Locomotive corporation is planning to repurchase part of its common stock by issuing corporate debt. as a result, the firm’s debt–equity ratio is expected to rise from 0.35 to 0.5. the firm currently has $3.6 million worth of debt outstanding. the cost of this debt is 8 percent per year. locomotive expects to have an ebit of $1.35 million per year in perpetuity. locomotive pays no taxes. a. what is the market value of locomotive corporation before and after the repurchase announcement? b. what is the expected return on the firm’s equity before the announcement of the stock repurchase plan? c. what is the expected return on the equity of an otherwise identical all-equity firm? d. what is the expected return on the firm’s equity after the announcement of the stock repurchase plan?

Goods and services that can be used for the same purpose are and goods and services that are used together are

Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale

Which critical success factor improves with reduced cycle time, better quality standards, and improved efficiency when an is is implemented?