Klein cosmetics has a profit margin of 5.0%, a total assets turnover ratio of 1.5 times, no debt and therefore an equity multiplier of 1.0, and an roe of 7.5%. the cfo recommends that the firm borrow money, use the funds to buy back stock, and raise the equity multiplier to 2.0. the size of the firm (assets) would not change. she thinks that operations would not be affected, but interest on the new debt would lower the profit margin to 4.5%. this would probably be a good move, as it would increase the roe from 7.5% to 13.5%.
a. true
b. false

Emery pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. emery uses 825 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $48 per order. the cost schedules of two suppliers are as follows: vendor 1 vendor 2 quantity price/lb quantity price/lb 1-499 $17 1-399 $17.10 500-999 $16.75 400-799 $16.85 1000+ $16.50 800-1199 $16.60 1200+ $16.25 (a) what is the economic order quantity for each supplier? (b) what quantity should be ordered and which supplier should be used? (c) the total cost for the most economic order sire is $