Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this, the company's profits are driven by the amount of work Tom does. If he works 40 hours each week, the company's EBIT will be $435,000 per year; if he works a 50-hour week, the company's EBIT will be $530,000 per year. The company is currently worth $2.7 million. The company needs a cash infusion of $1.2 million and can issue equity or issue debt with an interest rate of 8 percent. Assume there are no corporate taxes. a. What are the cash flows to Tom under each scenario

Analyzing and computing accrued warranty liability and expense waymire company sells a motor that carries a 60-day unconditional warranty against product failure. from prior years' experience, waymire estimates that 2% of units sold each period will require repair at an average cost of $100 per unit. during the current period, waymire sold 69,000 units and repaired 1,000 units. (a) how much warranty expense must waymire report in its current period income statement? (b) what warranty liability related to current period sales will waymire report on its current period-end balance sheet? (hint: remember that some units were repaired in the current period.) (c) what analysis issues must we consider with respect to reported warranty liabilities?