Tuesday 4 November 2014

FIN 370 Week 5 Complete

FIN 370 Week 5 Complete

Firm A has $10,000 in assets entirely financed in equity.
Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt (with a 10% rate of interest) and $5,000 equity.
Both firms sell 10,000 units of output at $2.50 per unit.  The variable costs of production are $1, and the fixed production costs are $12,000.  (To ease the calculation, assume no income tax.)
a)    What is the opening income (EBIT) for both firms?
b)   What are the earnings after interest?
c)    If sales increase by 10 percent to 11,000 units, by what percentage will each firm’s earnings after interest increase?
-          Determine the earnings after taxes and compute the percentage increase in these earnings from the answers derived in part (b).
      d) Why are the percentage changes different?
Select a Virtual Organization using the student website. Assume your organization is privately held, wants to expand operations, and is faced with three options for expansion:
 Going public through an IPO.
 Acquiring another organization in the same industry.
 Merging with another organization.
Write a 1,050- to 1,400-word paper in which you compare and contrast options and make a recommendation about which strategy the organization must choose. Address the following:
 Strengths and weaknesses of each approach.
 Opportunities and threats of each approach.
Also consider the following as it relates to all three options should the organization pursue an international location:
 Effects of globalization on financial decisions.
 Factors that contribute to exchange rate risks.
 Mitigating exchange rate risk.
Format your paper consistent with APA guidelines.
To download the complete paper click FIN 370 Week 5 Complete
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