Answer:
a. Terrell's Optimal Capital Structure is 40:60. It means to obtain optimal capital structure in-order to increase value of firm, Terrell should finance 40% of its Assets through Debt and remaining through Common Equity.
b. The optimal Capital Structure is the point where company's WACC is minimized. So, 40:60 is the ratio where Terrell's WACC will be minimized.
Explanation:
The goal of Management is to increase Shareholders' wealth and not to generate profits because wealth is something that is for long-run whereas Profits are temporary. Management would accept projects having negative NPV if its goal is to maximize Profit.
Maximizing Shareholders' wealth means to increase the Share Price whereas Generating a higher EPS is Profit Maximization Strategy. So, you should look for that Capital Structure Point where the Company's Stock Price is Highest.
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Answer:
Explanation:
Calculation of Goodwill -
$ in Million $ in Million
Consideration given $ 590
Less: F.V of Harman's net assets
Assets
631
Less: F.V of Liabilities
(169) (462)
Goodwill on acquisition $ 128
2. The impairment loss Pesky would recognize at the end of year 2021 is $ 68 million , since the book value of the net assets exceeds its fair value.
Calculation :-
$ in million $ in million
Goodwill 128
Less Implied value of goodwill
F.V of Harman's, Inc
570
F.V of Harman's net assets (excluding Goodwill)
(510) (60)
Impairment Loss $ 68
3. Journal entry to record loss:
Dr Cr
Loss on impairment of goodwill Dr $ 68 million
Goodwill
$ 68 million
(To record the impairment loss
Answer:
Answer is given below.
Explanation:
Economic Unit Concept
2014 2015
Jannison Inc. 308000 364000
Techron Co. 98000 126000
Sub Total 406000 490000
Less : Amortization 11000 11000
Total Net Income 395000 479000
Non Controlling Interest
= 10 % of Techron Co,
(after deduction of amortization expense)
= 10% (98000-11000) 8700
= 10% (126000-11000) 11500
Consolidated Net income 386300 467500
(after Noncontrolling interest allocation)
Under Economic unit concept both business are taken as a single business unit, and accordingly incomes of both entities are clubbed to find income of business as whole
Answer:
The correct answer is letter "C": the Macro Islands have a comparative advantage in producing fishing boats, and the Micro Islands have a comparative advantage in producing guava jelly.
Explanation:
Comparative advantage is an advantage an individual, organization or country has to use <em>opportunity costs</em> in their production compared to their competitors. The scenario described above does not imply that the individual, organization or country has an absolute advantage.
In the example proposed:
- Comparative advantage of Macro islands in fishing boats =
- Comparative advantage of Micro islands in fishing boats =
- Comparative advantage of Macro islands in jars =
- Comparative advantage of Micro islands in jars =
Thus, <em>the Macro Islands have a comparative advantage in producing fishing boats, and the Micro Islands have a comparative advantage in producing guava jelly.</em>
Answer:
(C) perfectly inelastic.
Explanation:
Elasticity of demand measures the responsiveness of quantity demanded to changes in price.
Demand is perfectly inelastic if a change in price has no effect on quantity demanded. Quantity demanded remains unchanged no matter the change in price.
Water is assumed to be a necessity so demand would not change no matter the change in price.
Demand is inelastic when a change in price has little or no effect on quantity demanded.
Demand is elastic when a change in price has a greater effect on the quantity demanded.
Demand is unitary elastic when a change in price has an equal erfect on quantity demanded.
I hope my answer helps you
