Pretty sure it’s B since Marcos is using cash
Answer:
5. They are all neccessary
Answer: See explanation
Explanation:
First we will have to calculate the value of the firm before the debt issue. This will be:
= 25,000,000 × $10
= $250,000,000
We also calculate the value of the firm after after the proposed capital structure change. The value of equity will be:
= $250,000,000 - $160,000,000
= $90,000,000
Therefore, the value of debt will also be $160,000,000.
Answer:
Arbitrage
Explanation:
Arbitrage occurs when the same good sells for different prices at different market. This price difference allows market participants to earn riskless profit .
In this case, the generator is more expensive in South Carolina when compared with other places. Thus, in order to earn riskless profit, people would buy where it is cheaper and sell at South Carolina where it is more expensive.
Economic theory suggest that if this kind of buying continues, soon the prices would be the same in both markets .
I hope my answer helps you
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
