You are the manager in charge of global operations at BankGlobal – a large commercial bank that operates in a number of countries around the world. You must decide whether or not to launch a new advertising campaign in the U. S. market. Your accounting department has provided the accompanying statement, which summarizes the financial impact of the advertising campaign on U. S. operations. In addition, you recently received a call from a colleague in charge of foreign operations, and she indicated that her unit would lose $8 million if the U. S. advertising campaign were launched. Your goal is to maximize BankGlobal’s value. Should you launch the new campaign? Explain.

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Acompany has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. experience suggests that 6% of outstanding receivables are uncollectible. the current credit balance (before adjustments) in the allowance for doubtful accounts is $1,200. the journal entry to record the adjustment to the allowance account includes a debit to bad debts expense for $4,800. true or false

Stosch company's balance sheet reported assets of $112,000, liabilities of $29,000 and common stock of $26,000 as of december 31, year 1. if retained earnings on the balance sheet as of december 31, year 2, amount to $74,000 and stosch paid a $28,000 dividend during year 2, then the amount of net income for year 2 was which of the following? a)$23,000 b) $35,000 c) $12,000 d)$42,000