Answer:
a. measure the amount of debt the firm uses.
Explanation:
In simple words, the debt management stated the management of the debt that reflects the agreement with the unsecured creditors stating the time period. It usually happens with a motive for an extended period of time, so that he or she can have more time to repay their debt.
After extending the time period, the payment is made on the installment on a regular basis to the company that manage the debt.
Answer:
$89.32
Explanation:
For computing the ex-dividend price, first we have to determine the after-tax dividend which is shown below:
After-tax dividend would be
= Dividend per share × (1 - tax rate)
= $6.60 × (1 - 0.20)
= $5.28
Now the ex-dividend price would be
= Sale price of stock - after-tax dividend
= $94.60 - $5.28
= $89.32
Hence, we considered all the information which is mentioned in the question.
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Answer:
Explanation:
a.)
Given the different probabilities with their respective returns, you will find the firm's expected return using the following formula;
return; r = SUM (probability *expected return)
The formula above means that you multiply each probability by return , then sum the results.
r = (0.25*0.10) +(0.50*0.15) + (0.25*-0.02)
r = 0.025 +0.075 -0.005
r = 0.095 or 9.5%
Therefore, the correct answer is 9.5%. The choices given do not apply.
b.)
Use the Capital Asset Pricing Model(CAPM) formula to calculate the required return. Additionally, since we have inflation rate, adjust the formula to that inflation rate since investors would require a high rate to compensate for it.
Inflation adjusted CAPM required return; r = risk free + inflation + beta(Market return - risk free)
r = 0.045 + 0.03 + 1.50(0.11 - 0.045)
r = 0.075 + 0.0975
r = 0.1725 or 17.25%
Therefore, the required rate is 17.25%
