Answer:
$696400
Explanation:
The values given are as follows:
Tax rate= 21%, 21/100= 0.21
Equity cost= 11.1%
Value of Unlevered Firm= $625,000
Rate at which Tantum can borrow=6.7%, 6.7/100=0.067
Amount of value if the company ends up borrowing=$340,000
Value of levered Firm =?
The formular for finding the value of levered Firm is:
Value of Unlevered Firm + Tax Rate * Debt
=$625,000 + 0.21 *$340,000
= $625,000 + $ 71,400
= $ 696,400
Thus, the value of levered firm is $696,400.
Answer:
7.28%
Explanation:
Using the dividend discount model
where P = price
g = growth rate
r = market rate of return
Therefore, becomes,
= r = (1.80 * 1.04)/25.71
= r = market rate of return = 7.28%
Answer: $65 million
Explanation:
The Free Cash Flow will be calculated as:
= EBIT(1-t) + Dep & Amortisation- Changes in Working Capital- Capital Expenditure
= 250(1-30%) + 100 - 200 - 10
= 250(0.7) + 100 - 200 - 10
= 175 + 100 - 210
= $65 million
Answer:
Explanation:
a. The computation of the income from operations is shown below:
= Sales revenue - Cost of goods sold - Selling and admin expenses
= $310,000 - $140,000 - $50,000
= $120,000
b. The computation of the net income is shown below:
= Income from operations + Gain on sale of plant assets - interest expenses - Loss on discontinued operations
= $120,000 + $30,000 - $6,000 - $12,000
= $132,000
c. The computation of the comprehensive income is shown below:
= Net income + unrealized holding loss on these securities
= $132,000 + $10,000
= $142,000
d. The computation of the ending retained earning balance is shown below:
= Net income - Dividends declared and paid
= $132,000 - $5,000
= $127,000
Answer:
50% share.
Explanation:
Given:
There are only three firms in a market.
The largest firm has sales of $500 million.
The second-largest has sales of $300 million.
The smallest has sales of $200 million.
Question asked:
The market share of the largest firm is ?
Solution:
As we know:
Total sales of the largest company = $500 million.
Total sales of the market = Sales of largest firm + Sales of second largest firm+ Sales of smallest firm
Total sales of the market = $500 million + $300 million + $200 million
= $1000 million
Therefore, the market share of the largest firm is 50%.