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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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In reviewing the Indian software industry and the diamond of national advantage, which of the following is a relatively weak set
Dima020 [189]

U.S. demand conditions.

Answer: Option B.

<u>Explanation:</u>

Since the question is about the domestic demand and the demand of the citizens who are living in the country, the demand of the people who are living in the United States of America should not affect the domestic demand of Indian citizens.

The demand of every good and service is affected by some factors which increase or decrease the demand of these goods and the services. But the demand of the international consumers or customers will not affect the demand of the national goods and services.

3 0
3 years ago
Portions of the financial statements for Myriad Products are provided below. MYRIAD PRODUCTS COMPANY Income Statement For the Ye
Tamiku [17]

Answer:

$233 million

Explanation:

                      Statement of cash flow

              Cash flow from operating activity

Particulars                                                 Amount ($ in millions)

Net income                                                 113

<em>Adjustment in net income</em>

Depreciation                                   72  

Amortization                                    5

Loss on sale of land                        3

Decrease account receivable       14  

Decrease inventory                       12

Increase account payable             8

Decrease salary payable              (8)

Increase interest payable              7

Increase income tax payable        7           <u>120</u>

Net cash flow from operating activity     <u>233</u>

6 0
2 years ago
416,000 people each receive an average refund of $3,600, based on an interest rate of 3 percent, what would be the lost annual i
victus00 [196]

Answer:

$44,928,000

Explanation:

The fact that 416,000 received a refund of $3,600 each means that the tax authority would lose the interest income that could have been generated on the total refund amount based on a 3% interest rate of return.

Lost annual income=number of people who got refund*average refund per person*interest rate of return

number of people who got refund=416000

average refund per person=$3,600

the interest rate of return=3%

Lost annual income=416,000*$3,600*3%

Lost annual income=$44,928,000  

6 0
3 years ago
Moira Company has just finished its first year of operations and must decide which method to use for adjusting inventory account
Scrat [10]

Answer:

The Cost of good sold will decrease by 10,000

The other accounts balance will be the same.

<em>Missing Information:</em>

Ending balances in the relevant accounts were:

Work-in-Process            40,000

Finished Goods             80,000

Cost of Goods Sold     680,000

Explanation:

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This was charged into finished good which latter become cost of goods sold.

Then, as the actual overhead was 425,000 we have to adjust for the over-applied overehad. We applied more than it cost so we have to reduce it.

435,000 - 425,000 = 10,000

<u>We will decrease our COGS against the factory overhead account.</u>

COGS 10,000 debit

  factory overhead 10,000 credit

8 0
3 years ago
Create a cash flow statement for your own finances. Why are cash flow statements useful in managing money?
trapecia [35]
Answer:

Cash flows tell us about the company’s actual outflows and inflows of cash in particular period such as quarter or year or others. This very important for business as cash flow from main operations helps the company to see whether they are generating enough to invest in growth projects or not.
7 0
2 years ago
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