The Neal Company wants to estimate next year's return on equity
(ROE) under different financial leverage ratios. Neal's total
capital is $18 million, it currently uses only common equity, it
has no future plans to use preferred stock in its capital
structure, and its federal-plus-state tax rate is 40%. The CFO has
estimated next year's EBIT for three possible states of the world:
$5.1 million with a 0.2 probability, $3.3 million with a 0.5
probability, and $0.5 million with a 0.3 probability. Calculate
Neal's expected ROE, standard deviation, and coefficient of
variation for each of the following debt-to-capital ratios.
***Do not round intermediate calculations.***
***Round your answers to two decimal places at the end of the
calculations.***
Debt/Capital ratio is 0.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 10%, interest rate is 9%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 50%, interest rate is 11%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 60%, interest rate is 14%.
| RÔE = | % |
| σ = | % |
| CV = |
In: Finance
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FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $18 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.7 million with a 0.2 probability, $3.2 million with a 0.5 probability, and $0.9 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations. Debt/Capital ratio is 0.
Debt/Capital ratio is 10%, interest rate is 9%.
Debt/Capital ratio is 50%, interest rate is 11%.
Debt/Capital ratio is 60%, interest rate is 14%.
|
In: Finance
The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $13 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.6 million with a 0.2 probability, $1.7 million with a 0.5 probability, and $0.4 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.
Debt/Capital ratio is 0.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 10%, interest rate is 9%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 50%, interest rate is 11%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 60%, interest rate is 14%.
| RÔE = | % |
| σ = | % |
| CV = |
In: Finance
The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $18 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.6 million with a 0.2 probability, $3.5 million with a 0.5 probability, and $0.5 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.
Debt/Capital ratio is 0.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 10%, interest rate is 9%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 50%, interest rate is 11%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 60%, interest rate is 14%.
| RÔE = | % |
| σ = | % |
| CV = |
In: Finance
1. Which of the following statements is true?
A. Positive externalities lead to over production in the free market
B. The government may subsidize merit goods to increase social welfare
C. Public goods would be provided but expensive in the free market
D. The free market system maximizes consumer surplus
2. What does a deadweight social burden triangle mean?
A. Community surplus is maximized
B. Community surplus is minimized
C. The social marginal cost of the present output is greater than the social marginal benefit
D. The price of the product is minimized
3. Which of the following is not an injection into an economy?
A. Investment
B. Government spending
C. Export spending
D. Spending on imports
4. Equilibrium in an economy occurs when:
A. Planned savings equals planned taxation
B. Planned injections equals planned withdrawals
C. Planned investment is greater than planned savings
D. Injections plus withdrawals equals national income
5. The multiplier will be biggest when the marginal propensity to consume is:
A. 0.1
B. 0.2
C. 0.3
D. 0.4
In: Economics
The following data are for the two products produced by Tadros
Company.
| Product A | Product B | ||||
| Direct materials | $ | 14 per unit | $ | 26 per unit | |
| Direct labor hours | 0.3 DLH per unit | 1.6 DLH per unit | |||
| Machine hours | 0.2 MH per unit | 1.2 MH per unit | |||
| Batches | 115 batches | 230 batches | |||
| Volume | 10,000 units | 2,000 units | |||
| Engineering modifications | 10 modifications | 50 modifications | |||
| Number of customers | 500 customers | 400 customers | |||
| Market price | $ | 35 per unit | $ | 120 per unit | |
The company's direct labor rate is $20 per direct labor hour (DLH).
Additional information follows.
| Costs | Driver | |||
| Indirect manufacturing | ||||
| Engineering support | $ | 25,500 | Engineering modifications | |
| Electricity | 22,000 | Machine hours | ||
| Setup costs | 43,000 | Batches | ||
| Nonmanufacturing | ||||
| Customer service | 73,000 | Number of customers | ||
Required:
(Round your per unit cost answers to 2 decimal places and other
answers to nearest whole number. Loss amounts should be indicated
with minus sign.)
In: Accounting
Use the following information to answer questions 9 – 12: The following joint probability distribution describes the number of bridesmaids and groomsmen at weddings. To avoid lengthy arithmetic, it assumes there are always 1, 2, or 3 bridesmaids and either 1, 2, or 3 groomsmen.
| # of Groomsmen (Y) | |||||
| 1 | 2 | 3 | |||
| # of Bridesmaids (X) | 1 | 0.15 | 0.02 | 0.02 | 0.19 |
| 2 | 0.08 | 0.25 | 0.05 | 0.38 | |
| 3 | 0.08 | 0.05 | 0.3 | 0.43 | |
| 0.31 | 0.32 | 0.37 | 1 | ||
9. What is the marginal probability that a wedding will have 2
bridesmaids?
10. Suppose you know that a wedding is going to have 2 groomsmen;
what is the expected number of bridesmaids that will be at that
wedding?
11. Is the number of bridesmaids independent of the number of groomsmen? (So, are these two random variables independent?) (Yes or No)
12. What is the correlation between the number of bridesmaids and the number of groomsmen? (Hint: this will take a while to do. You need to first calculate the expected value of each random variable, then the covariance between the variables, then each variables standard deviation, and then you can find the correlation) (Your answer will be between -1 and 1)
In: Statistics and Probability
The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $10 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.2 million with a 0.2 probability, $3.1 million with a 0.5 probability, and $0.7 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.
Debt/Capital ratio is 0.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 10%, interest rate is 9%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 50%, interest rate is 11%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 60%, interest rate is 14%.
| RÔE = | % |
| σ = | % |
| CV = |
In: Finance
The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $16 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.6 million with a 0.2 probability, $3.4 million with a 0.5 probability, and $0.5 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.
Debt/Capital ratio is 0.
RÔE =
σ =
CV =
Debt/Capital ratio is 10%, interest rate is 9%.
RÔE = %
σ = %
CV =
Debt/Capital ratio is 50%, interest rate is 11%.
RÔE = %
σ = %
CV =
Debt/Capital ratio is 60%, interest rate is 14%.
RÔE = %
σ = %
CV =
In: Finance
he Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $14 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.9 million with a 0.2 probability, $2.9 million with a 0.5 probability, and $0.7 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.
Debt/Capital ratio is 0.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 10%, interest rate is 9%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 50%, interest rate is 11%.
| RÔE = | % |
| σ = | % |
| CV = |
Debt/Capital ratio is 60%, interest rate is 14%.
| RÔE = | % |
| σ = | % |
| CV = |
In: Finance