Wayfarer Company has no debt, and a value of $70.000 million. Adventures Incorporated is otherwise identical but has $28.000 million of debt in its capital structure. Under the different models, what is the value of Adventures Incorporated if its corporate tax rate is 25%, the personal tax rate on equity is 10%, and the personal tax rate on debt is 26%?
Answers
Answer:
Following are the solution to this question:
Explanation:
Please find the complete question in the attachment.
In point 1:
The answer is =70.000
In point 2:
[tex]=70.000+28.000 \times 25\%\\\\=70.000+28.000 \times \frac{25}{100}\\\\=70.000+28.000 \times \frac{1}{4}\\\\=70.000+ 7 \\\\=77.000\\\\=77[/tex]
In point 3:
[tex]=70.000+(1-(1-25 \%) \times \frac{(1-10\%)}{(1-26\%)) \times 28.000}\\\\=70.000+(1-(1- \frac{25}{100}) \times \frac{(1- \frac{10}{100})}{(1-\frac{26}{100})) \times 28.000}\\\\=70.000+(1-1+ \frac{1}{4}) \times \frac{(\frac{ 10-1}{10})}{( \frac{100-26}{100})) \times 28.000}\\\\=70.000+(\frac{1}{4}) \times \frac{(\frac{9}{10})}{(\frac{74}{100})) \times 28.000}\\\\=70.000+(\frac{1}{4}) \times \frac{0.9}{20.72}\\\\=70.000+ \frac{0.9}{82.88}\\\\=70.000+0.01058\\\\=70.01058\\\\[/tex]
Related Questions
A company's_______ tells you how much money the company has left over after subtracting all expenses. *
a) Net Profit
b) Gross Profit
c) Revenue
d) Cost Of Goods Sold (COGS)
Answers
Answer:
net profit
Explanation:
net profit is the money left after all cost are deducted
Answer:
D: COGS
Explanation:
A company's COGS tells you how much money the company has left over after subtracting all expenses
A company's managers have decided to issue bonds to raise financial capital. What is the first step in this process?
A. Selling the bonds to investors
B. Contacting a financial advisory firm
C. Filing documents with the SEC
D. Determining the firm's creditworthiness
E. Preparing documentation
Answers
Answer: Contacting a financial advisory firm
Explanation:
Since the company's managers have decided to issue bonds to raise financial capital, the first step in this process is for them to contact a financial advisory firm.
The financial advisory firm would help in giving advice and also consultation regarding the finance of the company and provide them with strategies that can help the company reduce costs and achieve their financial goals.
When long-term interest rates are higher than short-term rates, as they were in 2010, it:_________.
a. implies that inflation will fall.
b. has no implication for short-term interest rates.
c. implies that short-term interest rates are expected to rise.
d. implies that short-term interest rates are expected to fall.
Answers
Answer: c. implies that short-term interest rates are expected to rise.
Explanation:
If long term rates are higher than short term rates, people will expect short term rates to rise so that they may eventually reach the long term rates as time goes on.
This expectation will lead to a rise in short term rates as people take actions that will try to capitalize on the rates rising.
Seventy farmers in Morgan County joined together to hire Rusty to spray their crops one time (with his cropduster plane). These farmers have formed a: _______
a. business trust.
b. cooperative.
c. franchise.
d. joint venture.
Answers
Answer:
d. joint venture.
Explanation:
A cooperative, business trust or a franchise are generally stable businesses that are formed to operate in the long run.
On the other hand, a joint venture occurs when different entities get together to do business and that can be a one time event only. In this case, Rusty was hired for spraying the fields one time only (one time event).
________ measures the percentage of individuals in a defined target market who are exposed to an ad during a specified time period.
Answers
Answer:
Reach
Explanation:
Marketing reach is a metric used by sellers to estimate the portion of the target market that have been exposed to their adverts.
This is an important metric that shows how effective marketing efforts are, it also indicates wether more effort should be put into advertising to increase the reach.
Reach is calculated by dividing impressions by frequency.
Impression is the total number of times an advert is displayed while frequency is the number of times it is viewed.
Q2. Which of the following is not covered under Marine Insurance?
a Theft insurance
b. Marine insurance
c. Life insurance
d. Fire insurance
Answers
Answer:
Marine Insurance? lol kinda make no sense
Besides knowing the amount of sales, what other
information is required to calculate a return on
sales (ROS)?
Answers
Answer:
selling price, variable cost, fix cost
Explanation:
What type of mortgage requires fixed monthly interest payments for 3 to 5 years whereupon full payment of the mortgage principal is due?
Answers
Answer:
Balloon Payment Mortgages
Explanation:
Mortgages are simply loans to persons or businesses to get/purchase homes, land, or other real property.
A balloon payment mortgage is a a type of mortgage known for its ability to not fully amortize over the term of the note, thereby leaving a balance due at maturity. Its last or final payment is called a balloon payment because of its notable large size. This type of mortgages are more more common in commercial real estate than in residential real estate. the above statement of it that it require fixed monthly interest payments for 3 to 5 years whereupon full payment of the mortgage principal is due is correct.
The following data are available relating to the performance of Long Horn Stock Fund and the market portfolio:
Long Horn Market Portfolio
Average return 19 % 12 %
Standard deviations of returns 35 % 15 %
Beta 1.5 1.0
Residual standard deviation 3.0 % 0.0 %
The risk-free return during the sample period was 6%.
What is the Treynor measure of performance evaluation for Long Horn Stock Fund?
a. 0.0133
b. 0.04
c. 0.0867
d. 0.3143
e. 0.3714
Answers
Answer: c. 0.0867
Explanation:
Treynor measure for Long Horn Stock Fund;
= (Average return - Risk-free return) / Beta
= (19% - 6%) / 1.5
= 0.08666667
= 0.0867
You want to have $500,000 in today's (real) dollars when you retire in 40 years. The expected inflation rate is 1.1% and the nominal return on your investments is 6.5%. How much money do you have to save now if you can't make any additional deposits?
Answers
Answer:
Initial deposit= $62,378.07
Explanation:
First, we need to calculate the nominal value of $500,000 in 40 years:
Future Value= PV*(1+r)^n
r= inflation rate
FV= 500,000*(1.011^40)
FV= $774,490.74
Now, the initial deposit (PV) to be made in the present:
PV= FV/(1+i)^n
i= interest rate
PV= 774,490.74 / (1.065^40)
PV= $62,378.07
Why is it important for legal service workers to be fair and ethical?
(the blue highlighted one)
Answers
A credit union is different from a bank mainly because
Answers
Answer:D:(A cooperative lending institution for a particular group.)
Explanation:
A credit union is different from a bank mainly because it is owned and controlled by its members, who are typically individuals with a common bond, such as belonging to a specific community or organization.
In the context of a credit union, a common bond refers to a shared characteristic or affiliation among its members, such as living in the same community, working for the same employer, or belonging to a specific organization.
This common bond serves as the basis for membership eligibility and participation in the credit union. It fosters a sense of community and cooperation among members, who collectively own and control the credit union.
The common bond principle promotes a more personalized and community-oriented approach to financial services, catering to the specific needs and interests of the members it serves.
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Southport Industries has current assets of $900,000 and a current ratio is 2.50. Assume that the company prepays rent for 9 months in the amount of $40,000. The current ratio after this transaction is closest to:
Answers
Answer:
2.50
Explanation:
Based on the information given we were told that the current ratio is 2.50 which means that the current ratio after this transaction is closest to: 2.50 reason been that based on the information given Increase in prepaid rent lead to decreae in cash which is why we won't have any change in the current ratio of 2.50
Therefore the current ratio after this transaction is closest to: 2.50
As the marginal propensity to consume (MPC) increases, the spending multiplier: Increases, decreases, stays the sameIf the marginal propensity to consume is 0.70, then, assuming there are no taxes or imports, the multiplier is: (Note: round to the nearest tenth)Given the multiplier that you calculated, what is the total impact on spending when there is a $1,000 increase in government spending?
Answers
Answer:
(a) As the marginal propensity to consume (MPC) increases, the spending multiplier Increases.
(b) Multiplier is 3.30.
(c) Total impact on spending is $3,300.
Explanation:
(a) As the marginal propensity to consume (MPC) increases, the spending multiplier: Increases, decreases, stays the same.
In economics, the higher the MPC, the higher the spending multiplier.
Therefore, as the marginal propensity to consume (MPC) increases, the spending multiplier Increases.
(b) If the marginal propensity to consume is 0.70, then, assuming there are no taxes or imports, the multiplier is: (Note: round to the nearest tenth).
This can be calculated as follows:
Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.70) = 1 / 0.30 = 3.33333333333333
Rounding to the nearest tenth, we have:
Multiplier = 3.30
(c) Given the multiplier that you calculated, what is the total impact on spending when there is a $1,000 increase in government spending?
Total impact on spending = Increase in government spending * Multiplier = $1,000 * 3.30 = $3,300
The spending multiplier rises as the marginal propensity to consume (MPC) rises. 3.30 is the multiplier. The total financial impact is $3,300.
What is the total impact on spending?(a) The spending multiplier grows, declines, or remains constant when the marginal propensity to consume (MPC) increases.
The higher the MPC, the higher the spending multiplier in economics.
As a result, the spending multiplier rises as the marginal propensity to consume (MPC) rises.
(b) If the marginal propensity to consume is 0.70, the multiplier is: assuming no taxes or imports (Note: round to the nearest tenth).
Computation:
[tex]\text{Multiplier} = 1 / (1 - MPC) \\= 1 / (1 - 0.70) \\= 1 / 0.30 \\= 3.33333333333333[/tex]
If we round to the nearest tenth, we get: a 3.30 multiplier
(c) Given the multiplier you computed, what is the total impact on spending when government spending is increased by $1,000?
[tex]\text{Total impact on spending = Increase in government spending} \text{ x } \text{Multiplier}\\ = $1,000 \text { x } 3.30 = $3,300[/tex]
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Assume a company has two divisions, A and B. The company’s overall sales, overall contribution margin ratio, common fixed expenses, and net operating income are $500,000, 48%, $50,000, and $10,000, respectively. Division A has a contribution margin of $180,000. If Division B has traceable fixed expenses of $80,000, then what is Division A’s segment margin? Multiple Choice $80,000 $40,000 $20,000 $60,000
Answers
Answer:
$60,000
Explanation:
total sales A + B = $500,000
variable expenses = $260,000
combined contribution margin = $240,000
contribution margin A = $180,000
contribution margin B = $60,000
combined segment margins = $60,000 (= -$20,000 + $80,000)
segment margin B = -$20,000
segment margin A = $80,000
common fixed expenses = $50,000
net income = $10,000
The margin available after a segment has covered all of its costs is known as segment margin. The segment profit margin is $60,000 per segment. As a result, option (d) or (iv) is the proper response.
How do you compute segment margin?[tex]\text{total sales A + B} = $500,000\\\text{Variable expenses} = $260,000\\\text{Combined contribution margin} = $240,000\\\text{Contribution margin A} = $180,000\\\text{contribution margin B} = $60,000\\\text{combined segment margins} = $60,000 (= -$20,000 + $80,000)\\\text{segment margin B} = -$20,000\\\text{segment margin A} = $80,000\\\text{common fixed expenses} = $50,000\\\text{net income}= $10,000[/tex]
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In planning for your retirement, you have decided that you would like to be able to withdraw $60,000 per year for a 10 year period. The first withdrawal will occur 20 years from today.
a. What amount must you invest today if your return is 10% per year?
b. What amount must you invest today if your return is 15% per year?
Answers
Answer:
a. $66,309
b. $24, 333
Explanation:
In both scenarios, the Cash Flows are uneven. thus we need to be careful the way we use the Time Value of Money. What we will be looking for is the Net Present Value - the Initial cost of the Investment.
Step 1
The summary of cash flows for this project can be shown as follows :
Year 0 = ? (to be calculated)
Year 1 to Year 19 = 0
Year 20 to Year 30 = $60,000
Step 2
Using the CFj Function of the Financial calculator, we can then calculate the Net Present Value as :
Part a
$0 CFj
19 Nj
$60,000 CFj
10 Nj
10 % I/YR
Shift NPV = $66,309
Part b
$0 CFj
19 Nj
$60,000 CFj
10 Nj
15 % I/YR
Shift NPV = $24,333
In what positive and negative ways has the Internet changed the conduct and coordination of global business?
Answers
Answer: Positive ways; Barriers in connecting is slightly no more, Negative ways; Increase in fraud and cyber theft
Explanation:
The internet has changed the conduct and cordination of global business in many ways both positively and negatively. Considering the positive ways
Positive Ways: Barriers in connecting is slightly no more: connecting to one another has been made easy to do business recently, people in continents can carry out a transaction and a trade under minutes of interaction and get the goods and services exchanged among each other immediately.
Negative ways; Increase in fraud and cyber theft; despite the swift nature of doing business now, it has also Increased fraud as some people disguise themselves to be traders and businessmen just to collect people's money.
A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and is selling today at a $75.25 premium from par value. The current yield on this bond is _________.
a. 6%
b. 6.49%
c. 6.73%
d. 7%
Answers
Answer:
b. 6.49%
Explanation:
Calculation for The current yield on this bond
First step is to calculate the Current price
Current price = $1,000 - 75.25
Current price = $924.75
Now let calculate the Current yield using this formula
Current yield =Coupon bond interest/Current price
Let plug in the formula
Current yield = $60/$924.75
Current yield = 6.49%
Therefore the current yield on this bond is 6.49%
Does anyone know how to slap babies correctly?
Answers
Answer:
no don't do that.
Explanation:
Answer:
Yes. You get in the car, buckle up, ad drive to the police station and turn yourself in for child abuse :)
Explanation:
In September 2008, the stock market fell sharply and continued to perform poorly due to the financial crisis. How did this change impact GDP in the economy?
Answers
Answer:
Many people's wealth is held in stocks and as the price of stocks collapsed, they lost wealth.
Imagine that this happened to you. One day you are rich and that affects your spending habits. In a matter of few days or weeks, you lose a large portion of your wealth. So now, you are less rich or even poor. So your spending habits will be altered, i.e. you will spend less.
If you consider the economy as a whole, aggregate demand will fall, resulting in a decrease of aggregate supply, and an overall decrease of the GDP.
On January 1, Jim Shorts Corporation issued $300 million face value bonds for $580 million. During the same year, $1,500,000 of the bond premium was amortized. On a statement of cash flows prepared by the indirect method, Jim Shorts Corporation should report: A) An addition to net income of $1,500,000. B) An investing activity of $580 million. C) A financing activity of $300 million. D) A deduction from net income of $1,500,000. g
Answers
Answer: a deduction from net income of $1,500,000.
Explanation:
Based on the statements provided in the question, it should be noted that Jim Shorts Corporation should report a deduction from net income of $1,500,000 on the statement of cash flows prepared by the indirect method.
It should be noted that the caah flow statement would start the accrual basis of the net income under an indirect method of the cash flow and then, all the non-cash items would either be added or subtracted in order for the reconciliation of account.
In a period when costs are declining and inventory quantities are stable, the lowest cost of goods sold would be reported by using the inventory method of
Answers
Answer:
LIFO
Explanation:
To record the lowest cost of goods sold, the ending inventory amount must be high. This would only be high in LIFO whish would not be affected by declining costs.
By using LIFO (Last in First Out) inventory valuation will be based on the value of the earliest goods purchased instead of latest goods purchased as in FIFO (First In First Out)
The Johnson Drum Company is planning to build a new factory. The purchase of the land, building the plant, and installation of equipment will take place over a 2-year period. The following are planned cash outflows:
Year Cash Outflow 0 $3,500,000 1 $4,750,000 2 $6,100,000
Johnson Drum's cost of capital is 14%, and its marginal tax rate is 35%. What is the NINV measured in present value terms today?
Answers
Answer:
$12,356,650
Explanation:
Calculation for What is the NINV measured in present value terms today
Year Cash Outflow PVIF PV of NINV
Year 0 $3,500,000 * 1.000 = $3,500,000
Year 1 $4,750,000* 0.877 =$ 4,165,750
Year2 $6,100,000* 0.769 =$4,690,900
Total NINV=$12,356,650
(3,500,000+4,165,750+=4,690,900)
Therefore the NINV measured in present value terms today will be $12,356,650
Piper Pizzaâs pizza-and-sub deal is back! Any consumer who orders two pizzas will get a free meatball sub. Piper Pizzaâs promotion uses ____ to increase short-term sales.
Answers
Answer:
YUMMM
Explanation:
Pizza sounds good, sorry lol
Any consumer who orders two pizzas will get a free meatball sub. Piper Pizzas' promotion uses loyalty programs to increase short-term sales.
What type of promotion is a loyalty program?Retailers and other companies who sponsor loyalty programs do so in an effort to draw and keep consumers by providing prizes, discounts, and other unique incentives. They are made to reward customers for their brand or shop loyalty and promote repeat business (hence the name). Usually, a consumer receives bigger benefits the more frequently they shop at the business and the more money they spend.
The purpose of loyalty programs is to reward customers for their continued patronage by providing benefits, discounts, or other unique incentives. Companies profit from loyalty programs not only by fostering client loyalty but also by receiving vital data on consumer spending patterns and the most tempting goods or offers. Retailers and other businesses provide loyalty programs as a strategy to draw in and keep consumers.
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Coronado Industries reported total manufacturing costs of $450000, manufacturing overhead totaling $68000, and direct materials totaling $86000. How much is direct labor cost
Answers
Answer:
$296,000
Explanation:
Calculation for How much is direct labor cost
Using this formula
Direct labor cost=Total manufacturing costs-Manufacturing overhead totaling-Direct materials totaling
Let plug in the formula
Direct labor cost=$450,000 - $68,000 - $86,000
Direct labor cost=$296,000
Therefore the direct labor cost will be $296,000
A stock is currently selling for $79 per share. A call option with an exercise price of $83 sells for $3.95 and expires in three months. If the risk-free rate of interest is 2.8 percent per year, compounded continuously, what is the price of a put option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answers
Answer: $7.37
Explanation:
The price of a put option with the same exercise price would be calculated as:
C + Xe^-rt = P + S
It should be noted that in the formula above,
P = Put option price
C = price of call option
S = stock price
X = exercise price
r = interest rate
t = time
We then slot in the values which will be:
= 3.95 + 83e^-2.8% × 3/12 = P + 79
P = 3.95 + 83e^-2.8% × 3/12 - 79
P = 3.95 + 82.42 -79
= $7.37
Orlando Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 12,000 Actual variable overhead incurred: $77,700 Actual machine hours worked: 18,800 Standard variable overhead cost per machine hour: $4.50 If Orlando estimates 1.5 hours to manufacture a completed unit, the company's variable-overhead spending variance is:
Answers
Answer:
$37,600 favorable
Explanation:
Variable overhead spending variance can be computed as;
= (Actual hours worked × Actual variable overhead rate) - ( Actual hours worked - Standard variable overhead rate)
= ( 18,800 hours × $77,700/12,000) - (18,800 hours × $4.5)
= [(18,800 × $6.5) - (18,800 × $4.5)]
= $122,200 - $84,600
= $37,600 favorable
The three main methods that can be used to achieve the efficient use of a common resource are:___________.
A. property rights, production quotas, and ITQs
B. taxes, production quotas, and ITQs
C. property rights, marketable permits, and vouchers
D. property rights, production quotas, and marketable permits
Answers
Answer:
Option A:property rights, production quotas, and ITQs
Explanation:
A Common Resources is known simply as a resource for which rights are held in common by a group of individuals who has no exclusive ownership right. With common resources, property rights are not well-defined and are non-exclusive. In a common resource, an individual has the right to use the resource, but not to change its form or transfer it to other individuals. The policies that helps to improve efficiency include: production quotas, individual transferable quotas and property right.
Production quotas is simply an upper limit to the quantity of a good that may be produced legally.
An individual transferable quota is a production limit that is given to an individual who is free to transfer the quota to another person.
By the assignment of property rights, common property becomes private property.
Which employee role is directly accountable to ensure that employees are implementing security policies consistently
Answers
Answer: Information Technology
Explanation:
The employee role is directly accountable to ensure that employees are implementing security policies consistently is the information technology staff.
Such individual implements and also maintains security policies, procedures, and standards. The Information Technology staff gives the necessary mechanisms that will be required to enhance the security program.
Assume a company has $250 in its petty cash fund. It expends $175 as follows: $100 for delivery expenses, $40 for postage, $35 for office supplies. There is $75 of cash remaining in the fund after these disbursements. The journal entry to replenish the petty cash fund includes
Answers
Answer:
the journal entry to record petty cash expenses should be:
Dr Delivery expenses 100
Dr Postage expenses 40
Dr Office supplies expenses 35
Cr Cash 175
Explanation:
When money is missing in a petty cash fund, e.g. imagine it was $2 short, you can use the cash short and over account which is used to balance minor differences.
