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marshall27 [118]
3 years ago
15

Suppose that your firm's current unlevered value, V*, is $800,000, and its marginal corporate tax rate is 35 percent. Also, you

model the firm's PV of financial distress as a function of its debt level according to the relation: PV of financial distress = 800,000 × ((D/V*)^2). What is the firm's levered value if it issues $200,000 of perpetual debt to buy back stock?
Business
1 answer:
max2010maxim [7]3 years ago
3 0

Answer:

$820,000

Explanation:

The computation of the firm's levered value is shown below:

Value of levered firm = Value of unlevered firm + Debt × tax -PV (financial distress)

Value of levered firm = $800,000 + $200000 × 35% - $800,0000 × (25%)^2

= $820,000

The 25% is come from

= $200,000 ÷ $800,000

= 25%

We simply applied the above formula to determine the levered value

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Answer:

The answer is option  C) Managers find operation costing useful in cost management because​ it uses job costing to account for the conversion costs and process costing for the material and customizable components.

Explanation:

Operation costing is a mix of job costing and process costing,

In Process Costing, each process or stage of production is costed separately. while Job costing is used to calculate and assign the total cost of materials, labor, and overhead of a specific job.

The manufacture of a product may consist of several operations. In Operation Costing, costs are collected for each operation instead of each process or stage of manufacture.

Therefore, Managers find operation costing useful in cost management because​ it uses job costing to account for the conversion costs and process costing for the material and customizable components.

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3 years ago
The trial balance for Swifty Corporation appears as follows:
Shkiper50 [21]

Answer:

Explanation:

The adjusting entry for supplies is shown below:

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Which type of small store carries a limited line of high-turnover convenience goods and makes most of its revenues from cigarett
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Assume for this question that herman has 55 employees. when herman asks sally about jake's ability to see, what would be conside
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Learn more about the soup business at

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