Answer:
principal-agent problem
Explanation:
In a corporation, the principal-agent problem refers to conflict of priorities that exist between the shareholders and the management. Management has the duty of increasing the corporation value, and therefore increasing the shareholders' wealth. But sometimes, management makes decisions that benefit them more than the shareholders. This conflict of interest can be really dangerous for a corporation, since managers may safeguard their own personal interests and sacrifice the corporation's future value.
I believe the correct answer is Bachelor’s Degree
Answer:
Results are below.
Explanation:
Giving the following information:
Inflation rate= 7%
Real rate of return= 10%
Present value (PV)= $10,000
Number of periods (n)= 10 years
<u>The real rate of return incorporates the effect of the inflation rate. Therefore, the nominal rate of return:</u>
Nominal rate of return= 0.1 + 0.07= 17%
<u>To calculate the Future Value, we need to use the following formula:</u>
FV= PV*(1 + i)^n
FV= 10,000*(1.17^10)
FV= $48,068.28
This is the n<u>ominal valu</u>e received after ten years.
<u>If Sally wants to determine the real value of the investment after 10 years, we must use the real rate of return:</u>
<u></u>
FV= 10,000*(1.1^10)
FV=$25,937.42
Answer:
B) Children’s clothing only
Explanation:
cost of the expansion $148,000
three mutually exclusive projects:
- NPV $221,000 for children’s clothing ≥ $148,000 (initial investment)
- NPV $178,000 for exclusive gifts ≥ $148,000 initial investment
- NPV $145,000 for decorator items ≤ $148,000 initial investment
The projects whose NPV is positive should be considered (this eliminates decorator items)
Since the projects are mutually exclusive, only one can be chosen. So the project with the highest NPV is the best project for the store ⇒ children's clothing
Answer:
$587,500
Explanation:
You are required to calculate the value of the levered firm;
vL = vU + Dt, whereby;
vL = Value of levered firm
vU = value of unlevered firm
Dt = debt * tax ; which is the tax shield
Find value of unlevered firm;
vU = [EBIT(1-tax) ]/ rE
= [100,000(1-0.30)] / 0.16
= 437,500
Value of levered firm;
vL = 437,500 + (500,000*0.30)
= 437,500 +150,000
= $587,500
