- (Topic 1)
Plenary Inc specializes in overnight package delivery. Total packages delivered last year were 10 000.000. and this quantity is expected to remain unchanged in the coming year. Unit contribution margin is $4,50 and total fixed costs are S40.000,000. The firm's 300 delivery truck drivers are seeking a S10 000 raise in annual salary In addition to a current base salary of $45 000 per year, the drivers receive a commission of $0 50 per package delivered If the firm grants the $10,000 salary increase to each driver and seeks to maintain the same level of pre-tax operating profit what is the maximum amount of commission the firm can pay its drivers per package delivered?

Correct Answer:B

- (Topic 1)
FreeRide inc is considering replacing its existing shuttle bus win a new one. The new bus can offer considerable savings in operating costs Information about the existing bus and the new bus is shown below.

Correct Answer:A

- (Topic 1)
Which one of the following moral philosophies states that the morality of an action is inherent and not based on the consequences of the action?

Correct Answer:B

CORRECT TEXT - (Topic 2)
Explain now QDD's share repurchase plan would affect each of the following measures EPS, the degree of operating leverage, and the interest coverage ratio No calculations required
Essay
Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows

QDD's stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company "s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3??o risk free rate of return
QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock. QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments
Solution:
The share repurchase program will reduce the weighted average number of shares outstanding which is turn will increase the earning per share as the same income will be divided over a fewer number of shares
It has no impact on the operating leverage and me .Merest cover ratio as it has nothing to do with cost and interest expense (therefore profitability)
its an equity based transaction only

Does this meet the goal?

Correct Answer:A

- (Topic 1)
To minimize me risk of a two-stock portfolio, a company should most likely purchase stocks that have

Correct Answer:A

CORRECT TEXT - (Topic 2)
Explain one reason each Tot and against issuing bonds with a call feature
Essay
Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows

QDD's stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company "s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3??o risk free rate of return
QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock. QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments
Solution:
A callable bond allows companies to pay off their debt early and benefit from favorable interest rate drops a callable bono benefit the issuer and so investors of these bonds are compensated with a more attractive interest rate man on otherwise similar non-callable bonds However callable bonds are more expensive.

Does this meet the goal?

Correct Answer:A