Yozshubar Signed out You have successfully signed out and will be required to sign back in should you need to download more resources. This fully integrated online homework system gives students the hands-on practice and tutorial help they need to learn finance efficiently—while helping you free up your time. In this section, instructors will find multiple problems that address the important concepts, tools, and techniques in the chapter. Principles of Managerial Finance, 13th Edition Instructor resource file download The work is protected by local and international copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. These ask readers to complete problems using a simulated Excel spreadsheet in MyFinanceLab that resemble examples demonstrated in the corresponding section.
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LG 1: Breakeven comparisons—algebraic Basic a. From least risky to most risky: F and G are of equal risk, then H. It is important to recognize that operating leverage is only one measure of risk. LG 1: Breakeven point—algebraic and graphical Intermediate a. LG 1: Breakeven analysis Intermediate a. Barry should go into the CD business. LG 1: Breakeven analysis Easy a. Install the Geo-Tracker because the device pays for itself over The operating breakeven point is directly related to fixed and variable costs and inversely related to selling price.
Increases in costs raise the operating breakeven point, while increases in price lower it. Those more costly to produce will have higher prices than the less expensive production models. At the operating breakeven point, the DOL is infinite. DOL decreases as the firm expands beyond the operating breakeven point. Principles of Managerial Finance, Twelfth Edition b. LG 2: Financial leverage Challenge a.
Based on his calculations, the amount that Max will have available after loan payments with his current debt changes by 1. This is less responsive and therefore less risky than the 1. Chapter 12 Leverage and Capital Structure P LG 2, 5: DFL and graphic display of financing plans—challenge a.
See graph, which is based on the following equation and data points. The lines representing the two financing plans are parallel since the number of shares of common stock outstanding is the same in each case. LG 1, 2: Integrative—multiple leverage measures Intermediate a. Firm R has less operating business risk but more financial risk than Firm W. Two firms with differing operating and financial structures may be equally leveraged. Since total leverage is the product of operating and financial leverage, each firm may structure itself differently and still have the same amount of total risk.
LG 1, 2: Integrative—multiple leverage measures and prediction Challenge a. LG 3: Capital structures Intermediate a. Since Kirsten debt-related expenses as a percentage of her monthly gross income are less than bank-specified maximums, her loan application should be accepted. LG 3: Debt and financial risk Challenge a. B is more risky since it has a higher financial breakeven point. The steeper slope of the line for Structure B also indicates greater financial leverage.
Structure A has greater financial leverage, hence greater financial risk. LG 3, 4, 6: Integrative—optimal capital structure Intermediate a.
LG 3, 4, 6: Integrative—Optimal capital structures Challenge a. LG 3, 4, 5, 6: Integrative—optimal capital structure Challenge a. Probability 0. Principles of Managerial Finance, Twelfth Edition e. Principles of Managerial Finance, Twelfth Edition The return, as measured by the E EPS , as shown in part d, continually increases as the debt ratio increases, although at some point the rate of increase of the EPS begins to decline the law of diminishing returns.
The risk as measured by the CV also increases as the debt ratio increases, but at a more rapid rate. Ethics problem Intermediate Information asymmetry applies to situations in which one party has more and better information than the other interested party ies. This appears to be exactly the situation in which managers overleverage or lead a buyout of the company. Existing bondholders and possibly stockholders are harmed by the financial risk of overleveraging, and existing stockholders are harmed if they accept a buyout price less than that warranted by accurate and incomplete information.
The board of directors has a fiduciary duty toward stockholders, and hopefully bears an ethical concern toward bondholders as well. The board can and should insist that management divulge all information it possess on the future plans and risks the company faces although, caution to keep this out of the hands of competitors is warranted.
Principles of Managerial Finance eBook, 6th Edition
Mijar New Coauthor Chad Managreial. Available within the online course materials and offline via an iPad app, the enhanced eText allows instructors and students to highlight, bookmark, take notes, and share with one another. New to This Edition. Comprehensive Problemskeyed to the learning goals, are longer and more complex than the Warm-Up Exercises. Guide students through complex material with a proven learning goal system. Additional chapter resources, such as Chapter Cases, Group Exercises, Critical Thinking Problems, and numerous online resources for student learning and assessment are available in MyFinanceLab at www.
Principles of Managerial Finance, 6th Edition
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