On January 1, 2001, Daniel Negotiated a Contract on Behalf

question 51

Multiple Choice

On January 1, 2001, Daniel negotiated a contract on behalf of Compu/sys Inc for the supply of a computer system to Leader Co. The contract called for the supply by Compu/sys Inc of hardware and maintenance services for two years in return for $1 000 000. Daniel had no authority to negotiate this contract on behalf of Compu/sys. Subsequently, after 18 months of negotiations, he got Compu/sys to agree to perform the contract in part. The corporation agreed to provide the hardware but not the maintenance services. At the time it made this commitment it had gone bankrupt. Which of the following is TRUE?

• A) Compu/sys has not ratified the contract because a bankrupt corporation cannot ratify a contract.
• B) If Compu/sys has not ratified the contract, Daniel will only be personally liable if Daniel and Leader Co intended that the contract would be binding on the agent personally.
• C) Compu/sys has not ratified the contract because it has not agreed to all of the obligations under the contract.
• D) Compu/sys has not ratified the contract because it did not agree to the obligations under the contract within a reasonable time.
• E) all of the above.

Calculate earnings per share at break-even level of earnings before interest and taxes in different capital structures.

Identify break-even EBIT under various capital structures.

Understand the effect of adding financial leverage on a firm's value.

Calculate the value of a firm before and after restructuring with and without taxes.

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Definitions:

Private Costs

The costs that are incurred by an individual or a company when producing goods or services.

Bystanders

Individuals who are present at an event or incident but do not take part in it, often discussed in the context of emergency situations or accidents.

Congestion Toll

A fee charged to drivers who use certain roads during peak periods, intended to reduce traffic congestion by discouraging the use of those routes.

Internalizing

The process of absorbing or taking in information, values, or costs, often used when discussing the incorporation of external costs into market prices.