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Harvard Business School Finance Course With 100% Correct Screen Shots Solutions Of Mentioned Questions
The cost of debt is generally lower than the cost of equity.
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True
False
Bottom of Form
M&M’s Proposition I states that a company’s value is independent of its capital structure.
Top of Form
True
False
Bottom of Form
A higher level of leverage generally reduces managerial discretion.
Top of Form
True
False
Bottom of Form
The Pecking Order Theory of capital structure implies a unique optimum capital structure.
Top of Form
True
False
Bottom of Form
As EBIT drops, the return on equity (ROE) of a levered firm drops ______ the ROE of an otherwise identical unlevered firm.
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the same as
relatively more than
relatively less than
more or less than (it cannot be determined)
Bottom of Form
Shareholders prefer high risk projects when facing a high probability of bankruptcy because
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High risk projects usually bring high rewards.
Shareholders have the residual claim on a company.
Creditors have the residual claim on a company, and therefore bear the risk.
There is a good chance the government will rescue them in bankruptcy.
Bottom of Form
The _________ states that the value of the firm is determined solely by the value of its assets.
Top of Form
Static Tradeoff Model
M&M proposition I
The Pecking Order Model
Agency Theory
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Which of the following expresses the value of a levered firm (VL) in the Static Tradeoff model of optimal capital structure? [Note: VU denotes the value of the unlevered firm; CFD denotes expected costs of financial distress; and PV denotes present value.]
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VL = PV(Tax Shield) – PV(CFD)
VL = VU + PV(Tax Shield) / PV(CFD)
VL = VU + PV(Tax Shield) – PV(CFD)
VL = VU + PV(Tax Shield)
Bottom of Form
A example of indirect costs of bankruptcy is
Top of Form
Court costs
Attorney and advisor fees
Lost sales due to costumers and suppliers lost trust
All of the above
Bottom of Form
Which of the following are equivalent under M&M proposition I?
Top of Form
Maximizing firm value and maximizing firm profit
Maximizing firm value and minimizing the cost of capital
Minimizing firm’s cost of capital and minimizing firm’s debt burden
Maximizing profit and minimizing taxes
Bottom of Form
Baldwin's Turnover Rate For This Year Is 6.29%. This Rate Is Projected To Remain The Same Next Year And No Further Downsizing Will Occur From Automating
Baldwin’s turnover rate for this year is 6.29%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Baldwin plans to spend an additional $500 beyond the extra amount above the $1000 recruiting base it spent this year. The goal of this additional investment is to improve the quality of applicants. What would the total recruiting cost be for Baldwin next year?
Select: 1
$168,535
$202,242
$185,389
$219,096
Next year Baldwin plans to include an additional performance bonus of 0.25% in its compensation plan. This incentive will be provided in addition to the annual raise, if productivity goals are reached. Assuming the goals are reached, how much will Baldwin pay its employees per hour?
Select: 1
$28.22
$29.63
$31.04
$28.15
Andrews Corp. ended the year carrying $80,392,000 worth of inventory. Had they sold their entire inventory at their current prices, how many more dollars of contribution margin would it have brought to Andrews Corp.?
Select: 1
$128,965,000
$80,392,000
$46,302,000
$158,626,950
Which description best fits Digby? For clarity:
– A differentiator competes through good designs, high awareness, and easy accessibility.
– A cost leader competes on price by reducing costs and passing the savings to customers.
– A broad player competes in all parts of the market.
– A niche player competes in selected parts of the market.
Which of these four statements best describes this competitor?
Select: 1
Digby is a broad cost leader
Digby is a niche cost leader
Digby is a niche differentiator
Digby is a broad differentiator
The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin issues bonds:
Select: 1
It is a source of cash and will be shown in the financing section as an addition.
It is a source of cash, and will be shown in the investing section as an addition.
It is a use of cash, and will be shown in the financing section as a subtraction
It is a use of cash, and will be shown in the investing section as a subtraction
This year Baldwin achieved an ROE of 5.1%. Suppose management takes measures that decrease Asset turnover (Sales/Total Assets) next year. Assuming Sales, Profits, and financial leverage remain the same, what effect would you expect this action to have on Baldwin’s ROE?
Select: 1
Baldwin ROE will remain the same
Baldwin ROE will increase
Baldwin ROE will decrease
On the income statement, which of the following would be classified as a variable cost?
Select: 1
Inventory Carry Expense
R&D Expense
Depreciation Expense
Promotion Expense
It is January 2nd and senior management of Baldwin meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing 75,000 shares of stock plus a new bond issue. Assume the stock can be issued at yesterday’s stock price ($40.86) and leverage changes to 2.7. Which of the following statements are true? Select all that apply.
Select: 3
Total assets will rise to $235,152,272
Baldwin will issue stock totaling $3,064,500
Working capital will remain the same at $16,424,173
The total investment for Baldwin will be $26,272,303
Total liabilities will be 147,968,084
[SOLVED]International Business Decision Making
Assignment 1: Discussion Questions—International Business Decision Making
The various factors impacting international business may be brought together into a process for evaluating international business opportunities. Choosing the right mode of entry is the next step.
Research evaluation of business opportunities and modes of entry using your textbook, University online library resources, and the Internet. Respond to the following:
- Explain how a business can assess international business opportunities giving examples. Do you think the size of the company matters in assessing an international business opportunity? Give reasons for your answer.
- In your opinion, what would be the single most effective way for a potential international business to gain entry into an international market? What are the apparent risks of the mode of entry you recommend? For at least one other mode of entry, explain why it would be less effective compared to the one you chose.
Write your response in 400 words or less. Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.
Assignment 2: Presentation—Starting an International Business
Business decisions are not made on a hunch or some vague idea of a good place to do business. Professionals assess business opportunities and modes of entry to choose the best alternative.
Research the topic using your textbook, University online library resources, and the Internet. Based on your research, develop a presentation. Your role is of an educational specialist in international business and your audience is a group of middle managers.
Discuss the following in your presentation:
- Steps to analyzing international business opportunities with specifics of what is involved in each step
- Alternative methods for gaining entry into an international business opportunity or market
Submit your work in a 10-slide PowerPoint presentation. Use the speaker notes area to write the information supporting the slides. Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.