The leading piece of theoretical research in corporate finance is Myers and Majluf (1984)
They showed that when there is information asymmetry between the market and managers, a pecking order emerges in terms of how the firm should obtain funds for capital investments. Specifically, a firm would prefer to use:
a. debt, then retained earnings, and finally outside equity.
b. retained earnings, then debt, and finally outside equity.
c. retained earnings, then outside equity, and finally debt.
d. debt, then outside equity, and finally retained earnings.
B
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On January 1, 2017, Doyle Manufacturing Corporation purchased a machine for $40,000,000
The corporation expects to use the machine for 24,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $40,000. The corporation used the machine for 3,600 hours in 2017 and 5,000 hours in 2018. Calculate depreciation expense for 2018 if the company uses the units-of-production method of depreciation. What will be an ideal response
A Cp value of 1.33 indicates a standard of how many standard deviations (sigmas)?
A) 6 B) 1.33 C) 2 D) 3 E) 4