New co. is considering a change in its capital structure. New co. currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. Assume no growth and pays all of its earnings as dividends. EBIT is $14.933 million, and tax rate is 40%. The market risk premium is 4%, and the risk free rate is 6%. New co. is considering increasing its debt level to a capital structure with 40% debt, and repurchasing shares with the extra money that it borrows. New co. will have to retire the old debt in order to issue new debt, and the rate on the new debt will be 9 %. New co. has beta of 1.0.

4. What is New co's unlevered beta? Use market value D/S when levering.
5. What are New co's new beta and cost of equity if it has 40 percent debt?
6. What are New co's WACC and total value of the firm with 40% debt?
7. Describe the MM theory of capital structure. Also explain trade off theory and pecking order theory.

Management discovers that a supervisor at one of its restaurant locations removes excess cash and resets sales totals throughout the day on the point-of-sale (pos) system. at closing, the supervisor deposits cash equal to the recorded sales on the pos system and keeps the rest.the supervisor forwards the close-of-day pos reports from the pos system along with a copy of the bank deposit slip to the company’s revenue accounting department. the revenue accounting department records the sales and the cash for the location in the general ledger and verifies the deposit slip to the bank statement. any differences between sales and deposits are recorded in an over/short account and, if necessary, followed up with the location supervisor. the customer food order checks are serially numbered, and it is the supervisor’s responsibility to see that they are accounted for at the end of each day. customerchecks and the transaction journal tapes from the pos system are kept by the supervisor for 1 week at the location and then destroyed.what control allowed the fraud to occur?

Consider the following scenarios. use what you have learned to decide if the goods and services being provided are individual, public, or merit goods. for each case, state what kind of good has been described and explain your answer using the definitions of individual, public, and merit goods. (6 points each) 1. from your window, you can see a city block that's on fire. you watch city firefighters rescue people and battle the flames to save the buildings. 2. while visiting relatives, you learn that your cousins attend a nearby elementary school that is supported financially by local property tax revenue. 3. you see a squadron of military jets flying overhead. 4. you find out that your aunt works for a defense manufacturing company that has several defense contracts with the government. she tells you that she works for a team that is producing a communications satellite. 5. your class visits a local jail run by a private, profit-making company that detains county criminals and is paid with tax revenue.

Overspeculation and a decrease in consumer confidence are both leading factors of: ?