Consider the trade off model by Williamson (1968). Use the model to calculate the percentage cost reductions required to off-set the percentage increases in price for each of the following scenarios: a. Suppose the price increased by 20% due to the merger and the price elasticity of demand equals 0.25 after dropping the minus sign (absolute value), is 0.25.
b. Suppose the price increased by 25% due to the merger and the price elasticity of demand equals 0.25 after dropping the minus sign (absolute value), is 0.25. Show all calculations to receive full credit. A correct answer not supported with calculations is worth 0.001 points.

To be able to better compare stock performance within the same industry, similar companies are grouped into? a)market sectors b) industry blocks c) performance sectors d) average earning blocks

The market yield on spice grills' bonds is 15%, and the firm's marginal tax rate is 33%. what is their shareholders' required return if the equity risk premium is 4%?

Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805