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Ghost, Inc. , has no debt outstanding and a total market value of $450,000. Earnings before interest and taxes, EBIT, are projected to be $57,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 16 percent higher. If there is a recession, then EBIT will be 24 percent lower. The company is considering a $215,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 9,000 shares outstanding. The company has a tax rate of 25 percent, a market-to-book ratio of 1. 0, and the stock price remains constant. Required:a. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. b. Calculate the percentage changes in ROE when the economy expands or enters a recession. c. Assume the firm goes through with the proposed recapitalization. Calculate the return on equity (ROE) under each of the three economic scenarios. d. Assume the firm goes through with the proposed recapitalization. Calculate the percentage changes in ROE when the economy expands or enters a recession.
San antonio independent school district v. rodriguez (1973) in 1968, members of the edgewood concerned parent association filed a lawsuit in a texas district court challenging that the system of using property taxes as the main source of revenue for school districts discriminated against poorer school districts. they provided evidence showing that wealthier schools serving primarily white students spent more money per pupil than poorer schools, especially those with minority populations. without a wealthy tax base to fund their schools, they argued that poorer students fourteenth amendment rights were being violated.the case was brought before the supreme court in san antonio independent school district v. rodriguez (1973). in a 5-4 decision, which was divided along ideological lines, the supreme court ruled that the students constitutional rights were not violated by the texas school funding plan. in writing the majority opinion, justice powell stated that "the texas plan is not the result of hurried, ill-conceived legislation. it certainly is not the product of purposeful discrimination against any group or class. on the contrary, it is rooted in decades of experience in texas and elsewhere, and, in major part, is the product of responsible studies by qualified people."question a. identify the clause of the fourteenth amendment that is common to both brown v. board of education of topeka (1954) and san antonio independent school district v. rodriguez (1973).b. explain how the difference in facts led to a different decision in both brown v. board of education of topeka and san antonio independent school district v. rodriguez.c. explain how the outcome in san antonio independent school district v. rodriguez demonstrates how public policy regarding equality of opportunity is affected by federalism in the united states.
A comparative balance sheet and income statement is shown for Cruz, Incorporated.CRUZ, INCORPORATEDComparative Balance SheetsAt December 31 2021 2020Assets Cash $ 63,600 $ 15,900Accounts receivable, net 27,400 33,700Inventory 57,400 63,300Prepaid expenses 3,500 2,900Total current assets 151,900 115,800Furniture 70,500 82,200Accumulated depreciationFurniture (10,900) (6,200)Total assets $ 211,500 $ 191,800Liabilities and Equity Accounts payable $ 10,000 $ 14,100Wages payable 6,000 3,300Income taxes payable 1,000 1,800Total current liabilities 17,000 19,200Notes payable (long-term) 20,700 47,800Total liabilities 37,700 67,000Equity Common stock, $5 par value 153,600 124,000Retained earnings 20,200 800Total liabilities and equity $ 211,500 $ 191,800CRUZ, INCORPORATEDIncome StatementFor Year Ended December 31, 2021Sales $ 328,400Cost of goods sold 211,300Gross profit 117,100Operating expenses (excluding depreciation) 60,000Depreciation expense 25,300Income before taxes 31,800Income taxes expense 11,600Net income $ 20,200 Required:Use the indirect method to prepare the operating activities section of Cruzs statement of cash flows.