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Nata [24]
3 years ago
11

Round Hammer is comparing two different capital structures: An all-equity plan (Plan l) and a levered plan (Plan Il). Under Plan

I, the company would have 205,000 shares of stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding and $1.73 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. Use M&M Proposition I to find the price per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the value of the firm under each of the two proposed plans?
Business
1 answer:
Dominik [7]3 years ago
6 0

Explanation:

A). The computation of price per share is shown below:-

Debt outstanding ÷ (Stock outstanding of Plan 1 - Stock outstanding of

Plan 2)

= $1,730,000 ÷ (205,000 - 125,000)

= $21.63 per share

B a.) Under equity plan the value is

= Debt outstanding × Stock outstanding of Plan 1

= $21.63 × 205,000 shares

= $4,433,125

B b.) under the levered plan the value is

Price per share × Stock outstanding of Plan 2 + Debt outstanding

= $21.63 × 125,000 shares + $1,730,000

= $2,703,125 + $1,730,000

= $4,433,125

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The federal funds rate is the interest rate that banks charge one another for short-term (typically overnight) loans. When the F
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Answer: decreases

                                                                         

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g When a company’s resources are valuable, rare, imperfectly imitable, and nonsubstitutable, it has a . Necessary to sustain a c
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Rare resources

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A sample consensus formula for fluid replacement recommends that a balanced salt solution be administered in the first 24 hours
sp2606 [1]

Answer:

A 176-lb (80-kg) man with a 30% burn should receive a minimum of 2,400 ml of fluid replacement in the first 8 hours

The answer is option b. 2,400 ml

Explanation:

<em>Step 1: Determine total minimum ml per percentage of burn</em>

Minimum ml per kg=2 ml

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Total minimum ml to be administered per percentage of burn=minimum ml per kg×weight of the man

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<em>Step 2: Determine total minimum ml  in the first 24 hours</em>

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<em>Step 2: Determine total minimum ml  in the first 8 hours</em>

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