1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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

You might be interested in
An express warranty is created when a seller: makes an affirmation of fact or promise concerning the goods that becomes part of
laiz [17]

Question:

An express warranty is created when a seller:

A) makes an affirmation of fact or promise concerning the goods that becomes part of the basis of the bargain.

B) uses descriptive terms as a part of the bargaining process, but the buyer does not take it into consideration when making the purchase.

C) sells goods meant for use for ordinary purposes.

D) avoids using a sample or model as the basis for the contract.

Answer:

The correct choice is A)

An express warranty is created in the contract when a supplier makes a promise concerning the goods that the buyer can hold on to as an incentive to purchase the product.

Explanation:

For example, if a consumer buys a Laptop online, but when it arrives the item is the wrong specifications, wrong color, or is dented or damaged in anyway, an <em>express warranty</em> might entitle the consumer to a refund or replacement.

This warranty usually is stated upfront prior to or during the execution of the sales transaction.

Cheers!

4 0
3 years ago
It is likely that airplane tickets will be increased by 5% each year for the next four years. The cost of the plane ticket to De
Luba_88 [7]

Answer:

The amount to save now is = $862.03 (to 2 decimal places)

Explanation:

In order to solve this, we will compute the end-of-year amounts using the 5% increase each year. This is done as follows:

Year 1 ending = $200

Year 2:

Year 2 beginning price = $200

Note that 5% increase = 5/100 = 0.05

increase in year 2 = 5% of 200 = 0.05 × 200 = 10

Year 2 new price = 200 + 10 = $210

Year 3:

beginning price = $210

increase in year 3 = 0.05 × 210 = $10.5

Year 3 new price = 210 + 10.5 = $220.5

Year 4

beginning price = $220.5

interest in year 4 = 0.05 × 220.5 = 11.025

new price in year 4 = 220.5 + 11.025 = $231.525

Next to calculate the amount needed to pay for one travel ticket per year for the next four years, we will add the prices of the tickets each year as follows:

Total amounts needed = 200 +210 + 220.50 + 231.53 = $862.03

5 0
3 years ago
Reports how much the company is worth to the owners at the
SashulF [63]
I really want to say income statement
6 0
3 years ago
Based on this research, which activity is this
Aneli [31]

Answer: conducting lectures in sustainable agriculture

Explanation: the description states that they help with environmental rights there for leading to agriculture and showing why they would support this activity

5 0
3 years ago
Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory is as follows: Product Tota
balu736 [363]

Answer:

Tatum Company

1. The carrying value of inventory at December 31, 2021, assuming the LCNRV rule is applied to individual products is:

=  $ 303,000

2. Adjusting Journal Entry:

Debit Cost of Goods Good $38,000

Credit Inventory $38,000

To write-down the value of ending inventory.

Explanation:

a) Data and Calculations:

Product   Total Cost     Total Net Realizable Value    LCNRV

101            $ 136,000        $ 108,000                           $ 108,000

102               99,000             118,000                               99,000

103               68,000             58,000                                58,000

104               38,000             58,000                                38,000

Total        $ 341,000       $ 342,000                          $ 303,000

Write-down:

Cost of inventory =    $341,000

LCNRV of inventory    303,000

Inventory write-down $38,000

8 0
3 years ago
Other questions:
  • In the T-bill secondary market the ask yield will normally be less than the bid yield. True or False
    12·1 answer
  • Kenneth, the plant manager, was talking with another manager about Brendan, the lead engineer in the corporate R &amp; D departm
    14·1 answer
  • Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance
    14·1 answer
  • Aaron is a freshman in college who has not yet decided on his major. He is thinking about majoring in operations management and
    6·1 answer
  • Wellington Corp. has outstanding accounts receivable totaling $1.27 million as of December 31 and sales on credit during the yea
    11·2 answers
  • Select the correct answer.
    15·1 answer
  • Blossom Corporation had income from continuing operations of $10,895,300 in 2020. During 2020, it disposed of its restaurant div
    9·1 answer
  • You are going to form a portfolio with stocks A &amp; B with the following information: Stock Expected Return Standard Deviation
    5·1 answer
  • Part 1 of 4
    10·1 answer
  • Juan is temporarily between jobs while searching for a new one. This type of short-term unemployment is called __________ unempl
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!