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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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3 years ago
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4 0
3 years ago
Read 2 more answers
Grand Trunk Inc., a furniture manufacturing company, does not manufacture furniture until an order is received. It coordinates a
sleet_krkn [62]

Answer:

supply chain management

Explanation:

Supply chain management -

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7 0
3 years ago
Suppose that in 1984 the total output in a single-good economy was 10,000 buckets of chicken. Also assume that in 1984 each buck
Dvinal [7]

Answer:

a. 62.5

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c. $160,000; $352,000

Explanation:

a. Price Index = (Price in year of interest/ Price in Base year) * 100

= (10/16) * 100

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= (100 - 62.5)/62.5

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= $352,000

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3 years ago
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