(Related to Checkpoint 15.2) (EBIT-EPS analysis) Abe Forrester and three of his friends from college have interested a group of venture capitalists in backing their business idea. The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum cleaners and accessories. These stores would be located in Dallas, Houston, and San Antonio. To finance the new venture two plans have been proposed: bullet

Plan A is an all-common-equity structure in which $2.2 million dollars would be raised by selling 82,000 shares of common stock. bullet

Plan B would involve issuing $1.2 million in long-term bonds with an effective interest rate of 11.7 percent plus another $ 1.0 million would be raised by selling 41000 shares of common stock. The debt funds raised under Plan B have no fixed maturity date, in that this amount of financial leverage is considered a permanent part of the firm's capital structure.

Abe and his partners plan to use a 35 percent tax rate in their analysis, and they have hired you on a consulting basis to do the following:

a. Find the EBIT indifference level associated with the two financing plans.

b. Prepare a pro forma income statement for the EBIT level solved for in part a that shows that EPS will be the same regardless whether Plan A or B is chosen.

Alka-Seltzer is an over-the-counter medicine used to treat acid indigestion and heartburn. The active pharmaceutical ingredients (API) in each Alka-Seltzer tablet are aspirin (325mg), citric acid 1:000 103 mg, and sodium bicarbonate 1:916 103 mg. For a single dose, two Alka-Seltzer tablets are dissolved in 4.0 fluid ounces of water (1.0 fluid ounce 29:57 mL), causing the following reaction:

C6H8O7aq 3NaHCO3aq ! 3H2Ol 3CO2g Na3C6H5O7aq |fflfflfflffl{zfflfflfflffl} |fflfflfflfflfflffl{zfflfflfflfflfflffl} |fflfflfflfflfflfflffl{zfflfflfflfflfflfflffl} citric acid sodium sodium citrate

bicarbonate

(a) What volume of CO2 gas (mL) at 25°C and 1 atm would be produced by a normal dose of Alka-Seltzer? Assume ideal-gas behavior and that the reaction goes to completion.

(b) Youwakeupfeelingmiserablebeforeyourmaterial-and-energy-balancesfinalexam,butyouknow you can’t miss it. You grab some Alka-Seltzer and an 11-ounce bottle of water. You drink just enough water to leave 4.0 fluid ounces in the bottle (you’ve had lots of practice with this). Then you drop in the two tablets, screw the cap tightly onto the bottle, and rush out the door. Calculate the pressure inside the bottle, assuming the temperature remains constant at 25°C and neglecting the volume of the tablets.

(c) How reasonable are the assumptions of ideal-gas behavior in Parts (a) and (b)?

(a) Assuming the undiluted catalyst solution is 1% mass/volume I₃K, how many moles of I₃K are present in reactions 1 and 3? The molecular weight of I3K is 420 g/mol.

(b) What is [I₃K] present in reactions 1 and 3 in units of molarity?

(c) What is [I₃K] present in reaction 2 in units of molarity?

Chart 1: 10 mL undiluted 1-2% IKI; and 5 ml 3% H₂O₂

Chart 2: 10 mL 0.5-1.0% IKI; and 5 ml 3% H₂O₂

Chart 3: 10 mL undiluted 1-2% IKI; and 5 ml 2.25% H₂O₂

1. Consider the following thermochemical equation: 2ZnS(s) + 3O2(g) → 2ZnO(s) + 2SO2(g) ∆H° = –878.2 kJ

(a) How much heat is released when 3.0 mol ZnS(s) reacts in excess oxygen?

(b) How much heat is released when 2.3 × 10^-2 mol ZnS(s) reacts in excess oxygen?

(c) What is the enthalpy change when 223.9 g ZnS(s) reacts in excess oxygen?

(d) What is the enthalpy change when 0.96 g ZnO(s) is produced?

2. Slaked lime (Ca(OH)2(s)) is produced when lime (calcium oxide, CaO(s)) reacts with liquid water. 65.2 kJ of heat is released for each mol of Ca(OH)2 that is produced.

(a) Write a thermochemical equation for the reaction.

(b) What is the enthalpy change when 523.3 kg of lime reacts with excess water?

3. The following reaction represents the complete combustion of hexane, C6H14(l) + 19/2O2(g) → 6CO2(g) + 7H2O(l) ∆H°= –4163 kJ

(a) If 0.537 mol of carbon dioxide is produced in the reaction represented by the equation above, how much heat is released by the reaction?

(b) If 25.0 kg of hexane is burned in sufficient oxygen, how much heat will be released?

(c) What mass of hexane is required to produce 1.0 × 10⁵ kJ of heat by complete combustion?

Problem 15-11
WACC and Optimal Capital Structure

F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows:

F. Pierce uses the CAPM to estimate its cost of common equity, rs and at the time of the analaysis the risk-free rate is 5%, the market risk premium is 5%, and the company's tax rate is 35%. F. Pierce estimates that its beta now (which is "unlevered" because it currently has no debt) is 0.95. Based on this information, what is the firm's optimal capital structure, and what would be the weighted average cost of capital at the optimal capital structure? Do not round intermediate calculations. Round your answers to two decimal places.

The patient is placed in a room. He is diaphoretic, and appears anxious. He is alert and oriented and able to answer questions. Lungs have scattered crackles bilaterally. No JVD is present. Heart sounds indicate a systolic ejection murmur and S4. Bowel sounds active and abdomen is non-distended. Pulses are palpable in all extremities. VS – 37.0 C – 92 – 18 – 170/100 – 94% RA. Chart View Lab Values Metabolic Panel Sodium 142 mmol/L Potassium 4.5 mmol/L Chloride 97 mmol/L CO2 27 mmol/L BUN 13 mg/dL Creatinine 1.2 mg/dL Glucose 110 Coagulation Profile Partial thromboplastin time 35 sec Prothrombin time 12 sec International Normalized Ratio 1.0 Fibrinogen 180 mg/dL Cardiac Markers CK-MB 2.0% CPK 85 IU/L Troponin I 0.0 ng/mL CBC with Differential WBC 7,500 K/uL Neutrophils 60% Band forms 4% Basophils 0.45% Eosinophils 1% Lymphocytes 30% Monocytes 4% Hemoglobin 14.0 g/dL Hematocrit 40.2% Red blood cell 4.8 M/uL Platelet 200,000 K/uL What assessment data and labs values are of concern? Why?

F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows:

* Use the exact value of 2/3 in your calculations.

F. Pierce uses the CAPM to estimate its cost of common equity, r_s and at the time of the analaysis the risk-free rate is 5%, the market risk premium is 4%, and the company's tax rate is 30%. F. Pierce estimates that its beta now (which is "unlevered" because it currently has no debt) is 0.85. Based on this information, what is the firm's optimal capital structure, and what would be the weighted average cost of capital at the optimal capital structure? Do not round intermediate calculations. Round your answers to two decimal places.

Debt:   %
Equity:   %
WACC:   %

1.A 0.40-kg mass, attached to the end of a 0.75-m string, is whirled around in a circular horizontal path. If the maximum tension that the string can withstand is 450 N, then what maximum linear speed can the mass have if the string is not to break?

A.370 m/s

B.22 m/s

C.19 m/s

D.29 m/s

2.A point on the rim of a 0.25-m-radius rotating wheel has a centripetal acceleration of 4.0 m/s². What is the angular speed of the wheel?

A.1.0 rad/s

B.2.0 rad/s

C.3.2 rad/s

D.4.0 rad/s

3. An object of mass 0.50 kg is transported to the surface of Planet X where the object's weight is measured to be 20 N. The radius of the planet is 6.0 × 10⁶ m. What is the mass of Planet X? (G = 6.67 × 10⁻¹¹ N ⋅ m²/kg²)

A.1.80E+18 kg

B.5.40E+24 kg

C.2.16E+25 kg

D.1.80E+18 kg

4.The escape speed from the surface of the Earth is 11.2 km/s. Estimate the escape speed for a spacecraft from the surface of the Moon. The Moon has a mass 1/81 that of Earth and a radius 0.25 that of Earth.

A.2.5 km/s

B.4.0 km/s

C.5.6 km/s

D.8.7 km/s

You have been given the following per unit information about the production of Gillian Inc., and are asked to provide the plant manager with information for a meeting with the vice-president of operations:

Production data, both budgeted and actual, for the year are as follows:

The plant manager has asked you to calculate the following variances: direct material price variance, direct material usage variance, direct labour rate variance, and the direct labour efficiency variance. Use your work to answer the following questions.

The total direct material price variance is $_______________.

The direct material price variance is

The total direct material usage variance is $_______________.

The direct material usage variance is

The total labour rate variance is $_______________.

The direct labour rate variance is

The total labour efficiency variance is $_______________.

The direct labour efficiency variance is

A)Which of the following is NOT a valid boundary condition for a particle inside a 1D box of finite length L? For this problem, assume that the potential energy outside the box is infinite.

1-When x = 0, PHI = 0.

2-The particle can only be inside the box.

3-The wave function is complex.

4-If the wavefunction is normalized, the integral of the complex conjugate from 0 to L will be 1.

5-When x = L, PHI = 0.

B)Looking at the energy eigenvalues for a 1D particle in a box, which of the following can we conclude about the change in energy between levels?

1-Energy level spacing increases when the box becomes more confined.

2-Energy level spacing increases as Planck's constant increases.

3-Energy level spacing increases when particle mass decreases and when the box becomes more confined.

4-Energy level spacing increases when particle mass decreases.

5-Energy level spacing does not change with particle mass.

C)One argon molecule is confined in 1.0 m³ box at 298 K. The probability of the Ar molecule being in the ground state (n=1) is very small. Why?

1-The change in energy between levels is very small compared to kT.

2-The partition function for this molecule is very large.

3-The box is much larger than the de Broglie wavelength of argon.

4-All of these answers are correct.