Suppose a U. S. firm is considering whether to issue stock in the U. S. or in Mexico. Assume the two stock markets are fully segmented, and that the following conditions prevail: Mexico U. S. Stock market expected return 8% 7% firm’s beta 0.8 1.0 riskless rate 3% 1% Expected rate of peso appreciation -2%/year against the U. S. dollar a) What is the cost of equity issued in the U. S.? b) What is the cost of issuing equity in Mexico, from the U. S. corporation’s perspective? Your answer should again be in percent per year, and should recognize that the dollar is the home currency for the U. S. corporation.

Atlas manufacturing produces a unique valve, and has the capacity to produce 50,000 valves annually. currently atlas produces 40,000 valves and is thinking about increasing production to 45,000 valves next year. what is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change? a. total manufacturing costs will increase and unit manufacturing costs will also increase. b. total manufacturing costs will stay the same and unit manufacturing costs will stay the same. c. total manufacturing costs will increase and unit manufacturing costs will decrease. d. total manufacturing costs will increase and unit manufacturing costs will stay the same.

Suppose the real risk-free rate and inflation rate are expected to remain at their current levels throughout the foreseeable future. consider all factors that affect the yield curve. then identify which of the following shapes that the u.s. treasury yield curve can take. check all that apply.

The school cafeteria can make pizza for approximately $0.30 a slice. the cost of kitchen use and cafeteria staff runs about $200 per day. the pizza den nearby will deliver whole pizzas for $9.00 each. the cafeteria staff cuts the pizza into eight slices and serves them in the usual cafeteria line. with no cooking duties, the staff can be reduced by half, for a fixed cost of $75 per day. should the school cafeteria make or buy its pizzas?