Though another way of looking at it is that Apple is only waiting for the really good investments, and that opportunity offset the lost revenue of hoarding cash at a low interest rate. Stockpiling cash increases grumbles from stakeholders for dividend or share buy backs. Apple’s war chest has grown faster than even the loftiest projections, and for Apple’s CEO Tim Cock more money brings more problems. Approximately 64% of Apple’s cash is overseas, which induce the issue of hefty tax to bring in into the United States [5]. An Apple share of stock is merely a claim on a portion of their future cash flow.
Answer: C A nondiscriminating pure monopolist's demand curve: A) is perfectly inelastic. C) lies above its marginal revenue curve. B) coincides with its marginal revenue curve. D) lies below its marginal revenue curve. Answer: C For an imperfectly competitive firm: A) total revenue is a straight, upsloping line because a firm's sales are independent of product price.
High quality manufacturers produce very good calculators that consumers value at 14 Euros. Low quality manufacturers produce less good ones that are valued at 8 Euros. At the time of purchase, customers cannot distinguish between a high quality product and a low quality product; nor can they identify the manufacturer. However, they can determine the quality of the product after the purchase. The consumers are risk-neutral: if they have probability p of getting a high quality product, they value this prospect 14p + 8(1 - p) Each type of manufacturer can produce the product at a constant unit cost of 11. a) Suppose that the sale of low quality calculators is illegal, so that the only items allowed to appear on the market are of high quality.
At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1000 units. What is the firm's current profit? What is likely to occur in this market, and why? A) Profit = (12.50 – 10) X 1000 = $2500.
ETO’s existing cost system contains only one cost center (the entire facility). All overhead is collected into a single cost pool, and the total overhead cost is divided by the total number of direct labor dollars consumed to give a single direct labor dollar burden rate. The major flaw in ETO’s existing system is that it assumes that all products consume direct labor and overhead in the same proportion. However, some products are produced on simple labor intensive equipment while others require very expensive automated equipment. Therefore, it is extremely unlikely that all products consume direct labor and overhead in the same proportion.
| Advantage | Disadvantage | Sole proprietorship: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Partnership: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Corporation | -unlimited life-easy transferability of ownership interest-limited liability | -corporate earnings may be subject to double taxation- more complex and time- consuming than creating a proprietorship or a partnership | c. How do corporations go public and continue to grow? What are agency problems? What is corporate governance? If a corporation continues to grow, it can raise additional funds through an initial public offering (IPO) by selling stock to the public at large. Agency problems occur when the managers of a corporation do what’s in their own interest rather than that of the company.
The Apogee company could have a few unprofitable field offices. In which case, closing or relocating the least profitable offices would dramatically increase the company’s profitablility. Secondly, there is no evidence that the market for the Apogee Company's goods and services is worse than it was in the past. There's not even any evidence of what the Apogee Company does! If markets for Apogee's goods and services exist in multiple locations, having one office hardly makes sense.
Precedents usually yield higher valuations than trading comps because a buyer must pay shareholders more than the current trading price to acquire a company. This is referred to as the control premium (use 20 percent as a 31 Customized for: JJ (jchen59@wisc.edu) Vault Guide to Private Equity and Hedge Fund Interviews Finance benchmark). If the buyer believes it can achieve synergies with the merger, then the buyer may pay more. This is known as the synergy premium. Between LBOs and DCFs, the DCF should have a higher value because the required IRR (cost of equity) of an LBO should be higher than
It is useful when trying to see at what prices a large quantity of stock are trading outside the market in a merger. 4. No. DFA believed in efficient market theory, which implied that the price had already reflected all of the market information. So it was not necessary to do fundamental analysis.
Monopoly and Price Discrimination What we called monopoly is the sole seller if the product and that product do not have close substitutes. Monopoly can control the prices of their goods, but their profit is not limited because high prices reduce the amount that their consumers buy. The most important cause of monopoly is barriers to entry. The three main sources are owned by a single firm, the government gives a single firm the exclusive right to produce some good or services, and the cost of production makes a single producer more efficient than a large number of producers like the distribution of water. Monopoly is the sole producer in the market; its demand curve is the market demand.