Milano pizza club owns three identical restaurants popular for their specialty pizzas. each restaurant has a debt–equity ratio of 30 percent and makes interest payments of $59,000 at the end of each year. the cost of the firm’s levered equity is 15 percent. each store estimates that annual sales will be $1.66 million; annual cost of goods sold will be $850,000; and annual general and administrative costs will be $585,000. these cash flows are expected to remain the same forever. the corporate tax rate is 40 percent. use the flow to equity approach to determine the value of the company’s equity.

Suppose the money market is in the liquidity trap and the fed increases the supply of money. individuals would rather hold than because they expect that bond prices can go no

You operate a small advertising agency. you employ two secretaries, a graphic designer, three sales representatives, and an office coordinator. 1. what types of things would you consider when determining how to compensate each position? describe two (2) considerations. 2. what type of compensation plan would you use for each position?

Milden company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. as an aid in planning, the company has decided to start using a contribution format income statement. to have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: cost cost formula cost of good sold $35 per unit sold advertising expense $210,000 per quarter sales commissions 6% of sales shipping expense ? administrative salaries $145,000 per quarter insurance expense $9,000 per quarter depreciation expense $76,000 per quarter management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. units sold and the related shipping expense over the last eight quarters follow: quarter units sold shipping expense year 1: first 10,000 $ 119,000 second 16,000 $ 175,000 third 18,000 $ 190,000 fourth 15,000 $ 164,000 year 2: first 11,000 $ 130,000 second 17,000 $ 185,000 third 20,000 $ 210,000 fourth 13,000 $ 147,000 milden company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter. required: 1. using the high-low method, estimate a cost formula for shipping expe