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Mountain Home Systems, Inc. is a well-known and reputable supplier of integrated circuits to manufacturers of telecommunications devices. The firm is currently debating whether to change its credit policy. Terms are currently 2/10, net 60 and would be changed to net 30. Currently, 60% of the customers on average pay at the end of the credit period (60 days) and the remaining customers would pay in 10 days to take advantage of the discount. Under the new policy, it is anticipated that customers will pay on average in 35 days and 50% of the customers will pay in 10 days to take advantage of the discount. All sales are credit sales and will remain so with the change of policy. Average annual sales of $8,000,000 a year are expected to fall to $6,000,000. Bad debt losses will drop from 3% of total sales to 2% of total sales. Variable production costs will remain at 80%. The opportunity cost of financing is 8%. Should Mountain Home Systems change its credit policy? Show all calculations. Access Excel Here.

Sales (75,000 units) $750,000 Variable costs 225,000 Contribution margin 525,000 Fixed manufacturing costs 187,500 Operating income 337,500 Interest 75,000 Earnings before taxes 262,500 Taxes (at 31%) 81,375 Net income $181,125 Shares outstanding 15,000  The Degree of Financial Leverage is:

Massa Machine Tool expects total sales of $10,000. The price per unit is $5. The firm estimates an ordering cost of $7.50 per order, with an inventory carrying cost of $0.70 per unit. What is the optimum order size?

The police receive a phone tip that Jeremiah David committed an armed robbery that was reported to the police two days before. The police seek a search warrant to search Mr. David’s apartment to look for the illicit fruits of the armed robbery. What standard will the court use to determine whether there is enough “probable cause” to satisfy the Fourth Amendment? 

The police believe that Jackson is an accomplice to a recent murder. The police obtain a valid search warrant to search Jackson’s apartment, which is located on the third floor of the apartment building. The warrant specifies that the police are entitled to search “the premises known as the third-floor apartment” at that address. When the police arrive, they search all of the rooms on the third floor of the building because they believe that they are all part of the same apartment. However, it turns out that one of the rooms on the third floor does not belong to Jackson and is a separate apartment. The police find incriminating evidence in that separate apartment. Is the search constitutional even though the police made a mistake in executing the warrant?

A police officer is on patrol in a neighborhood. She sees a motorist drive by that she suspects was involved in a crime that had been reported to police earlier in the evening. The motorist commits a minor traffic violation. The police officer pulls over the motorist. The police officer testifies that her actual motivation for pulling over the motorist was because she believed she might find evidence of the earlier crime. Was the search of the motorist constitutional?

Detectives questioned Ralph on the airport concourse and then asked him to accompany him to a small room about 40 feet away. His luggage was retrieved from the airline and brought to the small room. Ralph was then asked to consent to a search of his suitcase, which he did. About 15 minutes had elapsed since the initial encounter on the concourse.  Was this a valid temporary seizure of Ralph?

Officer Kennedy pulls Ben over to the side of the road because of a broken tail light. When he does a check on his computer he finds that Ben has an expired driver’s license. He arrests Ben and does a full-body search of Ben and pulls a pack of cigarettes out of his pocket. He looks in the pack and finds cocaine. Ben is charged with possession of a controlled substance.  Is this search of Ben in conformity with the Fourth Amendment?

United States Postal Inspectors are investigating a child pornography ring. As part of this investigation, the federal agents are examining the addresses on mail pieces sent from a specific sender.  Is this a violation of the Fourth Amendment?

Leveraged buyout activity has been limited in Canada because: