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Test Bank

Test Bank
Chapter 06: Working Capital and the Financing Decision
Chapter 6
Working Capital and the Financing Decision
Discussion Questions
6-1. Explain how rapidly expanding sales can drain the cash resources of a firm.
Rapidly expanding sales will require a buildup in assets to support the growth.
In particular, more and more of the increase in current assets will be permanent
in nature. A non-liquidating aggregate stock of current assets will be necessary
to allow for floor displays, multiple items for selection, and other purposes. All
of these “asset” investments can drain the cash resources of the firm.
6-2. Discuss the relative volatility of short- and long-term interest rates.
Figure 6-10 shows the long-run view of short- and long-term interest rates.
Normally, short-term rates are much more volatile than long-term rates.
6-3. What is the significance to working capital management of matching sales and
production?
If sales and production can be matched, the level of inventory and the amount
of current assets needed can be kept to a minimum; therefore, lower financing
costs will be incurred. Matching sales and production has the advantage of
maintaining smaller amounts of current assets than level production, and
therefore less financing costs are incurred. However, if sales are seasonal or
cyclical, workers will be laid off in a declining sales climate and machinery
(fixed assets) will be idle. Here lies the trade-off between level and seasonal
production: Full utilization of fixed assets with skilled workers and more
financing of current assets versus unused capacity, training and retraining
workers, with lower financing for current assets.
6-4. How is a cash budget used to help manage current assets?
A cash budget helps minimize current assets by providing a forecast of inflows

and outflows of cash. It also encourages the development of a schedule as to
when inventory is produced and maintained for sales (production schedule), and
accounts receivables are collected. The cash budget allows us to forecast the
level of each current asset and the timing of the buildup and reduction of each.
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent
of McGraw-Hill Education.
6-5. “The most appropriate financing pattern would be one in which asset buildup
and length of financing terms is perfectly matched.” Discuss the difficulty
involved in achieving this financing pattern.
Only a financial manager with unusual insight and timing could design a plan in
which asset buildup and the length of financing terms are perfectly matched.
One would need to know exactly what current assets are temporary and which
ones are permanent. Furthermore, one is never quite sure how much short-term
or long-term financing is available at all times. Even if this were known, it
would be difficult to change the financing mix on a continual basis.
6-6. By using long-term financing to finance part of temporary current assets, a firm
may have less risk but lower returns than a firm with a normal financing plan.
Explain the significance of this statement.
By establishing a long-term financing arrangement for temporary current assets,

a firm is assured of having necessary funding in good times as well as bad, thus
we say there is low risk. However, long-term financing is generally more
expensive than short-term financing and profits may be lower than those which
could be achieved with a synchronized or normal financing arrangement for
temporary current assets.
6-7. A firm that uses short-term financing methods for a portion of permanent
current assets is assuming more risk but expects higher returns than a firm with
a normal financing plan. Explain.
By financing a portion of permanent current assets on a short-term basis, we

run the risk of inadequate financing in tight money periods. However, since
short-term financing is less expensive than long-term funds, a firm tends to
increase its profitability over the long run (assuming it survives). In answer to
the preceding question, we stressed less risk and less return. Here the emphasis
is on risk and high return.
6-8. What does the term structure of interest rates indicate?
The term structure of interest rates shows the relative level of short-term and
long-term interest rates at a point in time on U.S. treasury securities. It is often
referred to as a yield curve.
6-9. What are three theories for describing the shape of the term structure of interest
rates (the yield curve)? Briefly describe each theory.
Liquidity premium theory, the market segmentation theory, and the

expectations theory.
The liquidity premium theory indicates that long-term rates should be higher
than short-term rates. This premium of long-term rates over short-term rates
exists because short-term securities have greater liquidity, and therefore higher
rates have to be offered to potential long-term bond buyers to entice them to
hold these less liquid and more price-sensitive securities.
The market segmentation theory states that Treasury securities are divided into
market segments by the various financial institutions investing in the market.
The changing needs, desires, and strategies of these investors tend to strongly
influence the nature and relationship of short- and long-term rates.
The expectations hypothesis maintains that the yields on long-term securities

are a function of short-term rates. The result of the hypothesis is that when
long-term rates are much higher than short-term rates, the market is saying that
it expects short-term rates to rise. Conversely, when long-term rates are lower
than short-term rates, the market is expecting short-term rates to fall.
6-10. Since the mid-1960s, corporate liquidity has been declining. What reasons can
you give for this trend?
The decrease in liquidity can be traced in part to more efficient inventory

management such as just-in-time inventory and point of sales terminals that
provide better inventory control. The decline in working capital can also be
attributed to electronic cash flow transfer systems, and the ability to sell
accounts receivables through securitization of assets (this is more fully
explained in the next chapter). It might also be that management is simply
willing to take more liquidity risk as interest rates declined.
Chapter 6
Problems
1. Expected value (LO6) Gary’s Pipe and Steel Company expects sales next year to be
$800,000 if the economy is strong, $500,000 if the economy is steady, and $350,000 if the
economy is weak. Gary believes there is a 20 percent probability the economy will be
strong, a 50 percent probability of a steady economy, and a 30 percent probability of a
weak economy. What is the expected level of sales for next year?
6-1. Solution:
Gary’s Pipe and Steel Company
State of Expected
Economy Sales Probability Outcome
Strong $800,000 .20 $160,000
Steady 500,000 .50 250,000
Weak 350,000 .30 105,000
Expected level of sales = $515,000
2. Expected value (LO6) Sharpe Knife Company expects sales next year to be $1,550,000 if
the economy is strong, $825,000 if the economy is steady, and $550,000 if the economy is
weak. Mr. Sharpe believes there is a 30 percent probability the economy will be strong, a
40 percent probability of a steady economy, and a 30 percent probability of a weak
economy. What is the expected level of sales for the next year?
6-2. Solution:
Sharpe Knife Company

State of Expected
Economy Sales Probability Outcome
Strong $1,550,000 0.30 $465,000
Steady 825,000 0.40 330,000
Weak 550,000 0.30 165,000
Expected level of sales = $960,000
3. External financing (LO1) Tobin Supplies Company expects sales next year to be
$500,000. Inventory and accounts receivable will increase $90,000 to accommodate this
sales level. The company has a steady profit margin of 12 percent with a 40 percent
dividend payout. How much external financing will Tobin Supplies Company have to
seek? Assume there is no increase in liabilities other than that which will occur with the
external financing.
6-3. Solution:
Tobin Supplies Company
$500,000 Sales
0.12 Profit margin
60,000 Net income
– 24,000 Dividends (40%)
$ 36,000 Increase in retained earnings
$ 90,000 Increase in assets
– 36,000 Increase in retained earnings
$ 54,000 External funds needed
4. External financing (LO1) Antivirus Inc. expects its sales next year to be $2,500,000.
Inventory and accounts receivable will increase $480,000 to accommodate this sales level.
The company has a steady profit margin of 15 percent with a 35 percent dividend payout.
How much external financing will the firm have to seek? Assume there is no increase in
liabilities other than that which will occur with the external financing.
6-4. Solution:
Antivirus Inc.
$2,500,000 Sales
.15 Profit margin
375,000 Net income
– 131,250 Dividends (35%)
$ 243,750 Increase in retained earnings
$ 480,000 Increase in assets

– 243,750 Increase in retained earnings
$236,250 External funds needed
5. Level versus seasonal production (LO1) Antonio Banderos & Scarves makes headwear
that is very popular in the fall-winter season. Units sold are anticipated as:
October..................................................... 1,250
November ................................................. 2,250
December ................................................. 4,500
January ..................................................... 3,500
11,500 units
If seasonal production is used, it is assumed that inventory will directly match sales for
each month and there will be no inventory buildup.
However, Antonio decides to go with level production to avoid being out of merchandise.
He will produce the 11,500 items over four months at a level of 2,875 per month.
a. What is the ending inventory at the end of each month? Compare the units sales to the
units produced and keep a running total.
b. If the inventory costs $8 per unit and will be financed at the bank at a cost of 12
percent, what is the monthly financing cost and the total for the four months? (Use 1
percent or the monthly rate.)
6-5. Solution:
Antonio Banderos and Scarves

a. Units Units Change in Ending
Sold Produced Inventory Inventory
October 1,250 2,875 +1,625 1,625
November 2,250 2,875 + 625 2,250
December 4,500 2,875 –1,625 625
January 3,500 2,875 – 625 0
b. Inventory
Total Cost Financing Cost
Ending per Unit (at 1% per
Inventory ($8 per unit) month)
October 1,625 13,000 130
November 2,250 18,000 180
December 625 5,000 50
January 0 0 0
Total Financing Cost = $360
6. Level versus seasonal production (LO1) Bambino Sporting Goods makes baseball gloves
that are very popular in the spring and early summer season. Units sold are anticipated as
follows:
March ....................................................... 3,250

April ......................................................... 7,250
May .......................................................... 11,500
June .......................................................... 9,500
31,500
If seasonal production is used, it is assumed that inventory will directly match sales for
each month and there will be no inventory buildup.
The production manager thinks the preceding assumption is too optimistic and decides to
go with level production to avoid being out of merchandise. He will produce the 31,500
units over four months at a level of 7,875 per month.
a. What is the ending inventory at the end of each month? Compare the unit sales to the
units produced and keep a running total.
b. If the inventory costs $12 per unit and will be financed at the bank at a cost of 12
percent, what is the monthly financing cost and the total for the four months? (Use 0.01
as the monthly rate.)
6-6. Solution:
Bambino Sporting Goods
a. Units Units Change in Ending
Sold Produced Inventory Inventory
March 3,250 7,875 +4,625 4,625
April 7,250 7,875 + 625 5,250
May 11,500 7,875 –3,625 1,625
June 9,500 7,875 –1,625 0
6-6. (Continued)
b. Inventory
Financing Cost
Ending Total Cost (at 1% per
Inventory ($12 per unit) month)
March 4,625 55,500 $ 555
April 5,250 63,000 630
May 1,625 19,500 195
June 0 0 0
Total Financing Cost = $1,380
7. Short-term versus longer-term borrowing (LO3) Boatler Used Cadillac Co. requires
$850,000 in financing over the next two years. The firm can borrow the funds for two years
at 12 percent interest per year. Mr. Boatler decides to do forecasting and predicts that if he
utilizes short-term financing instead, he will pay 7.75 percent interest in the first year and
13.55 percent interest in the second year. Determine the total two-year interest cost under
each plan. Which plan is less costly?
6-7. Solution:
Boatler Used Cadillac Co.
Cost of Two-Year Fixed Cost Financing
$850,000 borrowed @ 12% per annum × 2 years = $204,000 interest
cost
Cost of Two-Year Variable Short-Term Financing

1st year $850,000 × 7.75% per annum = $ 65,875 interest cost
2nd year $850,000 × 13.55% per annum = $115,175 interest cost
181,050 total interest cost
The short-term plan is less costly.
8. Short-term versus longer-term borrowing (LO3) Biochemical Corp. requires $550,000

in financing over the next three years. The firm can borrow the funds for three years at
10.60 percent interest per year. The CEO decides to do a forecast and predicts that if she
utilizes short-term financing instead, she will pay 8.75 percent interest in the first year,
13.25 percent interest in the second year, and 10.15 percent interest in the third year.
Determine the total interest cost under each plan. Which plan is less costly?
6-8. Solution:
Biochemical Corp.
Cost of Three-Year Fixed Cost Financing
$550,000 borrowed × 10.60% per annum × 3 years = $174,900
Cost of Three-Year Variable Short-Term Financing

1st year $550,000 × 8.75% per annum = $ 48,125 Interest cost
2nd year $550,000 × 13.25% per annum = 72,875 Interest cost
3rd year $550,000 × 10.15% per annum = 55,825 Interest cost
$176,825 3-year total
The fixed cost plan is less costly.
9. Short-term versus longer-term borrowing (LO3) Sauer Food Company has decided to
buy a new computer system with an expected life of three years. The cost is $150,000. The
company can borrow $150,000 for three years at 10 percent annual interest or for one year
at 8 percent annual interest.
How much would Sauer Food Company save in interest over the three-year life of the
computer system if the one-year loan is utilized and the loan is rolled over (reborrowed)
each year at the same 8 percent rate? Compare this to the 10 percent three-year loan. What
if interest rates on the 8 percent loan go up to 13 percent in year 2 and 18 percent in year 3?
What would be the total interest cost compared to the 10 percent, three-year loan?
6-9. Solution:
Sauer Food Company
If Rates Are Constant
$150,000 borrowed × 8% per annum × 3 years =
$36,000 interest cost
$150,000 borrowed × 10% per annum × 3 years =
$45,000 interest cost
$45,000 – $36,000 = $9,000 interest savings borrowing
short-term
If Short-Term Rates Change
1st year $150,000 × 0.08 = $12,000
2nd year $150,000 × 0.13 = $19,500
3rd year $15,000 × 0.18 = $27,000
Total = $58,500
$58,500 – $45,000 = $13,500 extra interest costs

borrowing short-term.
10. Optimal policy mix (LO5) Assume that Hogan Surgical Instruments Co. has $2,500,000
in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 18
percent, but with a high-liquidity plan, the return will be 14 percent. If the firm goes with a
short-term financing plan, the financing costs on the $2,500,000 will be 10 percent, and
with a long-term financing plan, the financing costs on the $2,500,000 will be 12 percent.
(Review Table 6-11 for parts a, b, and c of this problem.)
a. Compute the anticipated return after financing costs with the most aggressive asset
financing mix.
b. Compute the anticipated return after financing costs with the most conservative asset
financing mix.
c. Compute the anticipated return after financing costs with the two moderate approaches
to the asset financing mix.
d. Would you necessarily accept the plan with the highest return after financing costs?
Briefly explain.
6-10. Solution:
Hogan Surgical Instruments Company
a. Most aggressive
Low liquidity $2,500,000 × 18% = $450,000
Short-term financing 2,500,000 × 10% = –250,000
Anticipated return $200,000
b. Most conservative
High liquidity $2,500,000 × 14% = $350,000
Long-term financing 2,500,000 × 12% = –300,000
Anticipated return $ 50,000
c. Moderate approach
Low liquidity $2,500,000 × 18% = $450,000
Long-term financing 2,500,000 × 12% = –300,000
$150,000
OR
High liquidity $2,500,000 × 14% = $350,000
Short-term financing 2,500,000 × 10% = –250,000
$ 100,000
6-10. (Continued)
d. You may not necessarily select the plan with the highest
return. You must also consider the risk inherent in the plan.
Of course, some firms are better able to take risks than
others. The ultimate concern must be for maximizing the
overall valuation of the firm through a judicious
consideration of risk-return options.
11. Optimal policy mix (LO5) Assume that Atlas Sporting Goods Inc. has $840,000 in assets.
If it goes with a low-liquidity plan for the assets, it can earn a return of 15 percent, but with
a high-liquidity plan the return will be 12 percent. If the firm goes with a short-term
financing plan, the financing costs on the $840,000 will be 9 percent, and with a long-term
financing plan, the financing costs on the $840,000 will be 11 percent. (Review
Table 6-11 for parts a, b, and c of this problem.)
a. Compute the anticipated return after financing costs with the most aggressive asset-
financing mix.
b. Compute the anticipated return after financing costs with the most conservative asset-
financing mix.
c. Compute the anticipated return after financing costs with the two moderate approaches
to the asset-financing mix.
d. If the firm used the most aggressive asset-financing mix described in part a and had the
anticipated return you computed for part a, what would earnings per share be if the tax
rate on the anticipated return was 30 percent and there were 20,000 shares outstanding?
e. Now assume the most conservative asset-financing mix described in part b will be
utilized. The tax rate will be 30 percent. Also assume there will only be 5,000 shares
outstanding. What will earnings per share be? Would it be higher or lower than the
earnings per share computed for the most aggressive plan computed in part d?
6-11. Solution:
Atlas Sporting Goods Inc.
a. Most aggressive
Low liquidity $840,000 × 15% = $126,000
Short-term financing 840,000 × 9% = –75,600
b. Most conservative
High liquidity $840,000 × 12% = $ 100,800
Long-term financing 840,000 × 11% = –92,400
6-11. (Continued)
c. Moderate approach
Low liquidity $840,000 × 15% = $126,000
Long-term financing 840,000 × 11% = –92,400
OR
High liquidity $840,000 × 12% = $ 100,800
Short-term financing 840,000 × 9% = –75,600
d. Anticipated return $ 50,400

– Taxes (30%) 15,120
Earnings after taxes 35,280
Shares 20,000
Earnings per share $1.76
e. Anticipated return $ 8,400

– Taxes (30%) 2,520
Earnings after taxes 5,880
Shares 5,000
Earnings per share $1.18
It is higher ($1.18 vs. $1.76)
12. Matching asset mix and financing plans (LO3) Colter Steel has $4,200,000 in assets.
Temporary current assets ......................... $1,000,000

Permanent current assets .......................... 2,000,000
Fixed assets .............................................. 1,200,000
Total assets ......................................... $4,200,000
Short-term rates are 8 percent. Long-term rates are 13 percent. Earnings before interest and
taxes are $996,000. The tax rate is 40 percent.
If long-term financing is perfectly matched (synchronized) with long-term asset needs,
and the same is true of short-term financing, what will earnings after taxes be? For a
graphical example of perfectly matched plans, see Figure 6-5.
6-12. Solution:
Colter Steel
Long-term financing equals:
Permanent current assets $2,000,000
Fixed assets 1,200,000
$3,200,000
Short-term financing equals:
Temporary current assets $1,000,000

Long-term interest expense = 13% × $3,200,000 = $ 416,000
Short-term interest expense = 8% × 1,000,000 = 80,000
Total interest expense $ 496,000
Earnings before interest and taxes $ 996,000

Interest expense 496,000
Earnings before taxes $ 500,000
Taxes (40%) 200,000
Earnings after taxes $ 300,000
13. Impact of term structure of interest rates on financing plans (LO4) In Problem 12,
assume the term structure of interest rates becomes inverted, with short-term rates going to
11 percent and long-term rates 5 percentage points lower than short-term rates.
If all other factors in the problem remain unchanged, what will earnings after taxes be?
6-13. Solution:
Colter Steel (Continued)

Long-term interest expense = 6% × $3,200,000 = $192,000
Short-term interest expense = 11% × 1,000,000 = 110,000
Total interest expense $302,000
Earnings before interest and taxes $996,000
Earnings before taxes $694,000
Taxes (40%) 277,600
Earnings after taxes $416,400
14. Conservative versus aggressive financing (LO5) Guardian Inc. is trying to develop an
asset-financing plan. The firm has $400,000 in temporary current assets and $300,000 in
permanent current assets. Guardian also has $500,000 in fixed assets. Assume a tax rate of
40 percent.
a. Construct two alternative financing plans for Guardian. One of the plans should be
conservative, with 75 percent of assets financed by long-term sources, and the other
should be aggressive, with only 56.25 percent of assets financed by long-term sources.
The current interest rate is 15 percent on long-term funds and 10 percent on short-term
financing.
b. Given that Guardian’s earnings before interest and taxes are $200,000, calculate
earnings after taxes for each of your alternatives.
c. What would happen if the short- and long-term rates were reversed?
6-14. Solution:
Guardian Inc.
a. Temporary current assets $ 400,000
Permanent current assets 300,000
Fixed assets 500,000
Total assets $1,200,000
Conservative
% of Interest Interest
Amount Total Rate Expense
$1,200,000 ×0.75 = $900,000× 0.15 = $135,000 Long-term
$1,200,000 ×0.25 = $300,000 ×0.10 = 30,000 Short-term

Total interest charge $165,000
Aggressive
$1,200,000 ×0.5625 = $675,000 ×0.15 = $101,250 Long-term
$1,200,000 ×0.4375 = $525,000 ×0.10 = 52,500 Short-term
6-14. (Continued)
b. Conservative Aggressive
EBIT $200,000 $200,000
– Int 165,000 153,750
EBT 35,000 46,250
Tax 40% 14,000 18,500
EAT $ 21,000 $ 27,750
c. Reversed:
Conservative
$1,200,000 × 0.75 = $900,000 ×0.10 = $ 90,000 Long-term
$1,200,000 × 0.25 = $300,000 ×0.15 = 45,000 Short-term
Aggressive
$1,200,000 ×0.5625 = $675,000 ×0.10 = $67,500 Long-term
$1,200,000 ×0.4375 = $525,000 ×0.15 = 78,750 Short-term
Reversed Conservative Aggressive
EBIT $200,000 $200,000
– Int 135,000 146,250
EBT 65,000 53,750
Tax 40% 26,000 21,500
EAT $ 39,000 $ 32,250
15. Alternative financing plans (LO5) Lear Inc. has $840,000 in current assets, $370,000 of
which are considered permanent current assets. In addition, the firm has $640,000 invested
in fixed assets.
a. Lear wishes to finance all fixed assets and half of its permanent current assets with
long-term financing costing 8 percent. The balance will be financed with short-term
financing, which currently costs 7 percent. Lear’s earnings before interest and taxes are
$240,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate
is 30 percent.
b. As an alternative, Lear might wish to finance all fixed assets and permanent current
assets plus half of its temporary current assets with long-term financing and the balance
with short-term financing. The same interest rates apply as in part a. Earnings before
interest and taxes will be $240,000. What will be Lear’s earnings after taxes? The tax
rate is 30 percent.
c. What are some of the risks and cost considerations associated with each of these
alternative financing strategies?
6-15. Solution:
Lear Inc.
a.
Current assets – Permanent current assets = Temporary current
assets
$840,000 – $370,000 = $470,000
Long-term interest expense = 8% [$640,000 + ½($370,000)]
= 8% ($825,000)
= $66,000
Short-term interest expense = 7% [$470,000 + ½($370,000)]
= 7% × ($655,000)
= $45,850
Total interest expense = $66,000 + $45,850
= $111,850
Earnings before interest and taxes $240,000
Earnings before taxes $128,150
Taxes (30%) 38,445
Earnings after taxes $ 89,705
6-15. (Continued)
b. Alternative financing plan
Long-term interest expense = 8% [$640,000 + $370,000
+ ½($470,000)]
= 8% ($1,245,000)
= $99,600
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serás tú sin quexas,
hazer me has enojo
si esto no dexas,
daras a tu vida
ocasion de perdella.
T. Cuando la pena en
el alma se sella
siendo causada con
mucha razon,
despues
d'empremida en el corazon,
es imposible que
salga sin ella.
¿Pues cómo podré
mudar mi cuydado?
quel dia que vi tu
gran hermosura
quedó en mis
entrañas, tu gesto y figura
assi como es perfecto
estampado,
y quantas saetas
despues m'as tirado
de oro que hieren mi
corazon,
el fuego las hunde de
tanta pasion
y está en cada una tu
propio treslado.
Assi que yo muero
en mi sepultura,
de aqui a mill años
que vengan a ver
de tus efigias se
podran coger
tantas sin cuento que
no haurá mesura,
y en todos mis
huessos aurá una escritura
que ya dend'agora la
tengo yo escrita
e dizen las letras:
esta es Benita
la que desde
entonces su nombre nos
dura.
Assi que si quieres,
Benita, que olvide
tu nombre e
qu'aparte de mí tu querer,
saca mis huessos y
hazte raer
e de mis entrañas
d'allí te despide,
si a mí por ventura
alguno me pide
por no conocerme mi
nombre quál es,
dire que Benito so en
el enues,
c'asina me llaman
despues que te vide.
Si tal fantasia me
juzgan ser loca
más loco seria quien
tal me juzgasse,
que si con mis ojos te
viesse e mirasse
veria qu'es justo mi
vida ser poca,
que no puede menos,
señora, mi boca
hazer que no diga del
mal la ocasion
y aunq'ella quissiese
trocar la razon
el fuego de dentro la
causa prouoca.
Mas miras si
puedes quitar esta salma
que tanto m'agraua
con pena tan graue,
pues que de mi vida
tú tienes la llaue
podras de Vitoria
ganar una palma,
e aun dudo con esto
que pongas en calma
mis ondas crecidas
de tanta passion;
por que te quites de
mi corazon
pintada te quedas en
medio del alma.
La qual yo mirando
es fuerça que viua
porqu'es inmortal
estando tú en ella
y agora comigo mi
misma querella
la mata e la hiere e la
tiene captiua.
Mi mucho tormento la
gloria le priua
lo que siendo libre de
mi no podra
mas en tu presencia
contino estara
dandote quexas de
mi muerte esquiua.
Assi que pues ella
agora te adora
con mucha razon por
ver tu excelencia,
entonces contino
estara en tu presencia
muy más contenta
que no haze agora,
y pues que te enojas
de serme señora
siendo contento yo
serte captiuo,
despues de ser
muerto que no sere viuo
haurás mas pasar de
ser matadora.
Y solo esta gloria
me basta que baste
hazerme contento
perdiendo la vida
pues yo sere muerto
y tú arrepentida
de ver que sin culpa,
assi me mataste;
negarte has a ti que
no lo causaste,
que yo lo busqué e
mi mal consenti,
entonces mi alma
dirá: no es assi,
que tuyo es el cargo
pues mal le trataste.
Esto me haze
quedar satisffecho
hazerte contenta
despues ver dolerte,
¿y quien no será
quien quiera la muerte
si della se espera
tamaño provecho?
¡O quan contento mi
cuerpo dessecho
en la sepultura estara
sin abrigo
con ver esta gloria mi
alma contigo
haziendote mientes
del mal que m'as hecho!
B. Oyes, Torino,
¿quiés que te diga?
ten una cosa por muy
verdadera,
que en esto me
enojas en tanta manera
qu'e miedo que dello
mas mal no te siga,
pues tu vanidad
m'aprieta e obliga
a tenerte omizillo y
estar enojada
por ver tu porfia tan
importunada
que no puedo menos
de serte enemiga.
Pues creeme,
pastor, e haz lo que digo
e quedate a dios con
tu compañia.
T. Miafe, Benita,
imposible seria,
que aunque me
dexas allá voy contigo,
e tú aunque te vas
aqui estás comigo,
que siempre en mis
ojos tu figura está,
Benita está aqui,
Torino está allá,
si esto no crees la
obra es testigo.
G. Escucha, Quiral,
que yo nunca tal vi,
Benita s'es yda, Illana
tras ella,
el se está aquí, diz
que va con ella,
la otra está allí y diz
que esta aqui,
Dios me defienda e
me libre de ti,
¿no eres, Torino?
¿Aqui t'an dexado?
T. Mi cuerpo dexo, mi
alma he llevado
q'estando con ella no
parte de mi.
G. Entiendes, Quiral,
qué algarauia
que diz que sin alma
puede estar viuo,
estase consigo, diz
que esta captiuo,
a pocas de noche
dirá qu'es de dia,
yo creo que sabe
nigromancia
o es quelque hechizo
qu'está enhechizado.
Q. Calla, modorro,
que no es son penado
de aquello que agora
Benita dezia.
Y eres un bouo tú
que no sientes
estotro perdido que
s'anda sin tiento,
¿no sabes que dize:
do está el pensamiento
allá está el que
piensa do tiene las mientes?
G. Y essa y essotro
quiça son parientes
c'asina se andan
juntos los dos,
si esto no es,
prometote á Dios,
c'asina como él te
burlas o mientes.
Q. O dot'a mal año a
ti e a tu hablar,
vete al demoño tú e
tus consejas,
¿piensas qu'es esto
andar tras ouejas?
pues tú no lo'ntiendes
dexalo estar;
tambien tú, Torino, te
quieres matar
con este qu'es bouo
e con tu querella,
habla comigo pues yo
ya sé della,
que ambos podremos
mejor razonar.
T. ¿Qué quiés que te
diga, Quiral compañero?
pues pierdo la vida
de huzia y de veras.
Q. Miafe, Torino, que
penes y mueras.
T. ¿Cómo y no vees
en mi que ya muero?
Q. Morirte a la fe,
morirte de vero,
que más es que vida
la muerte qu'es tal.
T. ¡Plugiesse a Dios
hauria fin el mal
pues muero viuiendo
e remedio no espero!
Q. ¿Qué no moriras?
¿qu'estás diziendo?
c'amor aunque mate
no acaua la vida,
que aunque su pena
no tiene medida
aquel que más mata
le dexa viuiendo.
T. Yo esso que dizes
claro lo entiendo,
porque essa razon es
muy verdadera,
más es que morir
contino que muera
penando en la vida,
mill muertes sufriendo.
Q. Calla, Torino, sufre
contento
que a fe qu'es tu
pena y gloria bendita,
busca zagala ygual
de Benita
c'asina te haga ufano
el tormento.
T. Yo bien suffriria,
carillo, contento
conque le plugiesse
dexarme sofrillo.
Q. Ojo al demoño
deuria de dezillo,
porque te fuesses
burlandote al biento.
Es essa, pastor,
muy necia querella
e más necio tu e más
atreuido
osar publicar de
qu'estás herido,
poniendo tus quexas
en presencia della,
no es nada tu pena
que más fue sabella
e pues que lo sabe
contentate dello,
que harto es tu bien
Benita sabello
y grande tu gloria sin
tú merecella.
E pues has tenido
tal atreuimiento
de osarte vencer de
quien te venciste
e dezirselo a ella a
más te atreviste,
no hay más que
pedir, vine contento,
mas pues c'as subido
tu pensamiento
en parte tan alta y tan
alto lugar
no lo consientas
jamas abaxar,
son tenlo allá' riva
con esse tormento.
C'ansi hago yo la
pena e dolor
que passo e padezco
por causa de Illana,
la llaga es muy
grande mas es tan ufana
que quanto mas peno
mi gloria es mayor,
el mal que me crece
faltarme favor,
pues nadie lo alcança
por ser ella tal
tan grande es el bien
quan grande es el mal,
porque esta es la ley
perfecta de amor.
T. Bien sé que en
servir a quien más merece
perdiendo la vida la
gloria se gana,
lo uno te hiere, lo otro
te sana,
mas dame razon de
quien te aborrece,
penar ni servir no lo
agradece
ni verte ni oyrte
jamas no le plaze.
Q. ¿Y a mí su plazer
qué fruto me haze
si huelgo yo en vella
pues bien me parece?
Mandame Illana
pues qu'es tan hermosa
que nunca la vea ni
nunca la haya,
si quiere matarme la
vida no es suya
e si ella la mata será
venturosa,
¿pues no te parece
que es poderosa
Benita que puede
mandarte que mueras?
pues sirve, Torino,
que nunca devieras
en toda tu vida hazer
otra cosa.
T. Al fin tu consejo
havre de seguir
pues pena me sobra
y en ella razon,
que poco es mi daño
segun la ocassion,
pues quiero penando
muriendo vivir,
quiero cantar, llorar e
reyr,
quiero plañir, baylar e
quexar,
quiero suffrir, gritar e
callar,
quiero por fuerça de
grado servir.
G. Verás qué cantica
hará tan donosa
que quando en el frio,
que quando en el fuego,
ya está de veras, ya
está de juego
él se lo dize y él se lo
glosa;
agora rebulle, agora
rebosa,
agora se alaba, agora
se quexa,
agora comiença,
agora se dexa,
a pocas dirá qué
qu'és cosa y cosa.
San Blas me
bendiga y señor Santanton
con este perdido e
con su cachondez,
lo que agora dize no
dize otra vez
ni mas de una buelta
os dirá una razon,
dot'a mal fuego a ti, a
tu question,
ven acá, Quiral, tañe
y bailemos.
Q. Mejor es,
Guillardo, que todos cantemos,
si quiere Torino,
alguna cancion.
Torino, cantemos,
dexa el pensío,
date descanso en
algun gasajado.
T. ¿Qué quieres que
cante el más desdichado
pastor que s'es visto
de mal como el mio?
G. O do al diablo tan
gran modorrio
como el de vosotros
para ser zagales;
cantemos si quiera e
cantá vuestros males.
T. Si esso cantamos
yo no do desuio.
(Villancico, que cantan los tres

pastores.)
Nunca yo pense que amor
con sus amores
d'amor matasse pastores.
Tras galanes palaciegos
yo pense que siempre andaua
e no pense que mataua
los pastores ni matiegos,
mas do van tras sus borregos
veo que con su dolor
les da dolores
con que los mata de amores.
Con su nombre falso
engaña
que parece que no es nada
e de majada en majada
e de cabaña en cabaña
va con su engañosa maña
prometiendo su fauor,
e sus fauores
matan despues los pastores.
(Otro villancico de Quiral y

Torino.)
G. Zagal, mal te va en
amores,
ya lo sé.
T. Guillardo, mal a la fe.
G. Mal te deue d'ir, zagal,
segun veo en ti señales.
T. Tanto mal me va de males
que no hay remedio en mis
males.
G. Luego en ver que
estauas tal
me lo pense.
T. Mucho mal me va a la fe.
LO QUE PASSÓ ACABADA LA

EGLOGA
La egloga acabada, Flamiano se
tornó á su posada; e tornaron á la
fiesta vestidos de máscara él y el
cardenal de Brujas, con aljubas e
capas de paño negro frisado
enrrejadas encima de fresos de
oro angostos puestos sobre
pestañas blancas; en medio de
los quadros hauia sobre el paño
vnas mariposas de plata con las
alas abiertas bolando, con vna
letra que Flamiano sacó que
dezia:
May reposa
la vida qu'está dudosa.
Assi estuuieron tanto que la fiesta

del dançar duró que fue la mayor
parte de la noche. Despues de
tornados a sus posadas,
hauiendo reposado dos dias
Flamiano apartó á Felisel e
mandole que tornase a ver a
Vasquiran con vna carta suya, e
que le lleuase vna mula quel
señor cardenal de Felernisa le
hauia dado con dos muy buenos
lebreles que le hauia dado el
señor cardenal de Brujas e
despues de hauerle despachado,
le mandó que de parte suya
afincadamente le rogasse e
importunasse que se uiniesse a
ver e descansar con él algun
tiempo. Despachado Felisel se
partio, e llegado á Felernisa halló
á Vasquiran que se era leuantado
pocos dias hauia de vnas
calenturas que hauia tenido.
Hauiendole dado su letra e las
cosas que le lleuaua le preguntó
la causa de su enfermedad.
Vasquiran le dixo: Felisel,
verdaderamente yo pense que me
hallaras alegre con el mal de la
muerte, e hallasme triste con la
desesperación de la vida. Yo he
estado doliente de vnas
calenturas que he tenido á las
quales quando venirlas vi,
creyendo que serian más como
desseaua, del gozo que con ellas
houe hize esta cancion.
CANCION
Pues que remediays mis
males
bien seays venido, mal,
pero haueys de ser mortal,
que los mios son mortales.
Si vos guareceys mi pena
y passiones con matarme,
pues que venis á sanarme
vos vengays en ora buena,
mas mira bien que son tales
y la causa dellos tal
que si vos no soys mortal
nunca sanareys mis males.
Assi estuue, Felisel, con esta

cancion e con mi enfermedad
algun dia reposado esperando
con ella dar fin á mis
enfermedades, e no quiso mi
desuentura que houiessen fin
hasta que yo en ellas fenezca,
sino que la salud del cuerpo me
tornó por lleuarme la del desseo,
y assi con tal desesperacion yo
torné á hazer este villancico.
Pues que ya tornays, salud,

a matarme con la vida
vos seays la mal venida.
Yo pensaua ya gozar
de mí riendome sin vos
e que os ybades con Dios
por dexarme reposar,
mas pues que quereys tornar
donde os tienen aborrida
vos seays la mal venida.
Pues assi estuuieron todos aquel

dia en diuersas cosas hablando,
assi de lo que en el juego de
cañas hauia pasado como de las
damas y señoras que en
Virgiliano hauian estado aquellos
dias y de los caualleros
assimesmo y de muchas cosas
que hauian passado. En especial
le recitó la egloga que Flamiano
habia representado, de que
Vasquiran holgó en mucha
manera. E assi a la noche
hauiendo cenado, Felisel lo dió la
carta que le traya, porque hasta

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Foundations of Financial Management

16th Edition Block Solutions Manual

Foundations of Financial Management 16th Edition Block

Foundations of Financial Management 15th Edition Block

Foundations of Financial Management 17th Edition Block

Foundations of Financial Management 14th Edition Block

Foundations of Financial Management Canadian 11th

Foundations of Financial Management Canadian 10th

Foundations of Financial Management 14th Edition Block

Foundations of Financial Management 15th Edition Block

6-4. How is a cash budget used to help manage current assets?

A cash budget helps minimize current assets by providing a forecast of inflows

By establishing a long-term financing arrangement for temporary current assets,

By financing a portion of permanent current assets on a short-term basis, we

6-8. What does the term structure of interest rates indicate?

Liquidity premium theory, the market segmentation theory, and the

The expectations hypothesis maintains that the yields on long-term securities

The decrease in liquidity can be traced in part to more efficient inventory

Sharpe Knife Company

$ 480,000 Increase in assets

Antonio Banderos and Scarves

March ....................................................... 3,250

Cost of Two-Year Variable Short-Term Financing

The short-term plan is less costly.

8. Short-term versus longer-term borrowing (LO3) Biochemical Corp. requires $550,000

Cost of Three-Year Variable Short-Term Financing

The fixed cost plan is less costly.

$58,500 – $45,000 = $13,500 extra interest costs

d. Anticipated return $ 50,400

e. Anticipated return $ 8,400

Temporary current assets ......................... $1,000,000

Temporary current assets $1,000,000

Earnings before interest and taxes $ 996,000

Colter Steel (Continued)

$1,200,000 ×0.25 = $300,000 ×0.10 = 30,000 Short-term

(Acercandose Benita habla

(Llegada Benita con su

(Villancico, que cantan los tres

(Otro villancico de Quiral y

LO QUE PASSÓ ACABADA LA

Assi estuuieron tanto que la fiesta

Assi estuue, Felisel, con esta

Pues que ya tornays, salud,

Pues assi estuuieron todos aquel

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