A firm (with face value of debt = $100) is to choose between two mutually exclusive projects: PROJECT A: LOW-RISK PROBABILITY Firm Value Stock Value Debt Value RECESSION 0.5 100 0 100 BOOM 0.5 200 100 100 PROJECT B: HIGH-RISK PROBABILITY Firm Value Stock Value Debt Value RECESSION 0.5 50 0 50 BOOM 0.5 240 140 100 Answer the following questions: a) Consider first the case where the firm is an all equity firm. Which project will the firm choose? b) With the current face value of debt = $100, which project will it implement if management is to maximize shareholders’ value? c) What is the price debt holders will pay for the debt? d) Calculate the agency cost of debt.

Which of the following statements is true about financial planning

Avx home entertainment, inc., recently began a “no-hassles” return policy. a sample of 500 customers who recently returned items showed 400 thought the policy was fair, 32 thought it took too long to complete the transaction, and the rest had no opinion. on the basis of this information, make an inference about customer reaction to the new policy. (round your answers to 1 decimal place.)

Apharmaceutical packaging company (ppc) has decided to reorganize its processes into cells. the company has four different production operations, each requiring a unique piece of equipment. the names and functions of the four pieces of equipment are sort, count, place, and package. the company packages five different families of products (a, b, c, d, and e). the tables below indicate the demand (total units/day by product family), required operations, and operation cycle times for each product family. assume that any individual piece of equipment is available to operate 16 hours/day, but 2 hours (in total) are lost each day on each piece of equipment due to breaks and meetings when operators are not available to operate the equipment. how many minutes/day are available for production