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Alborosie
3 years ago
13

Quillpen Company is unlevered and has a value of $45 billion. An otherwise identical but levered firm finances 25% of its capita

l structure with debt. Under the MM zero-tax model, what is the value of the levered firm? Enter your answer in billions. For example, an answer of $1 billion should be entered as 1, not 1,000,000,000. Round your answer to the nearest whole number.
Business
1 answer:
Alex_Xolod [135]3 years ago
5 0

Answer:

We can conclude that the value of levered firm is 40 billion.

Explanation:

Under the MM zero tax model value of levered firm is equal to value of unleveled firm

Under MM zero tax model VL = VU

VL= value of levered firm  

VU= value of unleveled firm  

Value of levered firm = value of unleveled firm + (tax rate × value of debt)

Firm capital structure is included debt and equity , when there is no tax it means value of levered and unleveled firm value is same

Therefore, We can conclude that the value of levered firm is 40 billion.

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The most likely cause of a shift of a production possibilities frontier of an economy ab to cd is:_________
MaRussiya [10]

The cause of a shift of a production possibilities frontier of an economy ab to cd is unemployment.

If an economy keeps growing its capital stock/range of employees/generation/herbal resources, then over the years its manufacturing possibilities curve will: shift to the proper .e shift of the frontier from A to B was maximum in all likelihood due to unemployment

. The curve bows outwards due to the law of increasing opportunity fee, which states that the quantity of an amazing which must be sacrificed for every additional unit of any other suitable is extra than become sacrificed for the preceding unit.

production possibilities curve. a graph or financial model that shows the most combinations of products and offerings, any two categories of goods, that can be produced from a set quantity of assets.

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3 0
1 year ago
A company builds a new plant and finances its construction by issuing stock. Which ratio is least likely to be affected, all els
Marta_Voda [28]

Answer:

a. Current ratio

Explanation:

Current Ratio is the least likely to be affected

The  Current Ratio is given as

Current Ratio = [ Current assets ] ÷ [ Current liabilities  ]

Now,

Building a new plant is a fixed asset for the company.

Thus, It will add to the Fixed assets

Since,

The Formula for current ratio is independent of the fixed assets

Therefore,

It will be least affected.

While,

Debt to equity ratio = [ Debt ] ÷ [ Equity ]

Debt to asset ratio= [ Total Debt ] ÷ [ Total Assets ]

Net fixed assets to total assets = [ Net fixed assets ] ÷ [ Total assets ]

in all the above relations, fixed asset will change the value of the total assets.

Hence,

They all will be affected

7 0
3 years ago
Which of the following is true of assigning costs to cost objects? a.Assigning costs to cost objects can be accomplished in a nu
podryga [215]

Answer:

A and B.

Explanation:

Understand  cost classification used for assigning costs to cost objects can be divided in direct costs and indirect costs.

Direct costs are those who can be easily and conveniently traced to a unit of product or other cost object. Examples are direct material and labor.

Indirect costs are those who cannot be easily and conveniently traced to a unit of product or other cost object. Example manufacturing overhead.

The common costs are the indirect costs incurred in support a number of cost objects. These costs cannot be traced to any individual cost object.

Determining cost tracing and allocation is more art than science, as it's difficult to trace costs with 100 percent accuracy.

Tracing costs becomes even more difficult when a cost goes toward producing multiple goods or services.

3 0
3 years ago
On January 1, 2009, a U.S. firm made an investment in Germany that will generate $5 million annually in depreciation, converted
Afina-wow [57]

Answer:

The expected real value (in terms of January 1, 2009, dollars) of the depreciation charge in year 2013 will be $1,958,815.416.

Explanation:

It is expected that the value of the dollar in the German market will fall at the same rate as that of the real market value of the dollar when we envisage the exchange rate will remain the same. Thus the depreciation of the tax write-off in terms of its real value in dollars will fall at 5% every year from 2009 to 2013.

Therefore, at a tax rate of 50% in Germany, a $2.5 million charge on depreciation on the investment of $5 million will result in 2013.

To calculate the real value of the dollar at an inflation of 5% yearly in 2013

When the tax rate in German is 50%, then charges of depreciation of $5 million will equal4$2.5 million in 2013 dollars. When the dollar's real value of this write-off is declining due to the inflation at 5% annually, the real value in 2013 will be calculated as:

Given: $2,500,000 (P/F , 5%, 5years) ;  0.78356 (factor for calculating the amount to be recieved after  5years)

= $2,500,000 * 0.78356

= $1,958,815.416

8 0
3 years ago
We've talked a lot about "fixed" and "variable" expenses. We've talked about the way these expenses impact your budget and your
eimsori [14]

Answer:c

Explanation:

6 0
2 years ago
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