Assume you have just been hired as business manager of PizzaPalace, a pizza restaurant located adjacent to campus. The company's EBIT was $500,000 last year, and since the university's enrollment is capped, EBIT is expected to remain constant over time. Since no expansion capital will be required, PizzaPalace plans to pay out all earnings as dividends. The management group owns about 50% of the stock, and the stock is traded in the OTC market. The firm is currently financed with all equity; it has 100,000 shares outstanding; and P0 = $25 per share. When you took your MBA Financial Analysis course, your instructor stated that most firms' owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he encouraged you to pursue the idea. As a first step, assume that you obtained from the firm's investment banker the following estimated costs of debt for the firm at different capital structures: % Debt Ratio rd 0% --- 20 8.0% 30 8.5 40 9.0 50 9.5 If the company were to recapitalize, debt would be issued, and the funds received would be used to repurchase stock. PizzaPalace is in the 40% state-plus-federal corporate tax bracket, its beta is 1.0 when debt ratio is 0%, the risk-free rate is 6%, and the market risk premium is 6%.

a. For each capital structure under consideration, calculate the WACC.

b. Now calculate the corporate value, the value of the debt that will be issued, and the resulting market value of equity.

1. You’ve inherited $10,000. You’d like to have $20,000 in 5 years. What rate of return do you need to make on your investment to reach your savings goal?

2. You’re interested in buying a house and need a $5,000 down payment. How much do you need to set aside today if you can make 5% on your money to make sure you have $5,000 in three years.

3. You’ve decided you want to get your MBA, which will cost you $15,000. If you have $10,000 now and can make 7.5% on your money, how soon can you attend classes?

4. You’ve just been hired on your first job! Congratulations. The company has a 401(k) plan and you’ve decided to put 10% of your $45,000 salary away each year. If you can earn 8% annually on your money, how much will you have 35 years from now when you’re ready to retire?

5. You’re aunt Edna just retired at the age of 65 years old. She has an annuity with $750,000 and wants to begin taking payments until she’s 90 years old. If the annuity can earn 4.5% annually, how much can she take each year before the account gets to $0?

6. You have to choose between investing your $1000 in a band CD that pays 2.5% annually, or into a 20 year treasury bond that pays 2.2% semi-annually. Which investment pays a better rate of return?

Business leaders live by the calendar, attaching forecasts, projects and goals to a specific date or period of time. No one knows how the crisis will play out or even when state-issued mandates to stay at home will lift. For CEOs, it is like stumbling around in the dark. When Bahram Akradi, founder of the Life Time health-club chain, closed more than 150 clubs in 30 states, he recorded a video message to employees. He said Life Time could weather a two-week shutdown without breaking much of a sweat. After that, he’d have to get creative. It is a classic case of decision-making under uncertainty!

• Q1 - Why does the coronavirus pose such a challenge for top managers and decision-makers in corporations?
• Q2 - What makes this particular crisis different from other types of crises?
• Q3 - Why are CEOs not so well-adapted to this kind of situation?
• Q4 - Why do their habits and training not prepare them for the kind of decision-making needed in the week of the current crisis?

Consider a university medical services department.

A1.1. Consider a university medical services department. Describe what could be the typical information items that is kept within the information system of such a department.

A1.2. What should be included in a typical physical vital records inventory specifically for at least one type of data records at this type of medical services department which is needed for business recovery planning.

Webster University sold bonds with a 25-year maturity, paying an annual coupon rate of 10% that come with 20 warrants attached to each bond. These bonds were issued at $1,000 par value. Currently in the market, bonds similar to the ones that Webster University sold are yielding 12%. What would be the valued amount for the warrants that Webster University’s issued? $5.96 $6.46 $6.94 $7.42 $7.84

When the bank introducer homeloans have fraud and other misconduct， Imagine yourself as the main decision maker of the bank or the financial institution (like the CEO). What would you have done differently at corporate level?

ANS: As the main decision maker of the bank or the financial institution (like the CEO)., we should abide by ethics, do not hire(use) introducer who are not approved and Unsatisfactory , we cannot relaxation the loan policy in order to increase the company's profits, like lend to credit poor consumers.

This answer is correct or wrong？ If the answer is incomplete, please complete it. Thank you.