Answer:
The value of the levered firm $31,125
Explanation:
Value of Firm is the value of present value of expected future earning. It is calculated by dividing the earning after tax by the cost of capital while considering that the business will operate for the foreseeable future time.
EBIT $4,250.00
Less
Interest <u>$0.00 </u>
EBT $4,250.00
Tax 35% x 4250 <u>$1,487.50</u>
EAT <u>$2,762.50</u>
Cost of Capial 10%
Value of firm = EAT / Cost of Capital = $2,762.5 / 10% = $27,625
Debt after tax = $10,000 x ( 1 - 0.35 ) = $6,500
Value of Equity = Value of firm - Debt after tax = $27,625 - $6,500 = $21,125
Value of debt = $10,000
Value of levered Firm = $21,125 + $10,000 = $31,125
What distinguishes an outsourcing arrangement from any other business arrangement is the transfer of ownership of an organization’s business activities (processes or functions)-or the responsibility for the business outcomes flowing from these activities-to a service provider. In a typical outsourcing arrangement, the people, the facilities, the equipment and the technology (the Factors of Production) are also transferred to the service provider, which then uses the Factors of Production to provide the services back to the organization. The people are often transferred to the service provider, but this is not always the case.
An outsourcing arrangement can be either “tactical” or “strategic.” An outsourcing is tactical when it is driven by a desire to solve a practical problem. For example, a company may find that its payroll clerk is not able to process payroll changes, cheques, tax returns and make the required accounting entries on time. The company concludes that although the payroll clerk is competent, there is too much work for a single person. The company outsources the payroll process (including the clerk), and ends up with all of the payroll work done on time and at a lower cost. As a result, it achieves a net gain in operational efficiency. Similarly, if an organization outsources its IT infrastructure so it can save five to 10 per cent on the cost of operating that function, the outsourcing is purely tactical.
“Strategic” outsourcing, on the other hand, is not driven by a problem-solving mentality. Instead, it is structured so that it is aligned with the company’s long-term strategies. The changes that organizations expect from strategic outsourcing vary and can include anything from
Answer:
Portal
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Answer:
C. Movement to the left along a given aggregate demand curve
Explanation:
Demand is the quantity of a good or service consumers are willing to buy at a given price over a given period of time. Price and demand tend to have a negative relationship. As price of a product increases, demand decreases as it is now more expensive and less affordable. On the other hand, when price decreases, demand increases as it is now cheaper than before.
To answer the question, as the price of a product increases, the quantity demanded falls, hence causing the leftward movement along the demand curve. A fall in price on the other hand, will cause a rightward movement along the demand curve.
Any other factor other than price such as a change in population, availability of substitutes and price of complementary products can cause a shift in the demand curve. If the factor is favorable, it causes a right-hand shift and if it is unfavorable, it causes a left-hand shift.
