Suppose that in the year 2015, Oceanaire, Inc. planned to produce 525,000 units of its lightweight scuba tanks. Of the 525,000 it planned to produce, a total of 35,000 units would be added to the inventory at its new plant in Arizona. Also assume that these units have been selling at a price of $ 250 each and that the price has been constant over time. Suppose further that this year the firm built a new plant for $ 4 million and acquired $ 2.5 million worth of equipment. It had no other investment projects, and to avoid complications, assume no depreciation.

Now suppose that at the end of the year, Oceanaire had produced 550,000 units but had only sold 500,000 units and that inventories now contained 50,000 units more than they had at the beginning of the year. At $225 each, that means that the firm added $11,250,000 in new inventory.

Oceanaire should produce ___.

(A) more output next year since it needs to add to its unplanned investment.
(B) more output next year since it needs to add to its equipment.
(C) less output next year since it needs to reduce its equipment.
(D) less output next year since it needs to reduce its unplanned investment.

When earning simple interest on money you invest, which statement is true? a. as time goes on and your bank account grows, you earn more interest. b. as time goes on and your bank account grows, you earn less interest. c. as time goes on and your bank account grows, you earn the same amount of interest. d. as time goes on and your bank account grows, you stop earning interest.

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

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