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Veseljchak [2.6K]
3 years ago
12

Charisma, Inc., has debt outstanding with a face value of $6.2 million. The value of the firm if it were entirely financed by eq

uity would be $29.9 million. The company also has 425,000 shares of stock outstanding that sell at a price of $58 per share. The corporate tax rate is 22 percent. What is the decrease in the value of the company due to expected bankruptcy costs
Business
1 answer:
Alenkinab [10]3 years ago
7 0

Answer:

Decrease in value of company due to expected bankruptcy cost = $414,000

Explanation:

As per the data given in the question,

According to M & M proportional I with taxes,

Levered firm value is = Equity + Debt

= $29,900,000 + 0.22 × $6,200,000

= $31,264,000

Market value of the firm = market value of debt + market value of equity

= $6,200,000 + 425,000 × $58

= $30,850,000

Decrease in value of company due to expected bankruptcy cost = $31,264,000 - $30,850,000

= $414,000

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Answer:

Return on Investment is an measure of corporate efficiency that is used by investors are other to estimate how well the company has gained profits and returns for their investments.

ROI makes it easier to compare companies in the same industry and it also can be used to compare the return on investments of a company over a period of time.

It is calculated by dividing the Earnings Before Interest, Tax and Depreciation by Investments amount.

the easiest way for comparing is to take them as a percentage. this way, it becomes simple to compare them quickly and easily.

Explanation:

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The factor that the salary hike effect is :
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B. Consider an outright acquisition.

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Currency held outside banks is $200 billion, money market mutual funds (retail) are $10 billion, small-denomination time deposit
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M2 = $470 billion.

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Your grandparents put $10,200 into an account so that you would have spending money in college. You put the money into an accoun
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