A luxury cell phone maker has a high fixed-cost base and a lot of debt. Which stakeholder in the company would you rather be?
A. A bond holder in a booming company
B. A shareholder in a stagnant economy
C. A bond holder in a stagnant economy
D. A shareholder in a booming economy
Answer: Option D is correct
We would rather be a shareholder in a booming economy, (in a
booming economy due to better future expectations we can expect an
increase in share price)
A luxury cell phone maker has a high fixed-cost base and a lot of debt. Which...
Phone Company The Phone Company has the following costs of producing and selling a cell phone assuming it produces and sells the normal volume of 100,000 of these cell phones per month: Per unit manufacturing cost Direct materials $50.00 Direct labor 10.00 Variable manufacturing overhead cost 40.00 Fixed manufacturing overhead cost 30.00 Per unit selling cost Variable 15.00 Fixed 10.00 Note that 100,000 (normal volume of production and...
The Phone Company has the following costs of producing and selling a cell phone assuming it produces and sells the normal volume of 100,000 of these cell phones per month: Per unit manufacturing cost Direct materials $50.00 Direct labor 10.00 Variable manufacturing overhead cost 40.00 Fixed manufacturing overhead cost 30.00 Per unit selling cost Variable 15.00 Fixed 10.00 Note that 100,000 (normal volume of production and sales) is...
Vince Limited, maker of high quality hand phone cases, has experienced steady growth over the last 5 years. However, increased competition has led Joe, the CEO, to believe that an aggressive campaign is needed next year to maintain the entity's present growth. The financial year begins in January and ends in December. The accountant has presented Joe with the following data for the current year, for use in preparing next year's advertising campaign. Cost Schedules Variable costs Direct labour per...
Which of the following describes equity securities, rather than debt securities or derivatives? a) They are best for hedging against changes in currency exchange rates. b) They offer a fixed rate of return. c) They typically generate the highest returns of the three types of marketable securities. d) They carry more risk than debt securities, but less than derivatives. Place the following steps for developing a credit policy in the correct order of process: A: The company decides that it...
4. The global cconomy has three cell phone users for every fixed line user. Two in e cell phone users lives in a developing nation and the growth rate is fastest in Africa In 2000, 1 African in 50 had a cell phone; in 2009, it was 14 in 50. Describe the changes in what, how, and for whom t n services the global economy produces. 5. Which of the entries in the list below are consumption goods and services...
please put excel functions used A company is developing a new cell phone and currently has two models under consideration. Historically, 70% of their new phones have had high consumer demand and 30% have had low consumer demand. The below table shows the investment cost and revenue per high and low demands for each model. Model 1 Model 2 Requires $200k investment Requires $175k investment If demand is high, revenue = $500k If demand is high, revenue = $450k If...
You are CEO of Rivet Networks, maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the Killer X3000, will cost $905,000 to develop up front (year O), and you expect revenues the first year of $801,000, growing to $1.48 million the second year, and then declining by 40% per year for the next 3 years before the product is fully obsolete. In years 1 through 5, you will...
You are CEO of Rivet Networks, maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the Killer X3000, will cost $ 904 comma 000 to develop up front (year 0), and you expect revenues the first year of $ 797 comma 000, growing to $ 1.42 million the second year, and then declining by 40 % per year for the next 3 years before the product is fully...