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Sonbull [250]
3 years ago
8

The Window Store will have a value of $139,000 if the economy does well this coming year and a value of $121,000 if the economy

does poorly. The probability of a good economy is 68 percent. The firm owes its bondholders $63,000. The firm will only operate for one more year. What is the value of this firm to its shareholders?
Business
1 answer:
ycow [4]3 years ago
8 0

Answer:

The value of this firm to shareholders is $70240

Explanation:

Using expected value approach, the value of the firm can be computed as :

(Optimistic value*its probability)+(pessimistic value*its probability)

optimistic value=$139000 and its probability is 68%=0.68

Pessimistic value=$121000 and its probability is 1-0.68=0.32

Expected value=($139000*0.68)+($121000*0.32)

                         =$133240

However, the value to shareholders is the expected value of the firm less debt of $63000

Equity value=$133240-$63000

                      =$70240

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Hinck Corporation reported net cash provided by operating activities of $361,200, net cash used by investing activities of $150,
PolarNik [594]

Answer:

$28,300

Explanation:

Missing word: "<em>Calculate free cash flow."</em>

<em />

Free cash flow = Operating cash flow - Capital expenditures - Dividends

Free cash flow = $361,200 - $206,000 - $126,900

Free cash flow = $28,300

So, the Free cash flow of Hinck Corporation is $28,300.

6 0
3 years ago
Assume you are going to lunch and have a choice of two meals. The first meal would give an increase in marginal utility of 100 w
pantera1 [17]

Answer:

C) Third

Explanation:

The first meal gives you 4 units of utility for every dollar spent (= 100 utility / $25).

The second meal gives you 5 units of utility for every dollar spent (= 10 utility / $2).

The third meal gives you 10 units of utility for every dollar spent (= 50 / $5). We should choose the meal that provides us with the greatest utility per dollar.

3 0
3 years ago
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velikii [3]

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6 0
3 years ago
What is a minimum balance when it comes to account requirement?
Komok [63]
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7 0
4 years ago
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Panda Cafe earned net income of $ 69 comma 000 after deducting depreciation of $ 3 comma 000 and all other expenses. Current ass
kompoz [17]

Answer:

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Explanation:

The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive at the amount of cash generated by operating activities.

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4 0
3 years ago
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