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Shtirlitz [24]
3 years ago
14

Marpor Industries has no debt and expects to generate free cash flows of $16 million each year. Marpor believes that if it perma

nently increases its level of debt to $40 ​million, the risk of financial distress may cause it to lose some customers and receive less favorable terms from its suppliers. As a​ result, Marpor's expected free cash flows with debt will be only $15 million per year. Suppose​ Marpor's tax rate is 35%​, the​ risk-free rate is 5%​, the expected return of the market is 15%​, and the beta of​ Marpor's free cash flows is 1.1 ​(with or without​ leverage). a. Estimate​ Marpor's value without leverage. b. Estimate​ Marpor's value with the new leverage.
Business
1 answer:
tatyana61 [14]3 years ago
5 0

Answer and Explanation:

The computation is shown below:

a.  Marpor's value without leverage is

But before that first we have to calculate the required rate of return which is

The Required rate of return = Risk Free rate of return + Beta × market risk premium

= 5% + 1.1 × (15% - 5%)

= 16%

Now without leverage is

= Free cash flows generates ÷ required rate of return

= $16,000,000 ÷ 16%

= $100,000,000

b. And, with the new leverage is

= (Free cash flows with debt ÷ required rate of return) + (Tax rate × increase of debt)

= ($15,000,000 ÷ 0.16) + (0.35 × $40,000,000)

= $93,750,000 + $14,000,000

= $107,750,000

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Answer:

A is the right answer so right it

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<u>Solution: </u>

The following are the correct and incorrect options

<u>Correct option</u>: Households used to save and those savings are utilized for investment through the intermediaries like bank. Firms and governments take those funds for their investment acts.

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OlgaM077 [116]

To be excluded from the client's total gifts in the year made are

  • Paid a hospital $11,000 for medical services rendered to a friend
  • Made a donation to the democratic party. Option D I and III

This is further explained below.

<h3>Which of these transfers will be excluded from the client's total gifts in the year made?</h3>

Generally, If anything is referred to as "the client's," it means that it belongs to a single person, such as a client's file. The use of the clients' plural possessive demonstrates that we may attribute things to more than one client.

In conclusion, To be excluded from the client's total gifts in the year made are

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Read more about client's

brainly.com/question/28162297

#SPJ1

CQ

Your client has made all of the following transfers. Which of these transfers will be excluded from the client's total gifts in the year made?

Paid a hospital $11,000 for medical services rendered to a friend

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A)

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below are the choices that should accompanied your question above the answer is D. 

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