University of Louisiana, Lafayette - FNAN 522 Module 5 Homework. Latest 2022
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Course
FNAN 522
Institution
University Of Louisiana, Lafayette
University of Louisiana, Lafayette - FNAN 522 Module 5 Homework.Started on Sunday, 24 November 2021, 9:17 PM State Finished Completed on Sunday, 24 Novem ber 2021, 9:19 PM Time taken 2 mins 38 secs Marks 10.00/10.00 Grade 20.00 out of 20.00 (100%) A company has $2 million in machinery expenses and ...
a company has 2 million in machinery expenses and 3 million in rent it costs 30 per
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University of Louisiana, Lafayette
FNAN 522
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FNAN522-020_860-202020
Started on Sunday, 24 November 2021, 9:17 PM
State Finished
Completed on Sunday, 24 November 2021, 9:19 PM
Time taken 2 mins 38 secs
Marks 10.00/10.00
Grade 20.00 out of 20.00 ( 100%)
Question 1 A company has $2 million in machinery expenses
Correct and $3 million in rent. It costs $30 per unit in labor
costs to produce the good, which is sold for $50
Mark 1.00 out of
per unit. What is the break even point?
1.00
Select one:
a. 50,000 units
b. 100,000 units
c. 166,667 units
d. 250,000 units
Question 2 A company produces 100,000 units that sell for
Correct $40. The company's variable costs per unit is $25.
The company's total fixed costs are $800,000.
Mark 1.00 out of
What is the company's degree of operating
1.00
leverage?
Select one:
a. 1.47
b. 1.14
c. 1.25
d. 2.14
, Question
Correct
3 Mark 1.00 out of
Managers of publicly traded corporations are often
1.00 compensated at least in part based on firm
profitability, and bondholders prefer to receive
principal and interest payments on time. Leverage
can increase firm profitability and make more
money available for interest and principal
payments, so it appears that mangers' interests
and bondholders' interests are well-aligned.
Which of the following is true about conflicts
between managers and bondholders?
Select one:
a. There is a clear target balance between the
amount of debt and equity financing that
aligns manager's interests with bondholders'
interests.
b. Managers' interests and bondholders'
interests are well aligned only when firms are
100% debt financed, but bankruptcy costs
prevent this level of debt financing in practice.
c. Managers may under invest in projects if it
appears that all proceeds will be absorbed by
bondholders, hurting both shareholders and
bondholders.
d. Managers' and bondholders' incentives are
well aligned only when firms are 100% equity
financed (zero debt financing).
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