objectives and its customers through the process of analyzing or reviewing the sales, costs and profits projection of its new products before pushing them out into the market.

Similarly, cost-volume-profit analysis is also known as the break even analysis, it is an important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is. It is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating income and net income.

5 0
3 years ago
R. C. Barker makes purchasing decisions for his company. One product that he buys costs $50 per unit when the order quantity is
astra-53 [7]

Answer:

a. 300

d. 200

Explanation:

EOQ = \sqrt{(2 * Annual demand * ordering cost) / holding cost } \\

2 * 7500 * 30 / 0.5

EOQ = 948 units

When price is $48 per unit

EOQ = 968 units

Total cost  = Holding cost + ordering cost + purchase cost

When the order is for 500 price is $48

Total cost = $2,400 + $30 + $24,000 = $26,430

When the order is for 300 price is $50

Total cost = $1,500 + $30 + $15,000 = $16,530

When the order is for 306 price is $50

Total cost = $1,530 + $30 + $15,300 = $16,860

When the order is for 200 price is $50

Total cost = $1,000 + $30 + $10,000 = $11,030

The best two possible order quantities are 200 and 300 which results in minimum total cost.

5 0
3 years ago
Which of the three limitations of the Payback Rule can be overcome with a modification to it? Gives equal weight to all cash flo
gogolik [260]

Answer:

Gives equal weight to all cash flows arriving before the cutoff 

Explanation:

The payback period measures how long it takes for the amount invested in a project to be recovered from a project.

A project with a shorter pay back period is favoured over projects with longer payback periods.

The payback period gives equal weights to all cash flows before arriving at a cut Off. The discounted payback period remedies this by discounting cash flows.

I hope my answer helps you

7 0
3 years ago
Read 2 more answers
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