Recycle America Inc

question 28

Multiple Choice

Recycle America Inc.has the opportunity to trade 8000 pounds of plastic pellets made from recycled soda bottles for 5000 pounds of aluminum cans.If the current market price of scrap aluminum is $0.83 per pound and the current market price for plastic pellets is $0.57 per pound,then the added benefit (cost) of making this trade is:

• A)($410).
• B)$410.
• C)($780).
• D)$780.

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Definitions:

Capital Structure

The particular combination of debt and equity used by a firm to finance its overall operations and growth.

Cost of Capital

Cost of Capital is the rate of return that a company must earn on its project investments to maintain its market value and satisfy its creditors and investors.

Legal Bankruptcy

A legal process whereby individuals or businesses unable to meet their debt obligations can seek relief from some or all of their debts.

Protective Covenants

Clauses in loan agreements that are designed to protect the lender by restricting the borrower’s actions, such as limiting dividends, adding debt, or asset sales.