Tangshan Mining borrowed $100,000 for one year under a revolving credit agreement that authorized and guaranteed the firm access to $200,000. The revolving credit agreement had a stated interest rate of 7.5 percent and charged the firm a 1 percent commitment fee on the unused portion of the agreement. Based on this information, the effective […]
Comparison of the degree of operating leverage of two firms is valid only when the base level of sales used for each firm is the same. Indicate whether the statement is true or false ANSWER TRUE
In a world of both personal and corporate taxes, individual investors may not be able to get the full advantage of debt by borrowing personally. Corporate borrowing rates, personal borrowing rates, and tax rates may differ. Indicate whether the statement is true or false ANSWER TRUE
Tangshan Mining borrowed $100,000 for one year under a line of credit with a stated interest rate of 7.5 percent and a 15 percent compensating balance. Normally, the firm keeps a balance of about $10,000 in its checking account. Based on this information, the effective annual interest rate on the loan is ________. A) 7.89% […]
Sizing up marketing management involves: A) identifying the firm’s strengths and weaknesses related to marketing. B) identifying the target market. C) identifying the appropriate marketing mix D) All of the above. ANSWER A
Banker’s Acceptances are closely affiliated with international transaction rather than domestic ones. Describe and provide an example of how this market works and why there is a need for the instrument. What will be an ideal response? ANSWER When firms engage in international trade they are often unfamiliar with the customer and the […]
$1.00 (one dollar) invested in a portfolio of 90-day U.S. Treasury bills in 1925 would have grown to a value IN EXCESS OF ________ by 2011 assuming that all cash flows had been reinvested in the portfolio. (Choose the answer closest to the research provided dollar amount.) A) $1.00 B) $10.00 C) $100.00 D) $1,000.00 […]
As we waive the conditions of perfect capital markets and include taxes, M&M suggest that the average cost of capital for the firm will remain unchanged with the addition of debt. Indicate whether the statement is true or false ANSWER FALSE
Hayley’s Theatrical Supply is in the process of negotiating a line of credit with two local banks. The prime rate is currently 8 percent. The terms follow: (a) Calculate the effective interest rate of both banks. (b) Recommend which bank’s line of credit Hayley’s Theatrical Supply should accept. ANSWER (a) 1st National Bank […]
Which of the following is NOT a question related to operations management and supply risk analysis? A) How close is the firm to full capacity? B) Are the products appropriate relative to the competitors’ products? C) How much inventory is required to meet demand? D) How critical are technological innovations and investments? ANSWER […]
