Answer:
• Degree of operating leverage = $2
• Expected Percent change in income = 20%
Explanation:
Details provided from the question includes ;
Total contribution margin = $80,200
Pretax net income = $40,100
Expected increase in sales value = 10%
Therefore;
Degree of operating leverage
= Contribution margin ÷ Net operating income
= $80,200 ÷ $40,100
= $2
Percent change income
= Percentage increase in sales × Degree of operating leverage
= 10% × 2
= 20%
Answer: SEE EXPLANATION
Explanation:
Given the following ;
Values depending on Success
$150M, $135M, $95M, $80M
Risk free rate = 5% = 0.05
Pervebtage to be lost in case of bankruptcy = 25% = 0.25
A.) 0.25 × [( 150 + 135 + 95 + 80) ÷ 1.05] = $109.52 million
Assume a zero-coupon debt with a $100million face value
B.) 0.25 × [( 100 + 100 + (95×0.75) + (80×0.75)) ÷ 1.05] = $78.87 million
C.) Yield to maturity (YTM)
(100M÷78.87M) - 1
1.2679 - 1 = 0.2679 = 26.79%
Expected return = 5%
D.) Equity value
0.25 × [( 150 + 135 + (95×0.75) + (80×0.75)) ÷ 1.05] = $99.11 million
E.) share if no debt is issued
109.52 ÷ 10 = 10.95 per share
F.) Share price if debt of $100M is issued
99.11 ÷ 10 = 9.91 per share
The price differs because bankruptcy cost will Lower the share price.
Answer:
i a depreciation of its currency;
Explanation:
A flexible exchange rate is when exchange rate is determined by the forces of demand and supply.
an expansionary monetary policy is a policy where the monetary authorities increase the money supply in the economy.
If exchange rate is flexible and an expansionary monetary policy is carried out, the supply of money would exceed its demand. as a result, the value of money would fall. this is known as depreciation
Answer:
d. equals the dollar amount of outstanding U.S. Treasury bonds
Explanation:
The National debt is entirely represented by the total dollar amount of outstanding U.S. Treasury bonds, both those bonds that are held by the public (private citizens), or by other governments.
Currently, the U.S. National Debt is over 24 million, and the amount of debt that can be issued in the form of U.S. Treasury bonds is limited by the national debt ceiling.
