1. It is January 2nd and senior management of Chester meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing $10,000,000 in bonds. Assume the bonds are issued at face value and leverage changes to 2.7. Which of the following statements are true? Select all that apply.
Select: 3
Total Assets will rise to $214,153,706
Working capital will remain the same at $14,334,954
The total investment for Chester will be $13,722,294
Chester's long-term debt will rise by $10,000,000
Total liabilities will be $133,458,907
2. Chester's turnover rate for this year is 6.29%. This rate is projected to remain the same next year and no further downsizing will occur from automating. What would the total recruiting cost be for Chester, assuming it spends the same amount extra above the $1,000 recruiting base as they did this year?
Select: 1
$189,746
$314
$2,514,744
$158,121
3. Suppose the Digby company expands to other markets with good designs, high awareness and easy accessibility, what strategy would they be implementing?
Select: 1
Broad cost leader
Broad differentiation
Niche differentiation
Niche cost leader
4. Andrews Corp. ended the year carrying $73,492,000 worth of inventory. Had they sold their entire inventory at their current prices, how many more dollars of contribution margin would it have brought to Andrews Corp.?
Select: 1
$54,726,000
$167,103,000
$73,492,000
$123,780,000
5. Last year, Baldwin Corp paid their workers $26.81 per hour. How much will they be paying them 2 rounds from then?
Select: 1
$29.56
$28.29
$28.15
$31.04
6.The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin makes plant improvements:
Select: 1
It is a source of cash, and will be shown in the investing section as an addition.
It is a use of cash, and will be shown in the financing section as a subtraction.
It is a source of cash and will be shown in the financing section as an addition.
It is a use of cash, and will be shown in the investing section as a subtraction.
7. This year Chester achieved an ROE of 1.9%. Suppose next year the profit margin (Net Income/Sales) increases. Assuming sales, assets and financial leverage remain the same next year, what effect would you expect this action to have on Chester's ROE?
Select: 1
Chester ROE will decrease.
Chester ROE will remain the same.
Chester ROE will increase.
8. On the income statement, which of the following would be classified as a variable cost?
Select: 1
Depreciation Expense
R&D Expense
Promotion Expense
Direct Material Expense