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Determine the moment of inertia | Ch 10 - 10-39, 14th Edition

Engineering Mechanics: Statics | 14th Edition | ISBN: 9780133918922 | Authors: Russell C. Hibbeler ISBN: 9780133918922 126

Solution for problem 10-39 Chapter 10

Engineering Mechanics: Statics | 14th Edition

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Engineering Mechanics: Statics | 14th Edition | ISBN: 9780133918922 | Authors: Russell C. Hibbeler

Engineering Mechanics: Statics | 14th Edition

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Problem 10-39

Determine the moment of inertia of the shaded area about the y axis. x 6 in. 3 in. 6 in. y 6 in. Probs. 1038/39

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FINANCIAL PLANNING ACHAPTER 16TING (Difficulty Levels: Easy, Easy/Medium, Medium, Medium/Hard, and Hard) Note that there is some overlap between the T/F and the multiple choice questions, as some T/F statements are used in the MC questions. See the preface for information on the AACSB letter indicators (F, M, etc.) on the subject lines. Multiple Choice: True/False (16­2) Sales forecast F K Answer: a EASY 1. The first, and most critical, step in constructing a set of forecasted financial statements is the sales forecast. a. True b. False (16­2) Sales forecast F K Answer: a EASY 2 . A typical sales forecast, though concerned with future events, will usually be based on recent historical trends and events as well as on forecasts of economic prospects. a. True b. False (16­2) Sales forecast F K Answer: b EASY 3. Errors in the sales forecast can be offset by similar errors in costs and income forecasts. Thus, as long as the errors are not large, sales forecast accuracy is not critical to the firm. a. True b. False (16­3) Spontaneously gen. funds F K Answer: a EASY 4 . As a firm's sales grow, its current assets also tend to increase. For instance, as sales increase, the firm's inventories generally increase, and purchases of inventories result in more accounts payable. Thus, spontaneously generated funds arise from transactions brought on by sales increases. a. True b. False (16­3) Spontaneously gen. funds F K Answer: b EASY 5. The term "spontaneously generated funds" generally refers to increases in the cash account that result from growth in sales, assuming the firm is operating with a positive profit margin. a. True b. False Chapter 16: Forecasting True/False Page 75 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. Page 76 True/False Chapter 16: Forecasting © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (16­3) Asset increase F K Answer: a EASY 6. A rapid build­up of inventories normally requires additional financing, unless the increase is matched by an equally large decrease in some other asset. a. True b. False (16­3) Additional funds needed F K Answer: b EASY 7. If a firm wants to maintain its ratios at their existing levels, then if it has a positive sales growth rate of any amount, it will require some amount of external funding. a. True b. False (16­3) Additional funds needed F K Answer: b EASY 8 . To determine the amount of additional funds needed (AFN), you may subtract the expected increase in liabilities, which represents a source of funds, from the sum of the expected increases in retained earnings and assets, both of which are uses of funds. a. True b. False (16­4) Forecasted statements F K Answer: a EASY 9 . When developing forecasted financial statements there are some inputs that management controls such as the growth rate and operating costs/sales ratio, while other inputs such as the tax rate and interest rate are not under its control. a. True b. False (16­3) Additional funds needed F K Answer: a MEDIUM 1. If a firm with a positive net worth is operating its fixed assets at full capacity, if its dividend payout ratio is 100%, and if it wants to hold all financial ratios constant, then for any positive growth rate in sales, it will require external financing. a. True b. False (16­3) Additional funds needed F K Answer: b MEDIUM 1. A firm's profit margin is 5%, its debt/assets ratio is 56%, and its dividend payout ratio is 40%. If the firm is operating at less than full capacity, then sales could increase to some extent without the need for external funds, but if it is operating at full capacity with respect to all assets, including fixed assets, then any positive growth in sales will require some external financing. a. True b. False Chapter 16: Forecasting True/False Page 77 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (16­3) Capital intensity ratio F K Answer: a MEDIUM 1. Two firms with identical capital intensity ratios are generating the same amount of sales. However, Firm A is operating at full capacity, while Firm B is operating below capacity. If the two firms expect the same growth in sales during the next period, then Firm A is likely to need more additional funds than Firm B, other things held constant. a. True b. False (16­3) Capital intensity ratio F K Answer: b MEDIUM 13 . If a firm's capital intensity ratio (A */S 0 de0reases as sales increase, use of the AFN formula is likely to understate the amount of additional funds required, other things held constant. a. True b. False (16­4) Financial forecasting F K Answer: b MEDIUM 1. The fact that long­term debt and common stock are raised infrequently and in large amounts lessens the need for the firm to forecast those accounts on a continual basis. a. True b. False (16­5) AFN and linear regression F K Answer: a MEDIUM 1. When we use the AFN equation to forecast the additional funds needed (AFN), we are implicitly assuming that all financial ratios are constant. If financial ratios are not constant, regression techniques can be used to improve the financial forecast. a. True b. False Multiple Choice: Conceptual (16­1) Strategic planning C K Answer: c EASY 1. Which of the following is NOT a key element in strategic planning as it is described in the text a. The mission statement. b. The statement of the corporation’s scope. c. The statement of cash flows. d. The statement of corporate objectives. e. The operating plan. Page 78 True/False Chapter 16: Forecasting © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (16­3) AFN equation C K Answer: b EASY 1. Which of the following assumptions is embodied in the AFN equation a. All balance sheet accounts are tied directly to sales. b. Accounts payable and accruals are tied directly to sales. c. Common stock and long­term debt are tied directly to sales. d. Fixed assets, but not current assets, are tied directly to sales. e. Last year’s total assets were not optimal for last year’s sales. (16­3) Additional funds needed C K Answer: a EASY/MEDIUM 18 . Jefferson City Computers has developed a forecasting model to estimate its AFN for the upcoming year. All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN) a. A sharp increase in its forecasted sales. b. A sharp reduction in its forecasted sales. c. The company reduces its dividend payout ratio. d. The company switches its materials purchases to a supplier that sells on terms of 1/5, net 90, from a supplier whose terms are 3/15, net 35. e. The company discovers that it has excess capacity in its fixed assets. (16­3) Additional funds needed C K Answer: b EASY/MEDIUM 1. The term “additional funds needed (AFN)” is generally defined as follows: a. Funds that are obtained automatically from routine business transactions. b. Funds that a firm must raise externally from non­spontaneous sources, i.e., by borrowing or by selling new stock, to support operations. c. The amount of assets required per dollar of sales. d. The amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth. e. A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant. (16­3) Capital intensity ratio C K Answer: e EASY/MEDIUM 2. The capital intensity ratio is generally defined as follows: a. Sales divided by total assets, i.e., the total assets turnover ratio. b. The percentage of liabilities that increase spontaneously as a percentage of sales. c. The ratio of sales to current assets. d. The ratio of current assets to sales. e. The amount of assets required per dollar of sales, or A */S .0 0 Chapter 16: Forecasting Conceptual M/C Page 79 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (16­1) Financial planning C K Answer: e MEDIUM 2. Which of the following is NOT one of the steps taken in the financial planning process a. Assumptions are made about future levels of sales, costs, and interest rates for use in the forecast. b. The entire financial plan is reexamined, assumptions are reviewed, and the management team considers how additional changes in operations might improve results. c. Projected ratios are calculated and analyzed. d. Develop a set of projected financial statements. e. Consult with key competitors about the optimal set of prices to charge, i.e., the prices that will maximize profits for our firm and its competitors. (16­3) Spontaneously gen. funds C K Answer: d MEDIUM 2. Spontaneously generated funds are generally defined as follows: a. Assets required per dollar of sales. b. A forecasting approach in which the forecasted percentage of sales for each item is held constant. c. Funds that a firm must raise externally through borrowing or by selling new common or preferred stock. d. Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include spontaneous increases in accounts payable and accruals. e. The amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm’s growth. (16­3) Additional funds needed C K Answer: b MEDIUM 23 . A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to increase a. The company previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity. b. The company increases its dividend payout ratio. c. The company begins to pay employees monthly rather than weekly. d. The company’s profit margin increases. e. The company decides to stop taking discounts on purchased materials. Page 80 Conceptual M/C Chapter 16: Forecasting © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (Comp.) Forecasting concepts C K Answer: b MEDIUM 2. Which of the following statements is CORRECT a. Perhaps the most important step when developing forecasted financial statements is to determine the breakdown of common equity between common stock and retained earnings. b. The first, and perhaps the most critical, step in forecasting financial requirements is to forecast future sales. c. Forecasted financial statements, as discussed in the text, are used primarily as a part of the managerial compensation program, where management’s historical performance is evaluated. d. The capital intensity ratio gives us an idea of the physical condition of the firm’s fixed assets. e. The AFN equation produces more accurate forecasts than the forecasted financial statement method, especially if fixed assets are lumpy and economies of scale exist. (16­1) Strategic planning C K Answer: c MEDIUM/HARD 2. Which of the following statements is CORRECT a. Once a firm has defined its purpose, scope, and objectives, it must develop a strategy or strategies for achieving its goals. The statement of corporate strategies sets forth detailed plans rather than broad approaches for achieving a firm's goals. b. A firm’s corporate purpose states the general philosophy of the business and provides managers with specific operational objectives. c. Operating plans provide management with detailed implementation guidance, consistent with the corporate strategy, to help meet the corporate objectives. These operating plans can be developed for any time horizon, but many companies use a 5­year horizon. d. A firm’s mission statement defines its lines of business and geographic area of operations. e. The corporate scope is a condensed version of the entire set of strategic plans. (16­3) Additional funds needed C K Answer: d MEDIUM/HARD 2. Which of the following statements is CORRECT a. Since accounts payable and accrued liabilities must eventually be paid off, as these accounts increase, AFN as calculated by the AFN equation must also increase. b. Suppose a firm is operating its fixed assets at below 100% of capacity, but it has no excess current assets. Based on the AFN equation, its AFN will be larger than if it had been operating with excess capacity in both fixed and current assets. c. If a firm retains all of its earnings, then it cannot require any additional funds to support sales growth. d. Additional funds needed (AFN) are typically raised using a combination of notes payable, long­term debt, and common stock. Such funds are non­spontaneous in the sense that they require explicit financing decisions to obtain them. e. If a firm has a positive free cash flow, then it must have either a zero or a negative AFN. Chapter 16: Forecasting Conceptual M/C Page 81 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (16­3) Additional funds needed C K Answer: d MEDIUM/HARD 2. Which of the following statements is CORRECT a. Any forecast of financial requirements involves determining how much money the firm will need, and this need is determined by adding together increases in assets and spontaneous liabilities and then subtracting operating income. b. The AFN equation for forecasting funds requirements requires only a forecast of the firm’s balance sheet. Although a forecasted income statement may help clarify the results, income statement data are not essential because funds needed relate only to the balance sheet. c. Dividends are paid with cash taken from the accumulated retained earnings account, hence dividend policy does not affect the AFN forecast. d. A negative AFN indicates that retained earnings and spontaneous capital are far more than sufficient to finance the additional assets needed. e. If assets and spontaneously generated liabilities are not projected to grow at the same rate as sales, then the AFN method will provide more accurate forecasts than the projected financial statement method. (16­3) AFN equation C K Answer: a MEDIUM/HARD 28 . Which of the following statements is CORRECT a. The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm's AFN equals zero. b. If a firm’s assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm’s AFN to be negative. c. If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm’s actual AFN must, mathematically, exceed the previously calculated AFN. d. Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio. e. Dividend policy does not affect the requirement for external funds based on the AFN equation. Page 82 Conceptual M/C Chapter 16: Forecasting © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (16­5) Forecasting fin. reqmts. C K Answer: c MEDIUM/HARD 2. Which of the following statements is CORRECT a. When we use the AFN equation, we assume that the ratios of assets and liabilities to sales (A */0 a0d L */S0) v0ry from year to year in a stable, predictable manner. b. When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow. c. Firms whose fixed assets are “lumpy” frequently have excess capacity, and this should be accounted for in the financial forecasting process. d. For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets. e. Regression techniques cannot be used in situations where excess capacity or economies of scale exist. Multiple Choice: Problems (16­3) Excess capacity C K Answer: a EASY 3. Last year Godinho Corp. had $250 million of sales, and it had $75 million of fixed assets that were being operated at 80% of capacity. In millions, how large could sales have been if the company had operated at full capacity a. $312.5 b. $328.1 c. $344.5 d. $361.8 e. $379.8 (16­5) Forecasting inv.­­regression C K Answer: d EASY 3. Kamath­Meier Corporation's CFO uses this equation, which was developed by regressing inventories on sales over the past 5 years, to forecast inventory requirements: Inventories = $22.0 + 0.125(Sales). The company expects sales of $400 million during the current year, and it expects sales to grow by 30% next year. What is the inventory forecast for next year All dollars are in millions. a. $74.6 b. $78.5 c. $82.7 d. $87.0 e. $91.4 (16­3) Excess capacity C K Answer: c MEDIUM 3. Last year Wei Guan Inc. had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity. In millions, by how much could Wei Guan's sales increase before it is required to increase its fixed assets a. $170.09 b. $179.04 c. $188.46 d. $197.88 Chapter 16: Forecasting M/C Problems Page 83 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. e. $207.78 (16­3) Excess capacity C K Answer: e MEDIUM 33 . Last year Handorf­Zhu Inc. had $850 million of sales, and it had $425 million of fixed assets that were used at only 60% of capacity. What is the maximum sales growth rate the company could achieve before it had to increase its fixed assets a. 54.30% b. 57.16% c. 60.17% d. 63.33% e. 66.67% (16­3) Finding target FA/S ratio C K Answer: b MEDIUM 34 . Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set a. 28.5% b. 30.0% c. 31.5% d. 33.1% e. 34.7% (16­5) Forecasting inv. turnover C K Answer: a MEDIUM 3. Fairchild Garden Supply expects $600 million of sales this year, and it forecasts a 15% increase for next year. The CFO uses this equation to forecast inventory requirements at different levels of sales: Inventories = $30.2 + 0.25(Sales). All dollars are in millions. What is the projected inventory turnover ratio for the coming year a. 3.40 b. 3.57 c. 3.75 d. 3.94 e. 4.14 (16­3) Positive AFN C K Answer: d MEDIUM/HARD 3. Clayton Industries is planning its operations for next year. Ronnie Clayton, the CEO, wants you to forecast the firm's additional funds needed (AFN). Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year Dollars are in millions. Last year’s sales = S0 $350 Last year’s accounts payable $40 Sales growth rate = g 30% Last year’s notes payable $50 Last year’s total assets = A0* $500 Last year’s accruals $30 Last year’s profit margin = PM 5% Target payout ratio 60% a. $102.8 Page 84 M/C Problems Chapter 16: Forecasting © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. b. $108.2 c. $113.9 d. $119.9 e. $125.9 (16­3) Negative AFN C K Answer: c MEDIUM/HARD 37 . Chua Chang & Wu Inc. is planning its operations for next year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year Last year’s sales = S 0 $200,000 Last year's accounts payable $50,000 Sales growth rate = g 40% Last year's notes payable $15,000 Last year’s total assets = A0* $135,000 Last year's accruals $20,000 Last year’s profit margin = PM 20.0% Target payout ratio 25.0% a. ­$14,440 b. ­$15,200 c. ­$16,000 d. ­$16,800 e. ­$17,640 (16­3) AFN­­changing div. payout C K Answer: b MEDIUM/HARD 3. Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level All dollars are in millions. Last year’s sales = S 0 $300.0 Last year’s accounts payable $50.0 Sales growth rate = g 40% Last year’s notes payable $15.0 Last year’s total assets = A0* $500.0 Last year’s accruals $20.0 Last year’s profit margin = PM 20.0% Initial payout ratio 10.0% a. $31.9 b. $33.6 c. $35.3 d. $37.0 e. $38.9 (16­3) Finding target FA/S ratio C K Answer: b HARD 3. Last year Emery Industries had $450 million of sales and $225 million of fixed assets, so its Fixed Assets/Sales ratio was 50%. However, its fixed assets were used at only 65% of capacity. If the company had been able to sell off enough of its fixed assets at book value so that it was operating at full capacity, with sales held constant at $450 million, how much cash (in millions) would it have generated a. $74.81 b. $78.75 c. $82.69 d. $86.82 Chapter 16: Forecasting M/C Problems Page 85 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. e. $91.16 Page 86 M/C Problems Chapter 16: Forecasting © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. ANSWERS ACHAPTER 16NS Chapter 16: Forecasting Answers Page 87 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. 1. (16­2) Sales forecast F K Answer: a EASY 2. (16­2) Sales forecast F K Answer: a EASY 3. (16­2) Sales forecast F K Answer: b EASY 4. (16­3) Spontaneously gen. funds F K Answer: a EASY 5. (16­3) Spontaneously gen. funds F K Answer: b EASY 6. (16­3) Asset increase F K Answer: a EASY 7. (16­3) Additional funds needed F K Answer: b EASY 8. (16­3) Additional funds needed F K Answer: b EASY 9. (16­4) Forecasted statements F K Answer: a EASY 10. (16­3) Additional funds needed F K Answer: a MEDIUM 11. (16­3) Additional funds needed F K Answer: b MEDIUM 12. (16­3) Capital intensity ratio F K Answer: a MEDIUM 13. (16­3) Capital intensity ratio F K Answer: b MEDIUM 14. (16­4) Financial forecasting F K Answer: b MEDIUM 15. (16­5) AFN and linear regression F K Answer: a MEDIUM 16. (16­1) Strategic planning C K Answer: c EASY 17. (16­3) AFN equation C K Answer: b EASY 18. (16­3) Additional funds needed C K Answer: a EASY/MEDIUM Answer a is obviously correct. Also, note that with purchase terms of 1/5 net 90, the nominal cost of non­ free trade credit is only 4.34%, whereas with 3/15, net 35, the nominal cost of trade credit is over 56%. Therefore, the firm should have been taking discounts originally, hence should have had few accounts payable, whereas it would probably not take discounts and thus have more accounts payable with the new supplier. That change would lower its AFN. 19. (16­3) Additional funds needed C K Answer: b EASY/MEDIUM 20. (16­3) Capital intensity ratio C K Answer: e EASY/MEDIUM 21. (16­1) Financial planning C K Answer: e MEDIUM 22. (16­3) Spontaneously gen. funds C K Answer: d MEDIUM 23. (16­3) Additional funds needed C K Answer: b MEDIUM 24. (Comp.) Forecasting concepts C K Answer: b MEDIUM 25. (16­1) Strategic planning C K Answer: c MEDIUM/HARD 26. (16­3) Additional funds needed C K Answer: d MEDIUM/HARD 27. (16­3) Additional funds needed C K Answer: d MEDIUM/HARD 28. (16­3) AFN equation C K Answer: a MEDIUM/HARD 29. (16­5) Forecasting fin. reqmts. C K Answer: c MEDIUM/HARD 30. (16­3) Excess capacity C K Answer: a EASY Sales $250 Fixed assets $75.0 % of capacity utilized 80.0% Full capacity sales = Actual sales/% of capacity used = $312.5 31. (16­5) Forecasting inv.­­regression C K Answer: d EASY Current year's sales $400 Growth rate 30% Projected Sales $520.0 Required inventories= $22.0 + 0.125 × Projected sales = $22.0 + 0.125 × $520.0 Required inventories = $87.0 32. (16­3) Excess capacity C K Answer: c MEDIUM Sales $350 Fixed assets (not used in calculations) $270 % of capacity utilized 65% Sales at full capacity = Actual sales/% of capacity $538.46 Additional sales without adding FA = Full capacity sales − Actual sales = $188.46 33. (16­3) Excess capacity C K Answer: e MEDIUM Sales $850 Fixed assets (not used in calculations) $425 % of capacity utilized 60% Sales at full capacity = Actual sales/% of capacity used = $1,416.67 Additional sales without adding FA = Full capacity sales − Actual s$566.67 Percent growth in sales = Additional sales/Old sales = 66.67% 34. (16­3) Finding target FA/S ratio C K Answer: b MEDIUM Sales $250 Fixed assets $100 % of capacity utilized 75% Sales at full capacity = Actual sales/% of capacity used = $333.33 Target FA/Sales ratio = Full capacity FA/Sales = FA/Capacity sales = 30.0% 35. (16­5) Forecasting inv. turnover C K Answer: a MEDIUM Current year’s sales $600 Growth rate 15% Projected sales $690 Req. inventories= $30.2 + 0.25 × Projected sales = $30.2 + 0.25 × $690.0 = $202.7 Inventory turnover = Sales/Inventories = 3.40 36. (16­3) Positive AFN C K Answer: d MEDIUM/HARD Last year's sales =0S $350 Sales growth rate = g 30% Forecasted sales = S × (1 + g) $455 0 ΔS = change in sales = S1 − 0 = 0 g $105 Last year's total assets =0A * =0A * since full capacity $500 Forecasted total assets = 1 * = 0 * × (1 + g) $650 Last year's accounts payable $40 Last year's notes payable. Not spontaneous, so does not enter AFN calculation $50 Last year's accruals $30 L0* = payables + accruals $70 Profit margin = PM 5.0% Target payout ratio 60.0% Retention ratio = (1 − Payout) 40.0% AFN = (A *0S )0S – (L *0S )0S – Profit margin × S 1× (1 − Payout) AFN = $150.0 – $21.0 – $9.1 = $119.9 37. (16­3) Negative AFN C K Answer: c MEDIUM/HARD Last year's sales =0S $200,000 Sales growth rate = g 40% Forecasted sales = S0 × (1 + g) $280,000 ΔS = change in sales = S1 − 0 = 0 × g $80,000 Last year's total assets =0A * =0A * since full capacity $135,000 Forecasted total assets = 1 * = A0* × (1 + g) $189,000 Last year's accounts payable $50,000 Last year's notes payable. Not spontaneous, so does not enter AFN calculation $15,000 Last year's accruals $20,000 L0* = payables + accruals $70,000 Profit margin = PM 20.0% Target payout ratio 25.0% Retention ratio = (1 − Payout) 75.0% AFN = (A *0S )0S – (L *0S )0S – Profit margin × S 1 (1 − Payout) AFN = $54,000 – $28,000 – $42,000 = ­$16,000 38. (16­3) AFN­­changing div. payout C K Answer: b MEDIUM/HARD Last year's sales = S $300 0 Sales growth rate = g 40% Forecasted sales = S0 × (1 + g) $420 ΔS = change in sales = S1 − S0 = S0 g $120 Last year's total assets =0A * =0A * since full capacity $500 Forecasted total assets = 1 * = A0* × (1 + g) $700 Last year's accounts payable $50 Last year's notes payable. Not spontaneous, so does not enter AFN calculation $15 Last year's accruals $20 L0* = payables + accruals $70 Profit margin = PM 20% Initial payout ratio 10% New payout ratio 50% Initial retention ratio = (1 − Payout) 90% New retention ratio = (1 − Payout) 50% AFN = (A *0S )0S – (L *0S )0S – Profit margin × S 1 (1 − Payout) Old AFN = $200.0 – $28.0 – $75.6 = $96.4 New AFN = $200.0 – $28.0 – $42.0 = $130.0 Change in AFN = $33.6 39. (16­3) Finding target FA/S ratio C K Answer: b HARD Sales $450 Fixed assets $225 % of capacity utilized 65% Sales at full capacity = Actual sales/% of capacity used = $692.31 Target FA/Sales ratio = Full capacity FA/Sales = FA/Capacity sales = 32.50% Optimal FA = Sales × Target FA/Sales ratio = $146.25 Cash generated = Actual FA − Optimal FA = $78.75 AN OVERVIEW OF FINANCICHAPTER 1MENT (Difficulty Levels: Easy, Easy/Medium, Medium, Medium/Hard, and Hard) Note that there is an overlap between the T/F and multiple­choice questions, as some of the T/F statements are used in multiple­choice questions. See the preface for information on the AACSB letter indicators (F, M, etc.) on the subject lines. Multiple Choice: True/False (1­1) Role of finance F M Answer: a EASY 1. In most corporations, the CFO ranks under the CEO. a. True b. False (1­1) Role of finance F M Answer: b EASY 2 . The Chairman of the Board must also be the CEO. a. True b. False (1­1) Role of finance F M Answer: a EASY 3 . The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking individual. The CEO generally works under the board and its chairman, and the board generally has the authority to remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in the same person. a. True b. False (1­3) Forms of organization F M Answer: a EASY 4. Partnerships and proprietorships generally have a tax advantage over corporations. a. True b. False (1­3) Forms of organization F M Answer: b EASY 5 . A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal liabilities in the event of bankruptcy than are investors in a typical partnership. a. True b. False Chapter 1: Overview True/False Page 1 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. Page 2 True/False Chapter 1: Overview © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (1­3) Forms of organization F M Answer: b EASY 6. An advantage of the corporate form of organization is that corporations are generally less highly regulated than proprietorships and partnerships. a. True b. False (1­3) Forms of organization F M Answer: a EASY 7 . Some partners in a partnership may have different rights, privileges, and responsibilities than other partners. a. True b. False (1­3) Forms of organization F M Answer: b EASY 8. One advantage of the corporate form of organization is that it avoids double taxation. a. True b. False (1­3) Forms of organization F M Answer: a EASY 9. It is generally harder to transfer one’s ownership interest in a partnership than in a corporation. a. True b. False (1­3) Forms of organization F M Answer: a EASY 1. One danger of starting a proprietorship is that you may be exposed to personal liability if the business goes bankrupt. This problem would be avoided if you formed a corporation to operate the business. a. True b. False (1­3) Forms of organization F M Answer: a EASY 1. If a corporation elects to be taxed as an S corporation, then it can avoid the corporate tax. However, its stockholders will have to pay personal taxes on the firm's net income. a. True b. False (1­3) Forms of organization F M Answer: b EASY 1. If a corporation elects to be taxed as an S corporation, then both it and its stockholders can avoid all Federal taxes. This provision was put into the Federal Tax Code in order to encourage the formation of small businesses. a. True b. False Chapter 1: Overview True/False Page 3 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. Page 4 True/False Chapter 1: Overview © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (1­3) Forms of organization F M Answer: b EASY 1. It is generally less expensive to form a corporation than a proprietorship because, with a proprietorship, extensive legal documents are required. a. True b. False (1­3) Forms of organization F M Answer: a EASY 1. The more capital a firm is likely to require, the greater the probability that it will be organized as a corporation. a. True b. False (1­3) Forms of organization F M Answer: b EASY 1. One disadvantage of forming a corporation rather than a partnership is that this makes it more difficult for the firm’s investors to transfer their ownership interests. a. True b. False (1­3) Forms of organization F M Answer: a EASY 1. Organizing as a corporation makes it easier for the firm to raise capital. This is because corporations' stockholders are not subject to personal liabilities if the firm goes bankrupt and also because it is easier to transfer shares of stock than partnership interests. a. True b. False (1­4) Shareholder value F M Answer: b EASY 17 . In order to maximize its shareholders' value, a firm's management must attempt to maximize the expected EPS. a. True b. False (1­4) Shareholder value F M Answer: b EASY 18 . In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price on a specific target date. a. True b. False (1­5) Intrinsic values F G M Answer: a EASY 19 . In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price in the long run, or the stock's "intrinsic value." a. True b. False Chapter 1: Overview True/False Page 5 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. Page 6 True/False Chapter 1: Overview © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (1­5) Intrinsic values F M Answer: b EASY 2. If management operates in a manner designed to maximize the firm's expected profits for the current year, this will also maximize the stockholders' wealth as of the current year. a. True b. False (1­6) Important trends E F M Answer: a EASY 2. Globalization of business has been facilitated by improvements in information technology. a. True b. False (1­7) Business ethics B F M Answer: a EASY 2. As a result of the Enron scandal and other recent scandals, there has been a strong push to improve business ethics. a. True b. False (1­7) Business ethics B F M Answer: b EASY 2. There are many types of unethical business behavior. One example is where executives provide information that they know is incorrect to banks and to stockholders. It is illegal to provide such information to banks, but it is not illegal to provide it to stockholders because they are the owners of the firm, not outsiders. a. True b. False (1­5) Intrinsic values F G Answer: a MEDIUM 24 . A stock's market price would equal its intrinsic value if all investors had all the information that is available about the stock. In this case the stock's market price would equal its intrinsic value. a. True b. False (1­5) Intrinsic values F G Answer: b MEDIUM 25 . If a stock's market price is above its intrinsic value, then the stock can be thought of as being undervalued, and it would be a good buy. a. True b. False (1­5) Intrinsic values F G Answer: b MEDIUM 26 . If a stock's intrinsic value is greater than its market price, then the stock is overvalued and should be sold. a. True b. False Chapter 1: Overview True/False Page 7 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. Page 8 True/False Chapter 1: Overview © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (1­5) Intrinsic values F G Answer: b MEDIUM 2. For a stock to be in equilibrium as the book defines it, its market price should exceed its intrinsic value. a. True b. False (1­5) Intrinsic values F G Answer: a MEDIUM 2. The term "marginal investor" means an investor who is active in the market and would tend to buy a stock if its price fell and sell it if it rose, barring any new information coming out about the stock. It is the “marginal investor” who determines the actual stock price. a. True b. False (1­7) Business ethics B F M Answer: b MEDIUM 2. If a lower level person in a firm does something illegal, like "cooking the books" to understate costs and thereby increase profits above the correct profits because he or she was told to do so by a superior, the lower level person cannot be prosecuted but the superior can be prosecuted. a. True b. False (1­7) Business ethics B F G Answer: a MEDIUM 3. If someone deliberately understates costs and thereby increases profits, this can cause the price of the stock to rise above its intrinsic value. The stock price will probably fall in the future. Also, those who participated in the fraud can be prosecuted, and the firm itself can be penalized. a. True b. False (1­8) Conflicts B F M Answer: b MEDIUM 31 . Managers always attempt to maximize the long­run value of their firms' stocks, or the stocks' intrinsic values. This is exactly what stockholders desire. Thus, conflicts between stockholders and managers are not possible. However, there can be conflicts between stockholders and bondholders. a. True b. False (1­8) Conflicts F M Answer: a MEDIUM 3. A hostile takeover is said to occur when another corporation or group of investors gains voting control over a firm and replaces the old managers. If the old managers were managing the firm inefficiently, then hostile takeovers can improve the economy. However, hostile takeovers are controversial, and legislative actions have been taken to make them more difficult to undertake. Chapter 1: Overview True/False Page 9 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. a. True b. False Page 10 True/False Chapter 1: Overview © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (1­5) Intrinsic values F M Answer: a HARD 3. If a firm's board of directors wants to maximize value for its stockholders in general (as opposed to some specific stockholders), it should design an executive compensation system whose goal is to maximize the stock's intrinsic value rather than the stock's current market price. a. True b. False Multiple Choice: Conceptual Please note that some of the answer choices, or answers that are very close, are used in different questions. This has caused us no difficulties, but please take this into account when you make up exams. (1­3) Forms of organization F M Answer: e EASY 3. Which of the following statements is CORRECT a. One of the disadvantages of incorporating your business is that you could become subject to the firm's liabilities in the event of bankruptcy. b. Sole proprietorships are subject to more regulations than corporations. c. In any partnership, every partner has the same rights, privileges, and liability exposure as every other partner. d. Corporations of all types are subject to the corporate income tax. e. Sole proprietorships and partnerships generally have a tax advantage over corporations. (1­3) Forms of organization F M Answer: c EASY 35 . Which of the following statements is CORRECT a. One of the advantages of the corporate form of organization is that it avoids double taxation. b. It is easier to transfer one’s ownership interest in a partnership than in a corporation. c. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability. d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., “one person, one vote.” e. Corporations of all types are subject to the corporate income tax. Chapter 1: Overview Conceptual M/C Page 11 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password­protected website for classroom use. (1­3) Forms of organization F M Answer: a EASY 3. Which of the following statements is CORRECT a. One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a partnership. b. Corporations face fewer regulations than sole pr

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Textbook: Engineering Mechanics: Statics
Edition: 14
Author: Russell C. Hibbeler
ISBN: 9780133918922

Engineering Mechanics: Statics was written by and is associated to the ISBN: 9780133918922. Since the solution to 10-39 from 10 chapter was answered, more than 398 students have viewed the full step-by-step answer. The answer to “Determine the moment of inertia of the shaded area about the y axis. x 6 in. 3 in. 6 in. y 6 in. Probs. 1038/39” is broken down into a number of easy to follow steps, and 25 words. This textbook survival guide was created for the textbook: Engineering Mechanics: Statics, edition: 14. This full solution covers the following key subjects: area, axis, determine, inertia, moment. This expansive textbook survival guide covers 11 chapters, and 1136 solutions. The full step-by-step solution to problem: 10-39 from chapter: 10 was answered by , our top Engineering and Tech solution expert on 11/10/17, 05:25PM.

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Determine the moment of inertia | Ch 10 - 10-39, 14th Edition