A common use of managerial contingency funds would be for:
A) Office supplies.
B) Management consulting fees.
C) A sudden increase in the price of unleaded gasoline.
D) An "act of God."
D
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When considering cost-of-living differences between locations, which type of costs stand out?
A) housing B) education C) health care D) food and energy
Fury Motor Corp is all equity financed and generates perpetual annual EBIT of $300. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year
Assume that Fury has a 100% payout rate, 1,500 shares outstanding, and that shareholders require a return of 5%. Assume that the tax rate is 0%. Fury Motor Corp is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares at the price of $4.00 per share. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds with a coupon rate (and yield) of 3%. Assume that the tax rate is 0%. If Fury Motor Corp goes ahead with the repurchase, then what is the stock price after the repurchase is complete? A) $3.00 B) $3.50 C) $4.00 D) $4.50 E) $5.00