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SOVA2 [1]
3 years ago
12

You are an entrepreneur starting a biotechnology firm. If your research is​ successful, the technology can be sold for $ 30$30 m

illion. If your research is​ unsuccessful, it will be worth nothing. To fund your​ research, you need to raise ​$2.02.0 million. Investors are willing to provide you with ​$2.02.0 million in initial capital in exchange for 50 %50% of the unlevered equity in the firm. a. What is the total market value of the firm without​ leverage? b. Suppose you borrow ​$1.01.0 million. According to​ MM, what fraction of the​ firm's equity will you need to sell to raise the additional ​$1.01.0 million you​ need? c. What is the value of your share of the​ firm's equity in cases ​(a​) and ​(b​)? a. What is the total market value of the firm without​ leverage?
Business
1 answer:
yanalaym [24]3 years ago
4 0

Answer:

a. What is the total market value of the firm without​ leverage?

  • = $2 million / 50% = $4 million

b. Suppose you borrow ​$1.0 million. According to​ MM, what fraction of the​ firm's equity will you need to sell to raise the additional ​$1.0 million you​ need?

  • = 33.33%

c. What is the value of your share of the​ firm's equity in cases ​(a​) and ​(b​)?

  • a) = $4 x 50% = $2 million
  • b) = $2 million

Explanation:

if successful price = $30 million

if unsuccessful price = $0

investment required = $2 million

in exchange of 50% of the firm

if you borrow $1 million, you will have to give up 33.33% of the company in exchange for the other $1 million needed

= $1 / ($4 - $1) = $1 / $3 = 33%

according to Modigliani and Miller (MM), the value of a firm is determined by its profit.

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Kyla is a first-time entrepreneur. She started a small business a few months ago. She encounters small problems on a daily basis
harina [27]
She is highly nimble (or flexible, adaptable, or other synonyms thereof, depending on whether there are exact choices). Having various small problems each day requires one to be able to solve them quickly (before they pile up), and to be able to move from one problem to the next without spending too much time thinking of one problem.
6 0
3 years ago
The Mighty Power Tool Company has the following accounts on its​ books: Customer Amount Owed​ ($) Age​ (days) ABC ​$47 comma 150
frez [133]

Answer:

Accounts receivable more than 60 days = $39,500

% of accounts receivable = 11.07%

Explanation:

The following table shows the aging schedule-

Customer    Amount Owed​ ($) Age​ (days)

ABC               ​$47,150                   32

DEF                 37,500                     7

GHI                  18,900                   14

KLM                72,000                   28

NOP                 41,450                   43

QRS                 16,000                    11

TUV                84,300                   58

WXY               39,500                   75

We have to develop a schedule with a 15 days incremental through 60 days. And we show which customers are falling in that category -

0-15   (DEF + GHI + QRS) = $(37,500 + 18,900 + 16,000) = $72,400

16-30 (KLM) = $72,000

31-45 (ABC + NOP) = $(47,150 + 41,450) = $88,600

46-60 (TUV) = $84,300

Over 60 (WXY) = $39,500

Accounts receivable more than 60 days = $39,500

Percentage of Accounts receivable = \frac{39,500}{72,400+72,000+88,600+84,300+39,500}

= 11.07%

8 0
3 years ago
Consider that you are a salesperson for the Carpenters Motors - Range Rover dealership. A young, newly married couple enters the
Tomtit [17]

Answer:

1.Prospecting as well as qualification: After greeting walk-in customers, the salesperson must make them feel at ease by providing a comfortable location to sit and talk, as well as a drink of tea and juice, according on the period .  The pair is simply in need of a vehicle, but they are undecided on which vehicle to purchase.

2.Preparation: I understand everything there is to know regarding my products, as well as the competing goods in the category, which I carry in my selling kit. Basic information such as engine size, mileage, guarantee, technological specifications, finance alternatives, servicing terms, and comfort data are tabulated and maintained in my sales kit for quick reference.

3. Approach: I use a step-by-step approach with them. During the initial conversation, I gathered that the necessity was for a high-end automobile, and that financing was not a problem or worry for them. They're seeking for a vehicle that'll keep them safe and pleasant

8 0
3 years ago
Southwest Pediatrics has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $116,000; All
Vilka [71]

Answer:

Bad Debt expense = Allowance for uncollectible debit + (Estimated uncollectibles)

= 1,900 + (15% * 116,000)

= $‭19,300‬

1.

Dec. 31 DR Bad debt expenses                                  $19,300    

                   CR Allowance for Uncollectable                            $19,300

2. Balance Sheet;

= 116,000 * 15%

= $‭17,400‬

Income Statement;

= $19,300

3. Net realizable value

= Accounts receivable - Estimated uncollectibles

= 116,000 - 17,400

= $‭98,600‬

6 0
3 years ago
Cash receipts A firm has actual sales of $ 60 comma 000 in April and $ 64 comma 000 in May. It expects sales of $ 75 comma 000 i
nirvana33 [79]

Answer:

Month incurred   Amount     June     July      August

June                     75,000     37500   18,750  18,750

July                       95,000                   47,500  23,750

August                  95,000                                 47,500

                                              37,500   66,250  90,000

The expected cash receipts are:

June = $37,500

July = $66,250

August = $90,000

Explanation:

The pattern of collection of sales is that 50% are collected in the months of sales while 25% each will be collected in the following month and following 2 months. For instance, 50% of June sales are collected in June, 25% are realized in July and 25% are collected in August. 50% of July sales are realized in July and 25% are collected in August.

7 0
3 years ago
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