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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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You plan to save $6,500 per year for the next 8 years. After the last deposit, you will keep the money in the account for 6 more
Marina CMI [18]

Answer:

$98,254.57

Explanation:

Value after 8 years

Future Value of Annuity = P * ((1 + r)^n - 1 ) / r

Future Value of Annuity = 6500 * ((1 + 6.8%)^8 - 1) / (6.8%)

Future Value of Annuity = 6500 * [(1.69266113113-1) / 0.068]

Future Value of Annuity = 6500 * 10.18619

Future Value of Annuity = $66,210.24

Value after 14 years

FV = PV * (1 + r )^n

FV = 66210.26*(1+ 6.8%)^6

FV = 66210.26 * 1.483978

FV = $98,254.57

So, the amount that will be there in the account 14 years from today is $98,254.57.

5 0
2 years ago
Investigations of large multinationals In manufacturing and service sectors reveal that Group of answer choices the 500 largest
goldfiish [28.3K]

Answer:

for most companies, the world's marketplace is triad-based rather than global

Explanation:

Based on investigations of large multinationals in manufacturing and service sectors, it was revealed that most of these companies generate the majority of their revenues within a single region rather than achieving broad and deep penetration of international markets as a whole.

Also, it was concluded that about 80 percent of these firms, generate their worldwide revenues within their home region considered to be a TRIAD of the three largest economic regions of North America, the European Union, and Asia.

Hence, it can be concluded that, Investigations of large multinationals In manufacturing and service sectors reveal that for most companies, the world's marketplace is triad-based rather than global, and this due to factors such as increasing capital intensity, soaring Research & Developmemt costs, converging worldwide consumer tastes and intensifying protectionism

7 0
3 years ago
What role does the idea of machine/machinery play in constructivist settings?
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The role that the idea of machine plays in contructivist settings include: RAMPS, PLATFORM AND STAIRWAYS.
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3 years ago
The following transactions and adjusting entries were completed by Robinson Furniture Co. during a three-year period. All are re
riadik2000 [5.3K]

Answer:

<u>Year 1 </u>

Jan. 8. Purchased a used delivery truck for $24,000, paying cash.

  • Dr Truck 24,000
  •     Cr Cash 24,000

Mar. 7. Paid garage $900 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.

  • Dr Maintenance expenses - Truck 900
  •     Cr Cash 900

Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is four years, with a residual value of $4,000 for the truck.

Depreciation expense = 2 x 0.25 x $24,000 = $12,000

  • Dr Depreciation expense 12,000
  •     Cr Accumulated depreciation - truck 12,000

<u>Year 2 </u>

Jan. 9. Purchased a new truck for $50,000, paying cash.

  • Dr Truck new 50,000
  •     Cr Cash 50,000

Feb. 28. Paid garage $250 to tune the engine and make other minor repairs on the used truck.

  • Dr Maintenance expenses - Truck 250
  •     Cr Cash 250

Apr. 30. Sold the used truck for $9,500. (Record depreciation to date in Year 2 for the truck.)

depreciation expense = 2 x 0.25 x 4/12 x $12,000 = $2,000

  • Dr Depreciation expense 2,000
  •     Cr Accumulated depreciation - truck 2,000

truck sold at $9,500 - $10,000 (carrying value) = -$500 loss on sale

  • Dr Cash 9,500
  • Dr Accumulated depreciation 14,000
  • Dr Loss on sale - truck 500
  •     Cr Truck 24,000

Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $12,000 and an estimated life of eight years.

Depreciation expense = 2 x 0.125 x $50,000 = $12,500

  • Dr Depreciation expense 12,500
  •     Cr Accumulated depreciation - truck new 12,500

<u>Year 3 </u>

Sept. 1. Purchased a new truck for $58,500, paying cash.

  • Dr Truck three 58,500
  •     Cr Cash 58,500

Sept. 4. Sold the truck purchased January 9, Year 2, for $36,000. (Record depreciation to date for Year 3 for the truck.)

Depreciation expense = 2 x 0.125 x 8/12 x $37,500 = $6,250

  • Dr Depreciation expense 6,250
  •     Cr Accumulated depreciation - truck new 6,250

truck sold at $36,000 - $31,250 (carrying value) = $4,750 gain on sale

  • Dr Cash 36,000
  • Dr Accumulated depreciation 18,750
  •     Cr Truck new 50,000
  •     Cr Gain on sale - truck new 4,750

Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $16,000 and an estimated useful life of 10 years.

Depreciation expense = 2 x 0.1 x 4/12 x $58,500 = $3,900

  • Dr Depreciation expense 3,900
  •     Cr Accumulated depreciation - truck three 3,900
5 0
2 years ago
Bond J has a coupon rate of 3 percent and Bond K has a coupon rate of 9 percent. Both bonds have 13 years to maturity, make semi
noname [10]

Solution :

Given :

Coupon rate for Bond J = 3%

Coupon rate for Bond K = 9%

YTM = 6 %

Therefore,

The current price for Bond J = $ 718.54       =PV(6%/2,13x2,30/2,1000)x -1

The current price for Bond K = $ 1281.46       =PV(6%/2,13x2,90/2,1000)x -1

If the interest rate by 2%,

Bond J =  $ 583.42     =  -18.80% (change in bond price)

Bond K  = $ 1083.32   = -15.46% (change in bond price)

6 0
3 years ago
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