ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $480,000 in stock. XYZ uses both stock and perpetual debt; its stock is worth $240,000 and the interest rate on its debt is 9 percent. Both firms expect EBIT to be $58,400. Ignore taxes. The cost of equity for ABC is percent, and for XYZ it is percent.

Roi analysis using dupont model. charlie? s furniture store has been in business for several years. the firm? s owners have described the store as a ? high-price, highservice? operation that provides lots of assistance to its customers. margin has averaged a relatively high 32% per year for several years, but turnover has been a relatively low 0.4 based on average total assets of $800,000. a discount furniture store is about to open in the area served by charlie? s, and management is considering lowering prices in order to compete effectively. required: a. calculate current sales and roi for charlie? s furniture store. b. assuming that the new strategy would reduce margin to 20%, and assuming that average total assets would stay the same, calculate the sales that would be required to have the same roi as they currently earned. c. suppose that you presented the results of your analysis in parts a and b of this problem to charlie, and he replied, ? what

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Consider the market for gasoline. suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon, and employees at gas stations earn $17.50 per hour. complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. statement price control effect the government has instituted a legal minimum price of $3.40 per gallon for gasoline. the government prohibits gas stations from selling gasoline for more than $3.40 per gallon. due to new regulations, gas stations that would like to pay better wages in order to hire more workers are prohibited from paying more than $14.50 per hour.