A. Going public achieves liquidity and diversification for current shareholders B
63) Which of the following is not an advantage of going public? Going public generally brings a lower price in the public market than in the venture capital or private placement markets. C. Going public enables a firm to raise additional capital. D. Going public gives existing shareholders a chance to sell portions of their shares as part of the IPO giving them a cash return on their investment and allows them to diversify their investment portfolios.
64) You work for ABC, Inc. in the finance department. You own shares in ABC, Inc. that are selling at $20 per share on the NYSE. You just found out they will have a new stock offering. You just found out they will publicly announce a new stock offering. The costs from the offering will be 10% of the new offering. The new offering will increase the number of outstanding share by 30%. There are currently 20,000,000 shares of ABC outstanding. Once the announcement is made public https://maxloan.org/payday-loans-wv/, what might be the expected impact from transaction (or issuance) costs on each share you own? A. You will lose 3% of the value of the share you own. B. You will lose 2% of the value of the shares you own. C. There will be no costs because markets are perfect when it comes to new stock offerings. D. There will be no costs because there is no information asymmetry present.
A. $30,000 increase B
65) Undertaker Corporation has a joint process that produces three products: P, G, and A. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $25,000. Other relevant data are as follows: Product Sales Value at Split-off Processing Costs after Split-off Sales Value at Completion P $62,000 $5,000 $88,000 G 12,500 6,500 19,000 A 9,400 5,000 12,000 Product G _____. A. an be processed further or sold at split off; there is no difference in profit. B. should be processed further to increase profits by $19,000. C. should be processed further to increase profits by $6,500. D. should be sold at split off since processing further would only reduce profits by $6,500.
66) The opportunity cost of an alternate course of action that is relevant to a make-or-buy decision is A. subtracted from the “Make” costs. B. Added to the “Make” costs. C. added to the “Buy” costs. D. none of these
67) It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income? $4,000 decrease C. $4,000 increase D. $6,000 decrease
68) Which one of the following characteristics would likely be associated with a just-in-time inventory method? A. An understanding with customers that they may come to the showroom and select from inventory on hand. B. A backlog of inventory orders not yet shipped. C. Ending inventory of work in process that would allow several production runs. D. Minimal finished goods inventory on hand.
D. Income would increase by $70,000
69) Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows: A. Income would increase by $20,000 B. Income would increase by $4,000. C. Income would decrease by $4,000.