If All Interest Rates Decline 90 Basis Points (ΔR/(1

question 117

Multiple Choice

If all interest rates decline 90 basis points (ΔR/(1 + R) = −90 basis points) , what is the change in the market value of equity?

• A)-$4.4300 million
• B)+$3.9255 million
• C)+$4.3875 million
• D)+$2.5506 million
• E)+$0.0227 million
• [Refer to: 9-115]

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Definitions:

Machine-Hours

A measurement unit used in accounting and manufacturing to allocate costs to products based on the number of hours machines are operated during the production process.

Variable Manufacturing Overhead

Expenses in the production process that vary with the level of production output, such as utilities or materials costs.

Fixed Manufacturing Overhead

Costs that do not change with the level of production output and are required to operate a manufacturing facility, such as rent and salaries of managers.

Machine-Hours

A gauge of manufacturing output or activity determined by the operation duration of machinery.