Presentation to the Board of Directors, The Pros and Con of Debt Financing The calculation of after-tax cost of debt plays a role in managing capital costs. You have been asked to present a few matters related to Debt (Bond) financing to the Board of Directors.
Please briefly explain to the board: 1) the usual collateral position of bondholders (lenders) versus equity investors, 2) why common stockholders can demand a higher rate of return than lenders, and 3) why you would suggest debt (or equity) financing?

Recently, verizon wireless ran a pricing trial in order to estimate the elasticity of demand for its services. the manager selected three states that were representative of its entire service area and increased prices by 5 percent to customers in those areas. one week later, the number of customers enrolled in verizon's cellular plans declined 4 percent in those states, while enrollments in states where prices were not increased remained flat. the manager used this information to estimate the own-price elasticity of demand and, based on her findings, immediately increased prices in all market areas by 5 percent in an attempt to boost the company's 2016 annual revenues. one year later, the manager was perplexed because verizon's 2016 annual revenues were 10 percent lower than those in 2015"the price increase apparently led to a reduction in the company's revenues. did the manager make an error? yes - the one-week measures show demand is inelastic, so a price increase will decrease revenues. yes - the one-week measures show demand is elastic, so a price increase will reduce revenues. yes - cell phone elasticity is likely much larger in the long-run than the short-run. no - the cell phone market must have changed between 2011 and 2012 for this price increase to lower revenues.

At which stage would you introduce your product to the market at large? a. development stage b. market testing stage c. commercialization stage d. ideation stage

In a chapter 7 bankruptcy, a debtor: