DeSoto Tools Inc. is planning to expand production. The expansion will cost $3,800,000, which can be financed either by bonds at an interest rate of 5 percent or by selling 76,000 shares of common stock at $50 per share. The current income statement before expansion is as follows:

After the expansion, sales are expected to increase by $1,680,000. Variable costs will remain at 40 percent of sales, and fixed costs will increase to $1,386,000. The tax rate is 40 percent.

a. Calculate the degree of operating leverage, the degree of financial leverage, and the degree of combined leverage before expansion. (For the degree of operating leverage, use the formula: DOL = (S − TVC) / (S − TVC − FC). For the degree of combined leverage, use the formula: DCL = (S − TVC) / (S − TVC − FC − I). These instructions apply throughout this problem.) (Round your answers to 2 decimal places.)
  

b. Construct the income statement for the two alternative financing plans. (Round EPS to 2 decimal places.)
  

c. Calculate the degree of operating leverage, the degree of financial leverage, and the degree of combined leverage, after expansion. (Round your answers to 2 decimal places.)
  

DeSoto Tools Inc. is planning to expand production. The expansion will cost $2,900,000, which can be financed either by bonds at an interest rate of 6 percent or by selling 58,000 shares of common stock at $50 per share. The current income statement before expansion is as follows:

After the expansion, sales are expected to increase by $1,590,000. Variable costs will remain at 40 percent of sales, and fixed costs will increase to $1,368,000. The tax rate is 40 percent.

a. Calculate the degree of operating leverage, the degree of financial leverage, and the degree of combined leverage before expansion. (For the degree of operating leverage, use the formula: DOL = (S − TVC) / (S − TVC − FC). For the degree of combined leverage, use the formula: DCL = (S − TVC) / (S − TVC − FC − I). These instructions apply throughout this problem.) (Round your answers to 2 decimal places.)
  

b. Construct the income statement for the two alternative financing plans. (Round EPS to 2 decimal places.)
  

c. Calculate the degree of operating leverage, the degree of financial leverage, and the degree of combined leverage, after expansion. (Round your answers to 2 decimal places.)
  

Suppose there is a market and its competitive equilibrium.

Demand P= 100-QD

Supply P = 20 + QS/3. The government introduces the a subsidy of s = $4 per unit of good sold and bought.

(a) Draw the graph for the demand and supply before subsidy, carefully determining all intercepts and relevant intersection points.

(b) What is the equilibrium price and quantity before the subsidy and after the subsidy? (in the subsidy case, what price the buyers pay and what price the sellers receive?)

(c) Looking at the prices buyers pay and sellers receive after the subsidy compared to the no subsidy case, do buyers or sellers receive more of the subsidy? How much of the $4/unit subsidy is received by the buyers and how much by the sellers? (d) Calculate the price elasticities of demand and supply at the equilibrium before the subsidy. Confirm that the elasticities are inversely proportional to the shares of the subsidy each side (buyers and sellers) receive?

(e) What is the consumer surplus CS and producer surplus PS before and after the subsidy? What is the cost to the government of this subsidy program? What is the DWL (deadweight loss) that comes with the subsidy policy?

(f) Suppose the government is trying to determine the amount of subsidy (they think they can do better than s=$4), to maximize the equilibrium quantity transacted (bought and sold) in the market, yet it has a budget of $1500 to spend on the subsidy provision. What is the maximum quantity the government subsidy can induce, and what is the amount of subsidy per unit to achieve this?

DeSoto Tools Inc. is planning to expand production. The expansion will cost $3,000,000, which can be financed either by bonds at an interest rate of 8 percent or by selling 60,000 shares of common stock at $50 per share. The current income statement before expansion is as follows:

After the expansion, sales are expected to increase by $1,600,000. Variable costs will remain at 20 percent of sales, and fixed costs will increase to $1,370,000. The tax rate is 30 percent.

a. Calculate the degree of operating leverage, the degree of financial leverage, and the degree of combined leverage before expansion. (For the degree of operating leverage, use the formula: DOL = (S − TVC) / (S − TVC − FC). For the degree of combined leverage, use the formula: DCL = (S − TVC) / (S − TVC − FC − I). These instructions apply throughout this problem.) (Round your answers to 2 decimal places.)
  

b. Construct the income statement for the two alternative financing plans. (Round EPS to 2 decimal places.)
  

c. Calculate the degree of operating leverage, the degree of financial leverage, and the degree of combined leverage, after expansion. (Round your answers to 2 decimal places.)
  

Many freeways have service (or logo) signs that give information on attractions, camping, lodging, food, and gas services prior to off-ramps. These signs typically do not provide information on distances. An article reported that in one investigation, six sites along interstate highways where service signs are posted were selected. For each site, crash data was obtained for a three-year period before distance information was added to the service signs and for a one-year period afterward. The number of crashes per year before and after the sign changes were as follows.

a)The article included the statement "A paired t test was performed to determine whether there was any change in the mean number of crashes before and after the addition of distance information on the signs." Carry out such a test. [Note: The relevant normal probability plot shows a substantial linear pattern.]
State and test the appropriate hypotheses. (Use

α = 0.05.)

Calculate the test statistic and P-value. (Round your test statistic to two decimal places and your P-value to three decimal places.)

b)If a seventh site were to be randomly selected among locations bearing service signs, between what values would you predict the difference in number of crashes to lie? (Use a 95% prediction interval. Round your answers to two decimal places.)

Pharoah Corporation provides the following information about its defined benefit pension plan for the year 2020:

Pharoah follows IFRS.

QUESTIONS:

A) Prepare a continuity schedule for 2020 for the defined benefit obligation.

B) Prepare a continuity schedule for 2020 for the plan assets.

C) Calculate pension expense for the year 2020.

D) Prepare all pension journal entries recorded by Pharoah in 2020.

E) What pension amount will appear on Pharoah’s SFP at December 31, 2020?

General ledger

INFORMATION

The inexperienced bookkeeper of Siyakha Traders prepared the following account in the general ledger:

DR                                                      DEBTORS CONTROL                                                     CR

                                                                         2019

              Jun 01    Balance                         b/d      73 200

Evaluate Stephen Moehrle article 2010) on response to the Financial Accounting Standards Board's and International Accounting Standard Boatd's Joint Discussion paper Entitled preliminary views on Financial Statement Presentation.

BP (British Petroleum) faced in 2010 a deep crisis as result of an accident -the worst environmental disaster in the United Stated up to date- in one of the prospection owned by the company. 11 people died, the equivalent to 4.9 million barrels were discharged in the Gulf of Mexico with devastating consequence to the marine life and $42.2 billion were claimed up to 2013 as civil liabilities.

Read the article “BP oil spill: Five years after 'worst environmental disaster' in US history, how bad was it really?”(http://www.telegraph.co.uk/news/worldnews/northamerica/usa/11546654/BP-oil-spill-Five-years-after-worst-environmental-disaster-in-US-history-how-bad-was-it-really.html) and answer the following questions:

Do you think that BP could have managed the crisis more effectively? Why or why not?

Could the reputational damage suffered by the company been avoided by a better/more adequate response?

Do you recall when the crisis was happening? What do you recall hearing about it from the media? Was the company doing enough to respond to the public at the time the crisis was happening?