Suppose That Banana Computers Has $1,000 in Revenue This Year

question 40

Multiple Choice

Suppose that Banana Computers has $1,000 in revenue this year, along with COGS of $400 and SG&A of $100. The required rate of return on its equity is 14%, and the risk-free rate is 5%. Assume that the COGS only include the marginal costs of selling a computer. Banana is considering adding $700 worth of debt with a coupon rate of 5% and an YTM of 7.9% to its capital structure. What is the net income of Banana without and with the debt?

• A) $500 and $484.2
• B) $484.2 and $500
• C) $500 and $465
• D) $490 and $500

Recognize the theoretical perspectives used to explain the development and persistence of anxiety disorders.

Understand the behavioral and cognitive techniques used in treating anxiety disorders.

Understand the role of environmental and biological factors in the development of anxiety disorders.

Recognize the importance of a comprehensive treatment plan that may include both pharmacological and psychological interventions.

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Definitions:

Compensating Variation

An economic concept describing the amount of additional income that would leave someone as well off after a price change as they were before it.

Price of Earrings

The amount of money required to purchase earrings, which can vary based on materials, brand, and design.

Utility Function

An analytical model that illustrates how buyers prioritize various combinations of products based on the amount of pleasure or utility derived from those combinations.

Consumer's Surplus

The variance between the aggregate sum consumers intend and have the means to pay for a good or service, and the sum they actually pay.