The following transactions are july activities of bennett’s bowling, inc. bennett’s collected $14,100 from customers for games played in july. bennett’s sold bowling merchandise inventory from its pro shop for $8,700; received $3,500 in cash and customers owed the rest on account. [consider only the effect on revenue here. do not consider cost of goods sold for this question.] bennett’s received $3,300 from customers who purchased merchandise in june on account. the men’s and ladies’ bowling leagues gave bennett’s a deposit of $2,800 for the upcoming fall season. bennett’s provided to customers bowling merchandise inventory costing bennett’s $3,790. (consider only the effect on cost of goods sold [expense] here.)

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