Consider Optitron Enterprises, a firm that is currently funded entirely with equity. There are 50 million shares outstanding and each share has a current market value of $15. Eric Fredrickson, the CEO, has considered whether the company should take on some debt, as he has learned in his Executive MBA class that some debt can increase shareholder value. Mr. Fredrickson has estimated that the current risk free rate is 1.9% and the expected return on a broad market portfolio is 9%. The company’s marginal tax rate is 40% and its operating beta (also known as unlevered beta) is 0.75. Mr. Fredrickson has contacted an investment banker who has analyzed the firm’s operational risk and financial condition. The investment banker has provided the following schedule of anticipated debt costs at various levels of debt financing. Optitron would use any proceeds from a debt issue to immediately retire outstanding equity by repurchasing shares, also known as a recapitalization. wd rd 0 0.0% 0.20 6.5% 0.40 7.5% 0.60 8.5% 0.80 9.5% 1. Using the Hamada equation, estimate the firm’s beta at each level of debt. 2. Using the CAPM, estimate the firm’s cost of equity at each level of debt.

Which of the following statements concerning an organization's strategy is true? a. cost accountants formulate strategy in an organization since they have more inputs about costs. b. businesses usually follow one of two broad strategies: offering a quality product at a high price, or offering a unique product or service priced lower than the competition. c. a good strategy will always overcome poor implementation. d. strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives.

Cardinal company is considering a project that would require a $2,725,000 investment in equipment with a useful life of five years. at the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. the company’s discount rate is 14%. the project would provide net operating income each year as follows: sales $2,867,000 variable expenses 1,125,000 contribution margin 1,742,000 fixed expenses: advertising, salaries, and other fixed out-of-pocket costs $706,000 depreciation 465,000 total fixed expenses 1,171,000 net operating income $571,000 1. which item(s) in the income statement shown above will not affect cash flows? (you may select more than one answer. single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. any boxes left with a question mark will be automatically graded as incorrect.) (a)sales (b)variable expenses (c) advertising, salaries, and other fixed out-of-pocket costs expenses (d) depreciation expense 2. what are the project’s annual net cash inflows? 3.what is the present value of the project’s annual net cash inflows? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 4.what is the present value of the equipment’s salvage value at the end of five years? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 5.what is the project’s net present value? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)

Assume that (i) setups need to be completed first; (ii) a setup can only start once the batch has arrived at the resource, and (iii) all flow units of a batch need to be processed at a resource before any of the units of the batch can be moved to the next resource. process step 1 molding 2 painting 3 dressing setup time 15 min. 30 min. no setup processing time 0.25 min./unit 0.15 min./unit 0.30 min./unit which batch size would minimize inventory without decreasing the process capacity?