Running head: LAWRENCE SPORTS SIMULATION
Lawrence Sports Simulation
LAWRENCE SPORTS SIMULATION
Lawrence Sports manufactures and distributes equipment and protective gear. Team A
has identified three working capital policies
Week 5 Text Problems
Ch. 17: Problem B1
a. FCC = 3.40 - 4.30
FFO / TD = 55 65
L D / C = 25 - 30
b. Bixtons CFO has to realize that a lender, at their discretion, may choose varying interest
rates regardless of whether or not they share the same debt
2) The development of the new issue junk bond market had important implications for capital structure
choice. The existence of a viable junk bond market means that firms can comfortably maintain higher
degrees of leverage than they could prior to the deve
1) Because the weighted average is always a correct measure of a required return, why do
firms not create securities to finance each project and offer them in the capital market in
order to accurately determine the required return for the project?
) Phyllis believes that the firm should use straight-line depreciation for a capital project because
it results in higher net income during the early years of the projects life. Joanna believes that
the firm should use the modified accelerated cost recove
1) A firm uses a single discount rate to compute the NPV of all its potential capital
budgeting projects, even though the projects have a wide range of nondiversifiable risk.
The firm then undertakes all those projects that appear to have positive NPVs. B
2.) Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering
a change in its credit terms to one of those indicated, explain whether the change should
increase or decrease sales. (a) 2/10, net 30, (b) net 60, (c) 3/15,
1.) Why are interest rates on short-term loans not necessarily comparable to each other?
Give three possible reasons.
Interest rates on short-term loans aren't necessarily comparable to each
other for a few different reasons. One reason is that every indi
2.) Suppose rf is 5% and rM is 10%. According to the SML and the CAPM, an asset with a beta of 2.0
has a required return of negative 5% [= 5 2(10 5)]. Can this be possible? Does this mean that
the asset has negative risk? Why would anyone ever invest in a
Guillermo Furniture Store Analysis
Guillermo Navallez owns a furniture store in the Sonora, Mexico area. There was a
time when he had a competitive advantage i
RUNNING HEAD: GUILLERMO STORE CONCEPTS
Guillermo Store Concepts Paper
GUILLERMO STORE CONCEPTS
Guillermo Store Concepts Paper
A study by Poctzer, A., Poctzer, S., (2010) examined marketing and economics
disciplines shared interest in cons
In order to receive proper credit, please reply to this message when posting your answers to WK2 DQ1.
Suppose you own $1 million worth of 30-year Treasury bonds. Is this asset riskless?
You own $1 million worth of 90-day Treasury bills. You roll over this
1.) What is ethics? If you follow all applicable rules and regulations, are you an ethical person?
In simple words, ethics can be defined as 'moral values and principals'.It is a decision
of choosing right among wrong and right. Business ethics are that f
2.) Assume that interest rates have increased substantially. Would this tend to increase or decrease
the market value (meaning the price an investor in the firm's paper is willing to pay) of a firms liabilities
(relative to the book value of liabilities)?