a. Distinct between Systematic Risk (Market Risk) and Unsystematic Risk. b. Compare and contrast preference shares with ordinary shares.

Question 5) Define (with simple engineering examples) the following aspects of a cost management plan; i) resource planning, ii) cost estimating, iii) cost budgeting and iv) cost control.

2- (20 pts.) The direct labor cost of making airplanes decreases with repetition (learning curve). As a result, the cost of manufacturing of airplanes depend on the unit production number (first, fifth, 10th, 50th, etc.). The following data shows the direct labor cost for selected production numbers.

3. You are given data regarding the interest coverage ratio and Altman's Z. Assign an appropriate synthetic debt rating consistent with the interest coverage ratio. Explain what you think about the default risk of the company.

1. We read some information on Emerging Growth Companies. How would you design a scientific study on the relationship between EGC status, information asymmetry, the cost of capital, and earnings quality? What would your hypotheses be? What results would you anticipate finding?

Question 7) What are the main reasons why project budgets are exceeded?

Question 3) Define what you understand about project financing and explain the variety of funding sources available. What are the advantages and disadvantages of the different internal and external sources of funds?

P16-31 CVP Analysis and Special Decisions Smoothie Company produces fruit purees which it sells to smoothie bars and health clubs. Assume the most recent year's sales revenue was $5,800,000. Variable costs were 55% of sales and fixed costs totaled $1,560,000. Smoothie is evaluating two alternatives designed to enhance profitability. • One staff member has proposed that Smoothie purchase more automated processing equipment. This strategy would increase fixed costs by $250,000 but decrease variable costs to 50% of sales. • Another staff member has suggested that Smoothie rely more on outsourcing for fruit processing. This would reduce fixed costs by $250,000 but increase variable costs to 60% of sales. Required a. What is the current break-even point in sales dollars? b. Assuming an income tax rate of 20%, what dollar sales volume is currently required to obtain an after-tax profit of $1,000,000? c. In the absence of income taxes, at what sales volume will both alternatives (automation and out- sourcing) provide the same profit? d. Briefly describe one strength and one weakness of both the automation and the outsourcing alternatives.

P17-31. Special Order Razor USA produces a variety of electric scooters. Assume that Razor has just received an order from a customer (Pulse Cycles) for 500 Power Core scooters. The following price, based on cost plus a 60% markup, has been developed for the order: