Klein cosmetics has a profit margin of 5.0%, a total assets turnover ratio of 1.5 times, no debt and therefore an equity multiplier of 1.0, and an roe of 7.5%. the cfo recommends that the firm borrow money, use the funds to buy back stock, and raise the equity multiplier to 2.0. the size of the firm (assets) would not change. she thinks that operations would not be affected, but interest on the new debt would lower the profit margin to 4.5%. this would probably be a good move, as it would increase the roe from 7.5% to 13.5%.
a. true
b. false

Afinancial institution, the thriftem bank, is in the process of formulating its loan policy for the next quarter. a total of $12 million is allocated for that purpose. being a full-service facility, the bank is obligated to grant loans to different clientele. the following table provides the types of loans, the interest rate charged by the bank, and the possibility of bad debt as estimated from past experience.type of loaninterest rateprobability of bad debtpersonal.140.10car.130.07home.120.03farm.125.05commercial.100.02 bad debts are assumed unrecoverable and hence produce no interest revenue either. competition with other financial institutions in the area requires that the bank allocate at least 40% of the total funds to farm and commercial loans. to assist the housing industry in the region, home loans must equal at least 50% of the personal, car, and home loans. the bank also has a stated policy specifying that the overall ratio for bad debts on all loans may not exceed .04. formulate this problem as a linear program. define your variables clearly and write all the constraints explaining the significance of each.

Jewelry manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches. what fundamental economic question are they addressing by offering this range of items?

If kroger had whole foods’ number of days’ sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? round interim calculations to one decimal place and your final answer to the nearest million.