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neonofarm [45]
2 years ago
15

Jericho Snacks is an all-equity firm with estimated earnings before interest and taxes of $624,000 annually forever. Currently,

the firm has no debt but is considering borrowing $725,000 at 6.75 percent interest. The tax rate is 25 percent and the current cost of equity is 15.2 percent. What is the value of the levered firm
Business
1 answer:
vova2212 [387]2 years ago
4 0

Value of levered firm is $2,922,171.

<h3><u>What is Finance?</u></h3>
  • The term "finance" refers to issues including the development, management, and study of money and investments. It entails employing future income flows to finance current initiatives through the use of credit and debt, securities, and investment.
  • Finance is strongly tied to the time value of money, interest rates, and other related topics because of its temporal component.
  • There are numerous further specialized classifications, such as behavioral finance, which aims to pinpoint the cognitive (e.g., emotional, social, and psychological) drivers of financial decisions.
  • Typically, "finance" is divided into three major categories: Taxation systems, government spending, budgeting practices, stabilization tools and policies, debt problems, and other governmental difficulties are all considered to be a part of public finance.
  • Managing a company's assets, liabilities, revenues, and debts is part of corporate finance.

VU = [$624,000 ×(1 -.35)]/.152 = $2,668,421.05

The Value of the levered Firm is:

VL = $2,668,421.05 + (.35 ×$725,000) = $2,922,171

Know more about Finance with the help of the given link:

brainly.com/question/26168077

#SPJ4

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Sabv Corporation's break-even-point in sales is $840,000, and its variable expenses are 75% of sales. If the company lost $34,00
zhuklara [117]

Answer:sales must have amounted to:$704,000

Explanation:

Contribution ratio = Sales ratio - Variable cost ratio

= 100%- 75%

=25%

Sales to break even = Fixed expenses / Contribution margin ratio

Therefore,

 Fixed expenses = Sales to break even   x  Contribution margin ratio

=$840,000 x 25%

=$210,000

Contribution margin can also be calculated as

Fixed expenses- Operating loss

=$210,000 -$34,000

=$176,000

Sales = Contribution margin/ Contribution ratio

= $176,000/25% =$704,000

5 0
2 years ago
Western Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,0
topjm [15]

Answer:

$2,500

Explanation:

Opening balance                             $12,000

Cash receipts                                   $30,000

Cash disbursement                        ($34,500)

Closing balance                                $7,500

Minimum cash balance                    $10,000

Borrowing amount(1$0,000-$7,500)     $2,500

To maintain $10,000 cash balance western company need to borrow $2,500($10,000-$7500)

7 0
3 years ago
This test that albert chong and his colleagues carried out was most relevant for evaluating the
vladimir2022 [97]

This test that Albert Chong and his colleagues carried out was most relevant for evaluating the allocative efficiency of these postal services because the test was designed to measure how often and how quickly the letters sent were returned to sender.

8 0
2 years ago
He offers an annual bonus of $10,000 for superior performance, $6,000 for good performance, $3,000 for fair performance, and $0
Alik [6]

If he offers an annual bonus of $10,000 for superior performance, $6,000 for good performance, $3,000 for fair performance, and $0 for poor performance. Based on prior records, he expects an employee to perform at superior, good, fair, and poor performance levels with probabilities 0.10, 0.20, 0.50, and 0.20, respectively. The expected value of the annual bonus amount will be: $3,700

First step

Expected value for Superior performance=$10,000×0.10

Expected value for Superior performance=$1,000

Expected value for Good performance=$6,000×0.20

Expected value for Good performance=$1,200

Expected value for Fair performance=$3,000×0.50

Expected value for Fair performance=$1,500

Expected value for Poor performance=$0×`1,500

Expected value for Poor performance=$0

Now let determine the total  expected value of the annual bonus amount

Expected value of annual bonus amount=$1,000+$1,200+$1,500+$0

Expected value of annual bonus amount=$3,700

Inconclusion if he offers an annual bonus of $10,000 for superior performance, $6,000 for good performance, $3,000 for fair performance, and $0 for poor performance. Based on prior records, he expects an employee to perform at superior, good, fair, and poor performance levels with probabilities 0.10, 0.20, 0.50, and 0.20, respectively. The expected value of the annual bonus amount will be: $3,700

Learn more here:

brainly.com/question/22845794

5 0
2 years ago
Wayne was a bona fide resident of Brazil for all of 2018 and 2019. He reports his income on the cash basis. In 2018, he was paid
Dmitrij [34]

Answer:

the answer is b

Explanation:

3 0
2 years ago
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