1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Crank
1 year ago
13

the common stock and debt of northern sludge are valued at $64 million and $36 million, respectively. investors currently requir

e a return of 16.6% on the common stock and 7.1% on the debt. if northern sludge issues an additional $16 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? assume that the change in capital structure does not affect the risk of the debt and that there are no taxes. (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)'
Business
1 answer:
kozerog [31]1 year ago
4 0

The expected return on the common stock should decrease.

To calculate the new expected return on the common stock, we need to calculate the new value of the common stock and debt. The new value of the common stock is $64 million + $16 million = $80 million. The value of the debt is reduced by $16 million to $20 million.

The new expected return on the common stock is 16.6% * ($80 million/$96 million) = 15.63%.

Therefore, the expected return on the common stock should decrease from 16.6% to 15.63%.

A security that symbolises ownership in a firm is called common stock. Common stock owners choose the board of directors and cast ballots for corporate rules. Long-term rates of return are often higher with this type of stock ownership.

To know more about stock here

brainly.com/question/14040903

#SPJ4

You might be interested in
What were the economic changes that revolutionized manufacturing in the eighteenth century and led to the factory system?
Daniel [21]

Answer:

The industrial revolution affected the whole global economy, social relations, and culture.

The industrial revolution changed how goods were manufactured, and it all started with the European accumulation of capital and the invention of the steam engine.

The two major sources of energy were coal and oil that were used to power steam engines that moved machinery using water steam. That led to work specialization and urbanization (people moving into large urban areas).

The industrial revolution first started in northwestern Europe, but it then spread to the US, Russia and Japan. The global economy developed new patterns of global trade and production between nations that produced resources and those that processed them and produced goods.

Exporting economies grew around the world because of the need for exporting both raw materials and food supplies from resource producing nations, and the need for exporting finished goods form industrialized nations.

7 0
3 years ago
The failure to record which transaction has no effect on the quality of inventory?
zimovet [89]

Do not record transactions that do not affect inventory quality. A recorded inventory transaction has actually taken place.

Records of inventory purchases made during the accounting period. The purchase account is increased by direct debit. The manufacturing costs of the goods sold are overestimated by the same amount. An overstatement of cost of goods sold will result in an understatement of net income and retained earnings by the original margin of error.

If the auditor is dissatisfied with the accuracy of the closing balance sheet and may be materially increase.

Inventory write-downs affect both the income statement and the balance sheet. Write-offs are treated as expenses. This means your net income and tax liability will be reduced. Therefore, a decrease in net income will reduce a company's retained earnings and reduce shareholders' equity on the balance sheet.

Learn more about inventory at

brainly.com/question/25887081

#SPJ4

4 0
1 year ago
Action learning uses challenging, structured outdoor activities, which include difficult sports.A. TrueB. false
mixas84 [53]

Answer: The answer is True.

Explanation: Action learning uses challenging, structured outdoor activities, which may include difficult sports such as dog-sledding or mountain climbing. ... Employees are most likely to learn when the training is linked to their current job experiences and tasks.

6 0
3 years ago
Bagels and cream cheese are complementary goods. The price of flour, used to make bagels, has fallen. As a result, the equilibri
statuscvo [17]

Answer: When the price of the flour falls, the equilibrium price of the cream rises and the equilibrium quantity of the cream cheese also rises

Answer A is correct

Explanation:

if flour is cheaper, bagels are chepear so demand increases and both equilbrium price and equilibrium quantity rises

8 0
3 years ago
Businesses should customize invoices to best detail the products or services they provide.
Doss [256]

Answer: A

Explanation:

5 0
3 years ago
Read 2 more answers
Other questions:
  • Several legal steps must sometimes be taken before a creditor can have his outstanding debt satisfied through the sale of the de
    11·1 answer
  • For a perfectly competitive firm, the marginal cost curve is identical to the firm’s ________________
    11·1 answer
  • The world price of grapefruits is above the price that currently prevails in Cuba in the absence of trade. Assuming that Cuba is
    7·1 answer
  • Frontier Airlines offers frequent fliers discounted rates on tickets to Denver, Colorado. The airline is attempting to build bra
    15·2 answers
  • Discuss how a fragmented audience is both a challenge and an opportunity for sports and entertainment marketers?
    10·1 answer
  • Golden Arch Company uses the periodic inventory system. It has compiled the following information in order to prepare the financ
    9·1 answer
  • The ability to interact, be responsible, persevere, be a team player, be motivated, and problem solve are examples of __________
    11·2 answers
  • Kế toán công ty nên sử dụng mô hình tổ chức bộ máy kế toán như thế nào để phù hợp với tình huống sau đây:
    13·1 answer
  • In a perpetual inventory system, inventory is initially recorded at ______.
    7·1 answer
  • (50 points) What is the combination of what you own, earn, and invest minus the debt you owe on those things called?
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!