Pam and lenny’s ice cream shop charges $1.25 for a cone. variable expenses are $0.35 per cone, and fixed costs total $1,800 per month. a “sweetheart” promotion is being planned for the second week of february. during this week, a person buying a cone at the regular price would receive a free cone for a friend. it is estimated that 400 additional cones would be sold and that 600 cones would be given away. advertising costs for the promotion would be $120.calculate the effect of the promotion on operating income for the second week of february. (do not round intermediate calculations.)net increase in op inc. = it is not 170

Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805