The reason why new common stock that is raised externally has a higher percentage cost than equity that is raised internally as retained earnings is because?

	a.	sunk costs
	b.	none of the above
	c.	flotation costs
	d.	size of offering

Tree Cutters Inc., a manufacturer of power tools, decides to offer a rebate of $100 on its 18-inch mid-range chain saw, which currently has a retail price of $470. The firms marketers estimate that, as a result of the promotional rebate, sales of this model will increase from 50,000 to 80,000 units next year. The profit margin for Tree Cutters Inc., before the rebate is $150 per unit. Based on the given information, is this decision to give the rebate a wise one?

	a.	Yes, since the benefits are $1.5 million more than the costs.
	b.	No, since costs are $5.0 million more than benefits.
	c.	Yes, since the benefits are $0.2 million more than the costs.
	d.	No, since costs are $3.5 million more than benefits.

You grandfather offers to sell you his used 1958 Cadillac Eldorado for $50,000. You note that very similar cars are selling on the open market for $90,000. You dont care for classic care and would really rather buy a new Ford Explorer for $356,000. What is the net value of buying the Cadillac?

	a.	$35,000, since this is the value of the car that you really want to buy.
	b.	$90,000, since the Cadillac could be sold for this price.
	c.	$50,000, since the Cadillac could be bought for this price.
	d.	$40,000, since this is the difference between the purchase and resale price of the Cadillac.