Answer:
Levered - $280,800,000
Unlevered - $398,400,000
Explanation:
The formula to compute the equity value is shown below:
Equity value = Number of outstanding shares × current worth per share
For Levered, the equity value would be
= 2,600,000 shares × $108
= $280,800,000
For Unlevered, the equity value would be
= 4,800,000 shares × $83
= $398,400,000
We simply multiply the number of outstanding shares with the current worth per share so that the equity value can come.
Answer:
<em>c. The reasoning of both Alfons and Mary suffers from the omitted variable problem</em>
Explanation:
The issue of omitted variables occurs as a result of mis-specification of a linear regression model, which could be either because the impact of the omitted variable on both the dependent variable is unclear, or the evidence was not accessible.
This causes you to omit the variable from your regression, resulting in over-estimation (upward bias) or underestimation (downward) of the influence of one of the other predictor variables.
Answer: e. repurchase shares
Explanation:
If the personal tax rates are lower than corporate tax rates then the company should engage in an activity that would put money into the pockets of shareholders such that they would take advantage of the lower personal tax rates.
The best way to do that would be a share repurchase. The company would probably buy at above market rates which would give shareholders capital gain and they wouldn't have to pay much taxes on it as personal rates are lower.
Answer:
a. <u>FALSE</u>
b. A contract cannot forbid the assignment of the right to receive <u>funds</u> . Assignments also cannot be restricted for the transfer of <u>real estate</u> , also called a restraint against <u>alienation</u> . A contract cannot prohibit the assignment of checks or promissory notes, also called <u>negotiable instruments</u> . The right to receive <u>damages</u> in a contract for the sale of <u>goods</u> also can be assigned, even if the contract forbids it.
Answer:
The correct answer is option A.
Explanation:
A negative externality refers to the situation when the cost of production is borne by a third party which is not involved in the production process.
In case there is a negative externality present, the marginal social cost will be greater than the marginal private cost. The competitive price will be lower than the socially optimal price.
Since a third party partially bears the cost, the producer will be able to produce more than the optimal level. There will be a deadweight loss of social welfare.
