2. Company A and Company B had the following balance sheets as of December 31, 20N5 (thousands of dollars)
Current assets
Fixed assets (net)
Total assets
Short-term liabilities
Long-term liabilities
Common stock
Retained earnings
Total liabilities and
equity
Company A
200 000
130 000
330 000
40 000
70 000
50 000
50 000
Company B
140 000
90 000
230 000
70 000
20 000
70 000
50 000
210 000
210 000
Earnings before interest and taxes for both firms are $40 million, and the effective federal plus-state tax
rate is 20%
a
What is the return on equity and return on total assets for each firm if the interest rate on short
term liabilities is 9% and the rate on long-term liabilities is 15%?
b. Assume that the short-term rate rises until 15% and the rate on long-term debt remains
unchanged. What would be the returns on equity for both companies under these conditions?
c. Which company is in a riskier position? Why?

Uppose that the federal reserve purchases a bond for $100,000 from donald truck, who deposits the proceeds in the manufacturer’s national bank. what will be the impact of this purchase on the supply of money? the money supply will increase by $100,000. the money supply will increase by $80,000. the money supply will increase by $500,000. this action will have no effect on the money supply. if the reserve requirement ratio is 20 percent, what is the maximum amount of additional loans that the manufacturer’s bank will be able to extend as the result of truck’s deposit? the maximum additional loans is $100,000. the maximum additional loans is $80,000. the maximum additional loans is $20,000. the maximum additional loans is $500,000. given the 20 percent reserve requirement, what is the maximum increase in the quantity of checkable deposits that could result throughout the entire banking system because of the fed’s action? this action will have no effect on the money supply. the money supply will eventually increase by $80,000. the money supply will eventually increase by $500,000. the money supply will eventually increase by $100,000.

Horace society is planning its annual western fair raceway gala. the gala committee has assembled the following expected costs for the event: dinner (per person) $10 gaming token and program (per person) $2 prize payouts $4,300 tickets and advertising $800 private box suite rental $1,700 lottery licenses $200 the committee members would like to charge $40 per person for the evening’s activities.required: 1. what is the break-even point for the dinner-dance (in terms of the number of persons who must attend)? 2. assume that last year only 200 persons attended the dinner-dance. if the same number attend this year, what price per ticket must be charged in order to break even? 3. refer to the original data ($40 ticket price per person). prepare a cvp graph for the dinner- dance from zero tickets up to 600 tickets sold.

Taking commercial paper means the holder acts honestly