Finance week 4 quiz. ____________________________________________
BUS 401 WeeK 4 Quizz
include the fees paid to the investment bankers, lawyers, and accountants involved in selling a new security issue.
encourage firms to pay large dividends.
are encountered whenever a firm fails to pay a dividend.
are incurred when investors fail to cash their dividend check.
Based on the data contained in Table A, what is the break-even point in units produced and sold?
Average selling price per unit $18.00
Variable cost per unit $13.00
Units sold 400,000
Fixed costs $650,000
Interest expense $ 50,000
The break-even model enables the manager of the firm to
calculate the minimum price of common stock for certain situations.
set appropriate equilibrium thresholds.
determine the quantity of output that must be sold to cover all operating costs.
determine the optimal amount of debt financing to use.
Moline Manufacturing Corporation reported the following items Sales = $6,000,000; Variable Costs of Production = $1,500,000; Variable Selling and Administrative Expenses = $550,000; Fixed Costs = $1,350,000; EBIT = $2,600,000; and the Marginal Tax Rate =35%. Moline\'s break-even point in sales dollars is
A firm\'s optimal capital structure occurs where?
EPS are maximized, and WACC is minimized.
Stock price is maximized, and EPS are maximized.
Stock price is maximized, and WACC is maximized.
WACC is minimized, and stock price is maximized.
Financial leverage is distinct from operating leverage since it accounts for
use of debt and preferred stock.
variability in fixed operating costs.
variability in sales.
changes in EBIT.
Bob\'s Baked Goods Company reported the following income statement for 2009
Variable Costs 900,000
Fixed Operating Costs 700,000
Interest Expense 200,000
Taxes (30%) 210,000
Net Income $490,000
Earnings Per Share $4.90
If Bob\'s sales next year increase by 20%, Bob\'s EBIT will increase
20%, showing no operating leverage.
20%, showing no financial leverage.
over 35%, due to operating leverage.
over 35%, due to operating leverage and financial leverage.
Amish Enterprises makes wooden play sets. The company pays annual rent of $400,000 per year and pays administrative salaries totaling $150,000 per year. Each play set requires $400 of wood, ten hours of
labor at $70 per hour, and variable overhead costs of $100. Fixed advertising expenses equal $100,000 per year. Each play set sells for $3,200. What is Amish Enterprises\' break-even output level?
340 play sets
325 play sets
297 play sets
258 play sets
A firm that uses large amounts of debt financing in an industry characterized by a high degree of business risk would have ________ earnings per share fluctuations resulting from changes in levels of sales.
The final approval of a dividend payment comes from
the president of the company.
the board of directors.
It is a joint decision requiring approval from all of the above.