12:26llCase (cost structure and businessdevelopment)A firm has the following cost structure:Unit Price: $10Unit Direct Cost: $8Fixed Cost: $1000 (for capacity up to1000 units)The President of the firm asks you,the new Finance Manager, for advicefor the following concerns:1. This is a new business: what arethe immediate concerns?2. The market is competitive: anyeffective strategy in such amarket?3. Long-term planningconsiderations?Note: Ground vour advice on dataGv Reply to All24MailSearchCalendar

Different levels Production and sales Cost per Unit Production and sales 1000 Units…

Answered: Case (cost structure and business…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. What is not a business discipline? A. International studies B. Accounting C. Finance D. Human resources 2. Marketing activities include advertising, weather forecasting, customer service, and market research. A. True B. False 3. Product lifecycle is how long a product will last for an individual customer. A. True B. False 4. When does a business have a good chance to be successful? A. When the economy is in a state of inflation B. During a recession C. During a depression D. When the economy experiences growth
1. From the scenario, Identify what is the Market value of the firm's equity, the market value of the firm's debt, the cost of equity (required rate of return), cost of debt (yield to maturity on existing debt) and the corporate tax rate.
The firm's self-supporting growth rate is influenced by the firm's capital intensity ratio. The more assets the firm requires to achieve a certain sales level, the lower its sustainable growth rate will be. Many experts argue that it is better for an organization to grow organically or by putting the money back into the business and not taking on debt. Consider your own organization that you currently work for or have worked for in the past. What is their approach to growing the business? How would you advise your company based on what you have learned this week in terms of self-supporting growth?
Finance multiple choice question. 9. Which of the following is the primary goal of financial management for all for-profit companies? Maximize value of owners' equity. Maximize net cash flows. Maximize profitability. Minimize risk. Maximize market share.
Describe a situation in which an M&A modeller will choose a 3-stage growth model to analyse a company (instead of a 1-stage growth model).
1. Interactions between financial market participants Financial markets facilitate the transfer of excess funds from those who have them to those who need them. In the following table, determine whether each financial market participant is a surplus unit or deficit unit. Financial Market Participant A state that is constantly running a budget deficit A firm that issues equity securities to expand operations A consumer that purchases equity securities from a new tech company Surplus Unit Deficit Unit S An angel investor Suppose Moonlit Productions needs to raise money to finance its new manufacturing facility, but their CFO does not want to part with any of the firm's equity. In this case, Moonlit Productions would likely issue securities to obtain the funding. Which of the following are ways that Moonlit Productions could obtain funds to finance the expansion of its operations, given its stated preference in the previous question? Check all that apply. Issue common stocks Issue…
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2.) Discount Rates for Oil Exploration You are a senior manager at an automobile company. In an effort to offer a full menu of auto and gas products, your firm is considering an oil exploration project. The CEO has selected the manager of the company's truck division to oversee the project, and has asked you to evaluate whether the company should proceed with the exploration or not. To help you evaluate the project, your associate gives you the following information: Company Equity Beta General American Oil 1.81 1.29 Louisiana Land & Exploration Mesa Petroleum 2.36 1.60 Murphy Oil Natomas Oil 1.84 1.53 1.35 Oceanic Exploration Superior Oil D/(D+E) 0.03 0.12 0.37 0.27 0.41 0.23 0.16 a.) Should you also ask the associate for similar information on car manufacturers? On truck manufacturers? On automobile companies? On your firm in particular? Why or why not? b.) Based on the information you have available, calculate an appropriate discount rate assuming that risk free rate is 4% and…
2) Financial Statement Analysis. Your firm has hired a consultant. At the conference you're attending, she says this about your company: "Sure, you've got high ROE, but with that comes a lot of risk. You have lots of ROE because you have a high Debt/Equity Ratio." People are looking very confused. Can you explain what the consultant means? How does high Debt/Equity cause lots of risk for your firm? Risk of what, exactly?
Subject: SBD & Entrepreneurship
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