LeCompte Learning Solutions is considering making a change to its capital structure in hopes of increasing its value. The company's capital structure consists of debt and common stock. In order to estimate the cost of debt, the company has produced the following table:

The company uses the CAPM to estimate its cost of common equity, r_s. The risk-free rate is 5% and the market risk premium is 6%. LeCompte estimates that if it had no debt its beta would be 1.0. (Its "unlevered beta," b_U, equals 1.0.) The company's tax rate, T, is 40%.

On the basis of this information, what is LeCompte's optimal capital structure, and what is the firm's cost of capital at this optimal capital structure?

Which assertion about stocks gamma, Hotel, India, and Juliet is true if PH > PJ > 0 and PI > PG > 0? And:

• All 4 stocks pay annual dividends with the next dividend expected to be paid in 1 year.
• The dividends for each stock are expected to grow at a constant rate of G forever.
• The expected returns for stocks Juliet and Hotel are expected to be different, and the expected returns for stocks India and Gamma are expected to be the same.
• The next expected dividends for stocks India and Gamma are expected to be different and the next expected dividends for stocks Juliet and Hotel are expected to be the same.
• Assume all expected dividends, growth rates, and returns are positive and all expected growth rates are less than all expected returns.

Playland at Pacific National Exhibition is an amusement park offering 31 different rides (including 4 rollercoasters and 1 water ride). The guests who are 48” or taller can go on any ride they want and so they get more value from visiting the park; let us say their individual demand is given by P = 5 – 0.25qO, where P is the price per ride ($ per ride) and qO is the number of the rides (per day) (the subscript O stands for “One Day;” that’s how the park calls its passes for the guests who are 48” or taller). The guests who are under 48” are not allowed on certain rides so they get less value from visiting the park; let us say their individual demand is given by P = 4 – 0.25qJ, where P is the price per ride ($ per ride) and qJ is the number of the rides (per day) (the subscript J stands for “Jr. One Day;” that’s how the park calls its passes for the guests under 48”). Assume it costs the park flat ¢25 per guest to operate a single ride, and it costs the park flat ¢75 to issue a single ticket to a ride. Assume there are 500 guests 48” or taller and 500 guests under 48” on an average day. We can consider Playland a monopolist in Vancouver

If Playland employed a second-degree price discrimination scheme (single ride tickets are issued, each rider receives a book of tickets [qO or qJ]),

what is Playland’s profit on an average day ($ per day)? Assume zero fixed cost

November 21, 1980, was the day of a tragic fire in the MGM Grand Hotel in Las Vegas. At the time of the fire, the hotel had only $30 million of liability insurance. One month after the fire, the hotel bought an extra $170 million of liability coverage for a premium of $37.5 million, retroactive to November 1, 1980 (before the fire). Based on your knowledge of present value concepts, why would insurers be willing to issue insurance to MGM under these conditions?

If the equilibrium wage is $9 in the market for hotel workers and $8 in the market for restaurant workers and both markets have similar elasticities of labor supply and demand, then a minimum wage of $10 in both markets will:

Assume you are an SMC Hotel Manager for and an Interview has been conducted for You

Answer the following questions in Brief

4. State and explain any three (3) significant errors you identified during the audit of SMC hotel?

5. Discuss any 2 situations in which the auditor can be sued or liable?

6. State and explain any 3 qualities of an auditor?

7. Explain how you used interviews and listening skills during your audit of SMC hotel?

Life Span of Tires: A certain brand of automobile tires has a mean life span of 35,000 miles and a standard deviation or of 2,250 miles. (Assume a bell-shape distribution).

1. The span of three randomly selected tires are 34,000 miles, 37,000 miles, and 31,000 miles. Find the z-scores that correspond to each life span. Would any of these tires be considered unusual?
2. The life spans of three randomly selected tires are 30,500 miles, 37,250 miles, and 35,000 miles. Using the Empirical Rule, find the percentile that corresponds to each life span.

Ada Hotel sells two room tpes: standard rooms and deluxe rooms. Average daily rate (ADR) and variable costs (VC) of the two room types are provided in the table below: (Hint: Treat two room types as two different products.)                      
                      
   ADR ($)   Variable Cost ($)              
Standard rooms    394.50   256.43              
Deluxe rooms   631.20   366.10              
                      
                      
The Mock Hotel's fixed costs for a month is = =       252480              
Sales mix (contribution of each room type to total room revenue) of the hotel is:                      
                      
Deluxe rooms   66%                  
Standard rooms    34%                  
                      
Required:                      
Using the information provided above, answer the following questions:                      
a. What is the break-even room nights (number) for the the hotel given the sales mix of the two room packages?                      
b. What must be the room revenue for the hotel to make a profit of $50,000 a month?                      
c. If the hotel is considering an advertisement campaign for its rooms with a cost $5,000, hom much in room revenue should be generated to cover this extra cost?                      

On average, 90 patrons arrive per hour at a hotel lobby (interarrival times are exponential) waiting to check in. At present there are five clerks, and patrons wait in a single line for the first available clerk. The average time for a clerk to service a patron is three minutes (exponentially distributed). Clerks earn $10 per hour, and the hotel assesses a waiting time cost of $20 for each hour that a patron waits in line. If needed, round your answers to the nearest cent. a. Compute the expected cost per hour of the current system. $ b. The hotel is considering replacing one clerk with an Automatic Clerk Machine (ACM). Management estimates that 20% of all patrons will use an ACM. An ACM takes an average of one minute to service a patron. It costs $48 per day (one day equals eight hours) to operate an ACM. Should the hotel install the ACM? Assume that all customers who are willing to use the ACM wait in a separate queue. The hotel replace the clerk with an ACM, as the total hourly cost would to $ .