Solutions to Problems

P11-1. LG 1: Breakeven pointalgebraic

Basic
FC
( P VC)
$12,350
Q=
= 1,300
($24.95 $15.45)
Q=

P11-2. LG 1: Breakeven comparisonsalgebraic

Basic
a.

Q=

FC
( P VC)

Firm F:

Q=

$45,000
= 4,000 units
($18.00 $6.75)

Firm G:

Q=

$30,000
= 4,000 units
($21.00 $13.50)

$90,000
= 5,000 units
($30.00 $12.00)
b. From least risky to most risky: F and G are of equal risk, then H. It is important to recognize
that operating leverage is only one measure of risk.
Firm H:

Q=

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Gitman Principles of Managerial Finance, Brief Fifth Edition

P11-3. LG 1: Breakeven pointalgebraic and graphical

Intermediate
a.

Q = FC (P VC)
Q = $473,000 ($129 $86)
Q = 11,000 units

b.

P11-4. LG 1: Breakeven analysis

Intermediate
a.

Q=

$73,500
= 21,000 CDs
( $13.98 $10.48 )

b. Total operating costs = FC + (Q VC)

Total operating costs = $73,500 + (21,000 $10.48)
Total operating costs = $293,580
c. 2,000 12 = 24,000 CDs per year. 2,000 records per month exceeds the operating breakeven
by 3,000 records per year. Barry should go into the CD business.
d. EBIT = (P Q) FC (VC Q)
EBIT = ($13.98 24,000) $73,500 ($10.48 24,000)
EBIT = $335,520 $73,500 $251,520
EBIT = $10,500
P11-5. LG 1: Breakeven analysis
Easy
a. Break even point in months = fixed cost (monthly benefit monthly variable costs)
$500 ($35 $20) = $500 $15 = 33 1/3 months
b. Install the Geo-Tracker because the device pays for itself over 33.3 months, which is less than
the 36 months that Paul is planning on owning the car.

Chapter 11

Leverage and Capital Structure

221

P11-6. LG 1: Breakeven pointchanging costs/revenues

Intermediate
a. Q = F (P VC)
Q = $40,000 ($10 $8) = 20,000 books
Q = $44,000 $2.00
= 22,000 books
b.
c.
Q = $40,000 $2.50
= 16,000 books
d.
Q = $40,000 $1.50
= 26,667 books
e. The operating breakeven point is directly related to fixed and variable costs and inversely
related to selling price. Increases in costs raise the operating breakeven point, while increases
in price lower it.
P11-7. LG 2: EBIT sensitivity
Intermediate
a. and b.

Sales
Less: Variable costs
Less: Fixed costs
EBIT

8,000 Units

10,000 Units

12,000 Units

$72,000
40,000
20,000
$12,000

$90,000
50,000
20,000
$20,000

$108,000
60,000
20,000
$ 28,000

c.
Unit Sales

Percentage
Change in
unit sales
Percentage
Change in
EBIT

8,000

10,000

(8,000 10,000) 10,000

= 20%
(12,000 20,000) 20,000
= 40%

12,000

(12,000 10,000) 10,000

0

= +20%
(28,000 20,000) 20,000

= + 40%

d. EBIT is more sensitive to changing sales levels; it increases/decreases twice as much as sales.
P11-8. LG 2: DOL
Intermediate
FC
$380,000
a. Q =
=
= 8,000 units
( P VC) $63.50 $16.00
9,000 Units

10,000 Units

11,000 Units

$571,500
144,000
380,000
$ 47,500

$635,000
160,000
380,000
$ 95,000

$698,500
176,000
380,000
$142,500

b.
Sales
Less: Variable costs
Less: Fixed costs
EBIT

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Gitman Principles of Managerial Finance, Brief Fifth Edition

c.
Change in unit sales
% change in sales
Change in EBIT
% Change in EBIT

1,000
1,000 10,000 = 10%
$47,500
$47,500 95,000 = 50%

0
0
0
0

+1,000
1,000 10,000 = +10%
+$47,500
$47,500 95,000 = +50%

d.
% change in EBIT
% change in sales

e.

50 10 = 5

DOL =

[Q ( P VC)]
[Q ( P VC)] FC

DOL =

[10,000 ($63.50 $16.00)]

[10,000 ($63.50 $16.00) $380,000]

DOL =

$475,000
= 5.00
$95,000

P11-9. LG 2: DOLgraphic
Intermediate

FC
$72,000
=
= 24,000 units
( P VC) $9.75 $6.75

a.

Q=

b.

DOL =

[Q ( P VC)]
[Q ( P VC)] FC

DOL =

[25,000 ($9.75 $6.75)]

= 25.0
[25,000 ($9.75 $6.75)] $72,000

DOL =

[30,000 ($9.75 $6.75)]

= 5.0
[30,000 ($9.75 $6.75)] $72,000

DOL =

[40,000 ($9.75 $6.75)]

= 2.5
[40,000 ($9.75 $6.75)] $72,000

c.

50 10 = 5

Chapter 11

Leverage and Capital Structure

[24,000 ($9.75 $6.75)]

=
[24,000 ($9.75 $6.75)] $72,000

d.

DOL =

e.

At the operating breakeven point, the DOL is infinite.

DOL decreases as the firm expands beyond the operating breakeven point.

P11-10. LG 2: EPS calculations

Intermediate

EBIT
Less: Interest
Net profits before taxes
Less: Taxes
Net profit after taxes
Less: Preferred dividends
Earnings available to
common shareholders
EPS (4,000 shares)

(a)

(b)

(c)

$24,600
9,600
$15,000
6,000
$ 9,000
7,500
$ 1,500

$30,600
9,600
$21,000
8,400
$12,600
7,500
$ 5,100

$35,000
9,600
$25,400
10,160
$15,240
7,500
$ 7,740

$ 0.375

$ 1.275

$ 1.935

P11-11. LG 2: DFL
Intermediate
a.
EBIT
Less: Interest
Net profits before taxes
Less: Taxes (40%)
Net profit after taxes
EPS (2,000 shares)
b.

DFL =

DFL =

$80,000
40,000
$40,000
16,000
$24,000
$ 12.00

$120,000
40,000
$ 80,000
32,000
$ 48,000
$ 24.00

EBIT

EBIT I PD

(1 T )

$80,000
=2
[$80,000 $40,000 0]

c.
EBIT
Less: Interest
Net profits before taxes
Less: Taxes (40%)
Net profit after taxes
EPS (3,000 shares)

DFL =

$80,000
= 1.25
[$80,000 $16,000 0]

$80,000
16,000
$64,000
25,600
$38,400
$ 12.80

$120,000
16,000
$104,000
41,600
$ 62,400
$ 20.80

223

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Gitman Principles of Managerial Finance, Brief Fifth Edition

P11-12. LG 2: Financial leverage

Challenge
a.
Current DFL

Available for making loan payment

Less: Loan payments
Available after loan payments
DFL
Proposed DFL

Available for making loan payment

Less: Loan payments
Available after loan payments
DFL

Initial Values Future Value

$3,000
$1,000
$2,000

$3,300
10.0%
$1,000
0.0%
$2,300
15.0%
15% 10% = 1.50

Initial Values Future Value

$3,000
$1,350
$1,650

Percentage
Change

Percentage
Change

$3,300
10.0%
$1,350
0.0%
$1,950
18.2%
18.2% 10% = 1.82

b. Based on his calculations, the amount that Max will have available after loan payments with
his current debt changes by 1.5% for every 1% change in the amount he will have available
for making the loan payment. This is less responsive and therefore less risky than the 1.82%
change in the amount available after making loan payments with the proposed $350 in monthly
debt payments. Although it appears that Max can afford the additional loan payments, he must
decide if, give the variability of Maxs income, he would feel comfortable with the increased
financial leverage and risk.
P11-13. LG 2, 5: DFL and graphic display of financing planschallenge
EBIT
a. DFL =

EBIT I PD

(1 T )

DFL =
b.

$67,500
= 1.5
[$67,500 $22,500 0]

Chapter 11

c.

DFL =

$67,500
$6,000

$67,500 $22,500 0.6

Leverage and Capital Structure

= 1.93

d. See graph, which is based on the following equation and data points.
Financing

EBIT

Original
financing
plan

$67,500

($67,000 $22,500)(1 0.4)

= $1.80
15,000

$17,500

($67,000 $22,500)(1 0.4)

= $0.20
15,000

$67,500

($67,000 $22,500)(1 0.4) 6000

= $1.40
15,000

$17,500

($17,000 $22,500)(1 0.4) 6000

= $0.60
15,000

Revised
financing
plan

e.

EPS

The lines representing the two financing plans are parallel since the number of shares of
common stock outstanding is the same in each case. The financing plan, including the
preferred stock, results in a higher financial breakeven point and a lower EPS at any
EBIT level.

P11-14. LG 1, 2: Integrativemultiple leverage measures

Intermediate
$28,000
= 175,000 units
a. Operating breakeven =
$0.16
b.

DOL =

[Q ( P VC)]
[Q ( P VC)] FC

DOL =

[400,000 ($1.00 $0.84)]

$64,000
=
= 1.78
[400,000 ($1.00 $0.84)] $28,000 $36,000

225

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Gitman Principles of Managerial Finance, Brief Fifth Edition

c.

EBIT = (P Q) FC (Q VC)
EBIT = ($1.00 400,000) $28,000 (400,000 $0.84)
EBIT = $400,000 $28,000 $336,000
EBIT = $36,000
DFL =

DFL =

EBIT

EBIT I PD

(1 T )

$36,000

$2,000
$36,000 $6,000

(1 0.4)

= 1.35

Chapter 11

DTL* =

d.

DTL =

DTL =

Leverage and Capital Structure

227

[Q ( P VC)]

PD
Q ( P VC) FC I

(1 T )

[400,000 ($1.00 $0.84)]

$2,000
400,000 ($1.00 $0.84) $28,000 $6,000

(1 0.4)

$64,000
$64,000
=
= 2.40
[$64,000 $28,000 $9,333] $26,667

DTL = DOL DFL

DTL = 1.78 1.35 = 2.40
The two formulas give the same result.
*

Degree of total leverage.

P11-15. LG 2: Integrativeleverage and risk

Intermediate
a.

DOL R =

[100,000 ($2.00 $1.70)]

$30,000
=
= 1.25
[100,000 ($2.00 $1.70)] $6,000 $24,000

DFL R =

$24,000
= 1.71
[$24,000 $10,000]

DTL R = 1.25 1.71 = 2.14

b.

DOLW =

[100,000 ($2.50 $1.00)]

$150,000
=
= 1.71
[100,000 ($2.50 $1.00)] $62,500 $87,500

DFLW =

$87,500
= 1.25
[$87,500 $17,500]

DTL R = 1.71 1.25 = 2.14

c.

Firm R has less operating (business) risk but more financial risk than Firm W.

d. Two firms with differing operating and financial structures may be equally leveraged. Since
total leverage is the product of operating and financial leverage, each firm may structure itself
differently and still have the same amount of total risk.
P11-16. LG 3: Capital structures
Intermediate
a. Monthly mortgage payment Monthly gross income = $1,100 $4,500 = 24.44%
Kirstens ratio is less than the bank maximum of 28%.
b. Total monthly installment payment Monthly gross income = ($375 + $1,100) $4,500 =
32.8%
Kirstens ratio is less than the bank maximum of 37.0%. Since Kirsten debt-related expenses
as a percentage of her monthly gross income are less than bank-specified maximums, her loan
application should be accepted.

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Gitman Principles of Managerial Finance, Brief Fifth Edition

P11-17. LG 3: Various capital structures

Basic
Debt Ratio

Debt

Equity

10%
20%
30%
40%
50%
60%
90%

$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$900,000

$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$100,000

Theoretically, the debt ratio cannot exceed 100%. Practically, few creditors would extend loans to
companies with exceedingly high debt ratios (>70%).
P11-18. LG 5: EBIT-EPS and capital structure
Intermediate
a. Using $50,000 and $60,000 EBIT:
Structure A

EBIT
Less: Interest
Net profits before taxes
Less: Taxes
Net profit after taxes
EPS (4,000 shares)
EPS (2,000 shares)

$50,000
16,000
$34,000
13,600
$20,400
$ 5.10

Financial breakeven points:

b.

Structure A

Structure B

$16,000

$34,000

$60,000
16,000
$44,000
17,600
$26,400
$ 6.60

Structure B

$50,000
34,000
$16,000
6,400
$ 9,600

$60,000
34,000
$26,000
10,400
$15,600

4.80

7.80

Chapter 11

Leverage and Capital Structure

229

c.

If EBIT is expected to be below $52,000, Structure A is preferred. If EBIT is expected to be

above $52,000, Structure B is preferred.
d. Structure A has less risk and promises lower returns as EBIT increases. B is more risky since
it has a higher financial breakeven point. The steeper slope of the line for Structure B also
indicates greater financial leverage.
e. If EBIT is greater than $75,000, Structure B is recommended since changes in EPS are much
greater for given values of EBIT.
P11-19. LG 5: EBIT-EPS and preferred stock
Intermediate
a.
Structure A

EBIT
Less: Interest
Net profits before taxes
Less: Taxes
Net profit after taxes
Less: Preferred dividends
Earnings available for
common shareholders
EPS (8,000 shares)
EPS (10,000 shares)

Structure B

$30,000
12,000
$18,000
7,200
$10,800
1,800

$50,000
12,000
$38,000
15,200
$22,800
1,800

$30,000
7,500
$22,500
9,000
$13,500
2,700

$50,000
7,500
$42,500
17,000
$25,500
2,700

$ 9,000
$ 1.125

$21,000
$ 2.625

$10,800

$22,800

1.08

2.28

b.

c. Structure A has greater financial leverage, hence greater financial risk.

d. If EBIT is expected to be below $27,000, Structure B is preferred. If EBIT is expected to be
above $27,000, Structure A is preferred.
e. If EBIT is expected to be $35,000, Structure A is recommended since changes in EPS are
much greater for given values of EBIT.

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P11-20. LG 3, 4, 6: IntegrativeOptimal capital structures

Challenge
a. 0% debt ratio
Probability

Sales
Less: Variable costs (40%)
Less: Fixed costs
EBIT
Less: Interest
Earnings before taxes
Less: Taxes
Earnings after taxes
EPS (25,000 shares)

0.20

0.60

$200,000
80,000
100,000
$ 20,000
0
$ 20,000
8,000
$ 12,000
$ 0.48

$300,000
120,000
100,000
$ 80,000
0
$ 80,000
32,000
$ 48,000
$ 1.92

0.20

$400,000
160,000
100,000
$140,000
0
$140,000
56,000
$ 84,000
$ 3.36

20% debt ratio:

Total capital = $250,000 (100% equity
= 25,000 shares $10 book value)
Amount of debt = 20% $250,000
= $50,000
= $200,000
Amount of equity = 80% 250,000
Number of shares = $200,000 $10 book value = 20,000 shares

Probability

EBIT
Less: Interest
Earnings before taxes
Less: Taxes
Earnings after taxes
EPS (20,000 shares)

0.20

0.60

0.20

$20,000
5,000
$15,000
6,000
$ 9,000
$ 0.45

$80,000
5,000
$75,000
30,000
$45,000
$ 2.25

$140,000
5,000
$135,000
54,000
$ 81,000
$ 4.05

40% debt ratio:

Amount of debt = 40% $250,000 = total debt capital = $100,000
Number of shares = $150,000 equity $10 book value = 15,000 shares
Probability
0.20

EBIT
Less: Interest
Earnings before taxes
Less: Taxes
Earnings after taxes
EPS (15,000 shares)

$20,000
12,000
$ 8,000
3,200
$ 4,800
$ 0.32

0.60

$80,000
12,000
$68,000
27,200
$40,800
$ 2.72

0.20

$140,000
12,000
$128,000
51,200
$ 76,800
$ 5.12

Chapter 11

Leverage and Capital Structure

231

60% debt ratio:

Amount of debt = 60% $250,000 = total debt capital = $150,000
Number of shares = $100,000 equity $10 book value = 10,000 shares
Probability
0.20

0.60

0.20

$80,000
21,000
$59,000
23,600
$35,400
$ 3.54

$140,000
21,000
$119,000
47,600
$ 71,400
$ 7.14

EBIT
Less: Interest
Earnings before taxes
Less: Taxes
Earnings after taxes
EPS (10,000 shares)

$20,000
21,000
$ (1,000)
(400)
$ (600)
$ (0.06)

Debt
Ratio

E(EPS)

(EPS)

CV
(EPS)

Number of
Common
Shares

Dollar
Amount
of Debt

Share Price*

0%
20%
40%
60%

$1.92
$2.25
$2.72
$3.54

0.9107
1.1384
1.5179
2.2768

0.4743
0.5060
0.5581
0.6432

25,000
20,000
15,000
10,000

0
$ 50,000
$100,000
$150,000

$1.92/0.16 = $12.00
$2.25/0.17 = $13.24
$2.72/0.18 = $15.11
$3.54/0.24 = $14.75

Share price: E(EPS) required return for CV for E(EPS), from table in problem.

b. 1. Optimal capital structure to maximize EPS:

60% debt
40% equity

2. Optimal capital structure to maximize share price: 40% debt

60% equity
c.

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P11-21. LG 5, 6: IntegrativeOptimal Capital Structure

a.
Debt
Ratio

Amount
of Debt

Amount
of Equity

Number of
Shares of
Common Stock*

0%
15%
30%
45%
60%

$
0
150,000
300,000
450,000
600,000

$1,000,000
850,000
700,000
550,000
400,000

40,000
34,000
28,000
22,000
16,000

Dollar amount of equity $25 per share = Number of shares of common stock.

b.

c.

Debt
Ratio

Amount
of Debt

Cost
of Debt

0%
15%
30%
45%
60%

$
0
150,000
300,000
450,000
600,000

0.0%
8.0
10.0
13.0
17.0

Annual
Interest

0
12,000
30,000
58,500
102,000

EPS = [(EBIT Interest) (1 T)] Number of common shares outstanding.

Debt
Ratio

0%
15%
30%
45%
60%

Calculation

EPS

{[($150,000 $
0) (1 0.40)] 40,000}
{[($250,000 $
0) (1 0.40)] 40,000}
{[($150,000 $12,000) (1 0.40)] 34,000}
{[($250,000 $12,000) (1 0.40)] 34,000}
{[($150,000 $30,000) (1 0.40)] 28,000}
{[($250,000 $30,000) (1 0.40)] 28,000}
{[($150,000 $58,500) (1 0.40)] 22,000}
{[($250,000 $58,500) (1 0.40)] 22,000}
{[($150,000 $102,000) (1 0.40)] 16,000}
{[($250,000 $102,000) (1 0.40)] 16,000}

= $2.25
= $3.75
= $2.44
= $4.20
= $2.57
= $4.71
= $2.50
= $5.22
= $1.80
= $5.55

Chapter 11

Leverage and Capital Structure

233

d.

The EBIT ranges over which each capital structure is preferred are as follows:
Debt Ratio

0%
15%
30%
45%
60%

EBIT Range

$0$80,000
$80,001$114,000
$114,001$163,000
$163,001$218,000
above $218,000

To calculate the intersection points on the graphic representation of the EBIT-EPS approach
to capital structure, the EBIT level which equates EPS for each capital structure must be
found, using the following formula.
EPS =

Set

(1 T ) (EBIT I ) PD
number of common shares outstanding

EPS 0% = EPS 15%

EPS 15% = EPS 30%
EPS 30% = EPS 45%
EPS 45% = EPS 60%

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Gitman Principles of Managerial Finance, Brief Fifth Edition

The first calculation, EPS 0% = EPS 15%, is illustrated:

EPS0% =

[(1 0.4)(EBIT $0) 0]

40,000 shares

EPS15% =

[(1 0.4)(EBIT $12,000) 0]

34,000 shares

20,400 EBIT = 24,000 EBIT 288,000,000

EBIT =

288,000,000
= $80,000
3,600

The major problem with this approach is that is does not consider maximization of
shareholder wealth (i.e., share price).
e.
EBIT = $150,000

f.

EBIT = $250,000

Debt
Ratio

EPS ks

Share
Price

EPS ks

Share
Price

0%
15%
30%
45%
60%

$2.25 0.100
$2.44 0.105
$2.57 0.116
$2.50 0.140
$1.80 0.200

$22.50
$23.24
$22.16
$17.86
$9.00

$3.75 0.100
$4.20 0.105
$4.71 0.116
$5.22 0.140
$5.55 0.200

$37.50
$40.00
$40.60
$37.29
$27.75

Chapter 11

Leverage and Capital Structure

235

g. At an EBIT of $150,000, to maximize EPS the 30% debt structure is preferred. To maximize
share value, the 15% debt structure is preferred. A capital structure with 15% debt is
recommended because it maximizes share value and satisfies the goal of maximization of
shareholder wealth.
At an EBIT of $250,000, to maximize EPS, the 60% debt structure is preferred. However, in
order to maximize share value, the 30% debt structure is recommended.
P11-22. Ethics problem
Information asymmetry applies to situations in which one party has more and better information
than the other interested party(ies). This appears to be exactly the situation in which managers
overleverage or lead a buyout of the company. Existing bondholders and possibly stockholders
are harmed by the financial risk of overleveraging, and existing stockholders are harmed if they
accept a buyout price less than that warranted by accurate and incomplete information.
The board of directors has a fiduciary duty toward stockholders, and hopefully bears an ethical
concern toward bondholders as well. The board can and should insist that management divulge all
information it possess on the future plans and risks the company faces (although, caution to keep
this out of the hands of competitors is warranted). The board should be cautious to select and
retain Chief executive officers (CEOs) with high integrity, and continue to emphasize an ethical
tone at the top. (Students will no doubt think of other creative mechanisms to deal with this
situation.)

Case

Evaluating Tampa Manufacturing Capital Structure

This case asks the student to evaluate Tampa Manufacturings current and proposed capital structures in
terms of maximization of EPS and financial risk before recommending one. It challenges the student to
go beyond just the numbers and consider the overall impact of his or her choices on the firms financial
policies.
1.

Times interest earned calculations

Debt
Coupon rate
Interest
EBIT
Interest
Times interest earned =

Current
10% Debt

Alternative A
30% Debt

Alternative B
50% Debt

$1,000,000
0.09
$ 90,000
$1,200,000
$ 90,000
13.33

$3,000,000
0.10
$ 300,000
$1,200,000
$ 300,000
4

$5,000,000
0.12
$ 600,000
$1,200,000
$ 600,000
2

As the debt ratio increases from 10% to 50%, so do both financial leverage and risk. At 10% debt
and $1,200,000 EBIT, the firm has over 13 times coverage of interest payments; at 30%, it still has
4 times coverage. At 50% debt, the highest financial leverage, coverage drops to 2 times, which may
not provide enough cushion. Both the times interest earned and debt ratios should be compared to
those of the printing equipment industry.

236

2.

Gitman Principles of Managerial Finance, Brief Fifth Edition

EBIT-EPS calculations (using any two EBIT levels)

Current 10% Debt
100,000 Shares

EBIT
Interest
PBT
Taxes
PAT
EPS

$600,000
90,000
$510,000
204,000
$306,000
$
3.06

$1,200,000
90,000
$1,110,000
444,000
$ 666,000
$
6.66

Alternative A 30% Debt

70,000 Shares

$600,000
300,000
$300,000
120,000
$180,000
$
2.57

$1,200,000
300,000
$ 900,000
360,000
$ 540,000
$
7.71

Alternative B 50% Debt

40,000 Shares

$600,000
600,000
$
0
0
$
0
0

$1,200,000
600,000
$ 600,000
240,000
$ 360,000
$
9.00

3.

If Tampa Manufacturings EBIT is $1,200,000, EPS is highest with the 50% debt ratio. The steeper
slope of the lines representing higher debt levels demonstrates that financial leverage increases as the
debt ratio increases. Although EPS is highest at 50%, the company must also take into consideration
the financial risk of each alternative. The drawback to the EBIT-EPS approach is its emphasis on
maximizing EPS rather than owners wealth. It does not take risk into account. Also, if EBIT falls
below about $750,000 (intersection of 10% and 30% debt), EPS is higher with a capital structure
of 10%.

4.

Market value: P0 = EPS rs

Current:
$6.66 0.12 = $55.50
Alternative A30%: $7.71 0.13 = $59.31
Alternative B50%: $9.00 0.18 = $50.00

5.

Alternative A, 30% debt, appears to be the best alternative. Although EPS is higher with Alternative
B, the financial risk is high; times interest earned is only 2 times. Alternative A has a moderate risk
level, with 4 times coverage of interest earned, and provides increased market value. Choosing this
capital structure allows the firm to benefit from financial leverage while not taking on too much
financial risk.

Chapter 11

Leverage and Capital Structure

237

Spreadsheet Exercise

The answer to Chapter 11s determination of the optimal capital structure at Starstruck Company spreadsheet
problem is located in the Instructors Resource Center at www.prenhall.com/irc.

A Note on Web Exercises

A series of chapter-relevant assignments requiring Internet access can be found at the books Companion
Website at http://www.prenhall.com/gitman. In the course of completing the assignments students access
information about a firm, its industry, and the macro economy, and conduct analyses consistent with those
found in each respective chapter.