19-3

Heather Smith Cosmetics (HSC) manufactures a variety of products and is organized into three divisions (investment centers): soap products, skin lotions, and hair products. Information about the most recent year’s operations follows. The information includes the value of intangible assets, including research and development, patents, and other innovations that are not included on HSC’s balance sheet. Were these intangibles to be included in the financial statements (as they are for EVA®), the increase in the balance sheet and the increase in after-tax operating income would be as given below:

Required:

1. Calculate the return on investment (ROI) for each division. (Round your answers to 2 decimal places. (i.e. .1234 = 12.34%))

2. Calculate the residual income (RI) for each division.

3. Calculate EVA^® for each division.

Compute the volume of each spring and it's uncertainty using error propagation.

What is the formula for finding Volume of a spring? Not sure if any of these help but these are my data from my lab. I just don't know what the formula is, to put it to use. And if anyone can help with error propagation with the volume, that would help alot too.

The length is .1310m
spring diameter is .01425m
wire diameter is .00075m
coil # 165
mass is .02780kg

Graphic Tees is a design company that sells custom printed t-shirts. The firm sells printed t-shirts under a block pricing scheme that charges $16 per t-shirt if the customer buys up to 10 t-shirts and $13 if they buy 11 to 20 t-shirts. The demand curve is Q = 1200 - 50P, and the marginal cost of a t-shirt is $7. What are the profits for Graphic Tees under this block pricing scheme?

Tailoring experts Frieda Oglesby, Rena Fitts, and Will Bertrand decide to go into business together. Their business, FitzWellby, is a business that provides in-home measuring and fittings and even on-site stitching to busy executives who don't have time to take their clothing to tailor shops.

Since all three have the same skills, they plan to share the profits of the business equally. At first, Oglesby believes that their business is unlikely to be sued for any reason—after all, they're just providing in-home services. Fitts points out that one of the three could accidentally damage a client's personal property or, more likely, an expensive piece of clothing. Oglesby is quickly convinced.

Which type of partnership would be right for FitzWellby: general, limited, limited liability, or joint venture? Explain your response

Industry Level Analysis/ Porters Five Forces of Etsy

MM with Corporate Taxes

Companies U and L are identical in every respect except that U is unlevered while L has $8 million of 6% bonds outstanding. Assume that: (1) All of the MM assumptions are met. (2) Both firms are subject to a 35% federal-plus-state corporate tax rate. (3) EBIT is $5 million. (4) The unlevered cost of equity is 13%.

1. What value would MM now estimate for each firm? (Hint: Use Proposition I.) Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places.
   Company U: $    million
   Company L: $    million
   
2. What is r_s for Firm U? Round your answer to one decimal place.
     %
   
   What is r_s for Firm L? Do not round intermediate calculations. Round your answer to one decimal place.
     %
   
3. Find S_L, and then show that S_L + D = V_L results in the same value as obtained in Part a. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
   S_L = $    million
   S_L + D = $    million
   
4. What is the WACC for Firm U? Do not round intermediate calculations. Round your answer to two decimal places.
     %

   What is the WACC for Firm L? Do not round intermediate calculations. Round your answer to two decimal places.
     %

Kate has a monthly income of $500. She spends her income on cell phone calls (measured in minutes on the horizontal axis) and other goods (measured in units on the vertical axis). The price of a unit of other goods is P_Y=1. Kate’s mobile phone company offers her the choice of two cell phone plans:

      Plan A: Pay a $40 monthly fee and make calls for $0.20 per minute.

            Plan B: Pay no monthly fee and make calls for $0.40 per minute.

27. Suppose Kate has a utility function of the form U=min(0.1X,Y). Kate’s utility at her utility maximizing bundle is ______166.67_______ utils.

28. Suppose instead that Kate has well-behaved preferences and is currently buying minutes under Plan A. Now suppose that Plan B becomes available, and by coincidence her budget lines under Plan A and Plan B happen to intersect at the number of minutes she is currently buying under Plan A. Kate will be (better off, worse off, just as well off) _____________ buying minutes under Plan B.

8. Meet Lobo. He is an alien bounty hunter and as such is a monopolistic competitor, given his brand of bounty hunting and has “requested” your help. He has a fixed cost of $5,000 and a constant marginal cost of $500 per job. If he faces a demand curve described by this equation: P = 1,000 – 10Q. (where P is the price he charges and Q is the number of jobs he takes)

a. At what price will Lobo break even and how many jobs will he have to take at that price?

b. Find Lobo's price and quantity where he maximizes profit

c. Calculate Lobo’s Monopoly profits from part b above

d. From your answers a through c above, convince Lobo that to make profit, he should not take on as many jobs as he can get his hands on. e. Suppose Lobo’s planet opens up and he is able to take jobs all over the galaxy, not just his planet, what would happen to Lobo’s price, number of jobs, and monopoly profits in the short run after opening up. (Assume that as the main man, Lobo charges different prices compared to all other bounty hunters and that before opening up, the bounty hunting market had reached its long run equilibrium without trade)

what are the Municipal solid waste management strategies?and industrial waste management strategies ?

Optimal Capital Structure with Hamada

Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 7%, and its stock price is $40 per share with 2 million shares outstanding. BEA is a zero growth firm and pays out all of its earnings as dividends. The firm's EBIT is $14.386 million, and it faces a 40% federal-plus-state tax rate. The market risk premium is 6%, and the risk-free rate is 4%. BEA is considering increasing its debt level to a capital structure with 30% debt, based on market values, and repurchasing shares with the extra money that it borrows. BEA will have to retire the old debt in order to issue new debt, and the rate on the new debt will be 8%. BEA has a beta of 1.0.

What is the total value of the firm with 30% debt? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places.
$   million

1. What is BEA's unlevered beta? Use market value D/S (which is the same as w_d/w_s) when unlevering. Do not round intermediate calculations. Round your answer to two decimal places.
2. What are BEA's new beta and cost of equity if it has 30% debt? Do not round intermediate calculations. Round your answers to two decimal places.
   Beta:  
   Cost of equity:   %
3. What are BEA’s WACC and total value of the firm with 30% debt? Do not round intermediate calculations. Round your answer to two decimal places.
     %

Is the Wonderlic test a good predictor? why or why not?

The University of California has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 3%. Coupons are paid twice a year. Bond A matures in 1 year, while bond B matures in 30 years. The market interest rate for similar bonds is 10%.

Part 1

What is the price of bond A?

Attempt 1/5 for 10 pts.

Part 2

What is the price of bond B?

Attempt 1/5 for 10 pts.

Part 3

Now assume that yields increase to 13%. What is the price of bond A?

Attempt 1/5 for 10 pts.

Part 4

What is now the price of bond B?

A GM and a Ford bond both have 4 years to maturity, a $1,000 par value, a BB rating and pay interest semiannually. GM has a coupon rate of 6.2%, while Ford has a coupon rate of 5.3%.

   Attempt 1/5 for 10 pts.

Part 1

The GM bond trades at 94.59 (percent of par). What is the yield to maturity (YTM)?

Attempt 1/5 for 10 pts.

Part 2

What should be the price of the Ford bond (in $)?

A bond has an annual coupon rate of 4.4%, a face value of $1,000, a price of $1,166.29, and matures in 10 years. What is the bond's YTM?

Boeing has a bond outstanding with 15 years to maturity, a $1,000 par value, a coupon rate of 6.9%, with coupons paid semiannually, and a price of 100.93 (percent of par).

If the company wants to issue a new bond with the same maturity at par, what coupon rate should it choose?

A corporate bond has 16 years to maturity, a face value of $1,000, a coupon rate of 4.8% and pays interest semiannually. The annual market interest rate for similar bonds is 3.3% What is the price of the bond?