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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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Senate Inc. is considering two alternative methods for producing playing cards. Method 1 involves using a machine with a fixed c
photoshop1234 [79]

Answer:

24,000 units

Explanation:

We know,

According to the contribution margin approach,

Operating Income (EBIT) = Sales - Variable cost - Fixed cost

or, EBIT = (Price x Quantity) - (Quantity x VC per unit) - Fixed cost

As there are two methods,

Method 1, Variable cost = $1.00/unit, Fixed cost = $17,000

Method 2, Variable cost = $1.50/unit, Fixed cost = $5,000

According to the Question, as both methods will yield same EBIT at the same output levels,

Method 1 EBIT = Method 2 EBIT

or,  (Price x Quantity) - (Quantity x $1.00) - 17,000 = (Price x Quantity) - (Quantity x $1.50) - $5,000

or, (Quantity x $1.50) - (Quantity x $1.00) = $(17,000 - 5,000) [Deducted (price x quantity from both the sides]

or, $0.50 x Quantity = $12,000

or, Quantity = $12,000/$0.50

Hence, Quantity = 24,000 units

At 24,000 output level, the EBIT of both methods will be same.

4 0
2 years ago
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e-lub [12.9K]

Answer:

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Business analytics on the other hand is the use of past data to predict future action that will best enable a firm meet its business objectives.

Therefore business intelligence and business analytics involves integrating the information streams produced by a firm into a single, coherent enterprise-wide set of data, and then using modeling, statistical analysis tools, and data mining tools to make sense out of all these data so that managers can make better decisions and better plans.

6 0
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seraphim [82]

Answer:

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