Answer and Explanation:
The computation is shown below:
For the firm value of operations
Value of the firm's operations = {market price per share × number of outstanding shares ] - Additional cash needed
= [$30 × 5,000,000] - $30,000,000
= $150,000,000 - $30,000,000
= $120,000,000
Now shares after repurchase is
= Number of shares - (Additional cash needed ÷ per share value)
= 5,000,000 - ($30,000,000 ÷ $30)
= 5,000,000 - 1,000,000
= 4,000,000 shares
what do economies of scale, the ownership of essential raw materials, and patents have in common? They are all barriers to entry.
Materials or substances used in the initial stages of producing or manufacturing items are known as raw materials. On commodity exchanges around the world, raw materials are commodities that are purchased and sold. Since raw materials, like labor and capital, are factors of production, traders buy and sell them on the factor market.
Various sorts of raw materials can be employed in a wide range of goods. The inventory or input commodities that a business needs to make its products are known as raw materials. For instance, a car manufacturer would employ steel used in the construction of vehicles as a raw material.
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Division of the resources into parcels as well as assigning them to individuals serves as a way that local community usually follow in regulations of shared as well limited resource.
- limited resource serves as term used to describe that the quantities of available labor as well as capital, land are finite.
- In order to regulate these resources, the local community can divide the resources into parcel so it will be able to easy for allocation.
- Another way is to assign this resources to individual one after the other.
Therefore, Division of the resources into parcels one way to share the resources.
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Answer:
At a corporate tax rate of 16.29%, both investment shall have same income, so it will be the indifference point.
Explanation:
Let take X to be the corporate tax rate
Note that 70% dividend exclusion for tax on dividend mean 30% is actually applied to dividend
Preferred dividend = 5000 * 7.75% = 387.5
Taxable dividend = 387.5 * 30% = 116.25
Interest on bond = 5000*10% = 500
For the purpose of Indifference of the two investment brought about by the two break-even corporate tax
387.5 - 116.25 * X = 500 - 500*X
500 X - 116.25 X = 500 - 387.5
383.75 X = 175
-112.5
383.75 X = 62.5
X= 62.5/383.75
X= 0.1629
X=16.29%
At a corporate tax rate of 16.29%, both investment shall have same income, so it will be the indifference point.