Carbondale oil announces that a well that it has sunk in a new oil province has shown the
existence of substantial oil reserves. the exploitation of these reserves is expected to increase
carbondaleʹs free cash flow by $100 million per year for eight years. if investors had not been
expecting this news, what is the most likely effect on carbondaleʹs stock price upon the
announcement, given that carbondale has 80 million shares outstanding, no debt, and an equity
cost of capital of 11%?
a) no effect
b) rise by $5.15
c) rise by $6.43
d) rise by $7.72

Walsh company manufactures and sells one product. the following information pertains to each of the company’s first two years of operations: variable costs per unit: manufacturing: direct materials $ 25 direct labor $ 12 variable manufacturing overhead $ 5 variable selling and administrative $ 4 fixed costs per year: fixed manufacturing overhead $ 400,000 fixed selling and administrative expenses $ 60,000 during its first year of operations, walsh produced 50,000 units and sold 40,000 units. during its second year of operations, it produced 40,000 units and sold 50,000 units. the selling price of the company’s product is $83 per unit. required: 1. assume the company uses variable costing: a. compute the unit product cost for year 1 and year 2. b. prepare an income statement for year 1 and year 2. 2. assume the company uses absorption costing: a. compute the unit product cost for year 1 and year 2. b. prepare an income statement for year 1 and year 2. 3. reconcile the difference between variable costing and absorption costing net operating income in year 1.