Answer:
a) Share price of company is $28.20.
b) So value of unlevered firm is $4.512 million.
Explanation:
a.
Share price = Value of debt / (160,000 - 110,000)
= $1,410,000 / 50,000
= $28.20
Share price of company is $28.20.
b.
VAlue of all equity firm = Number of share outstanding × Price per share
= 160,000 × $28.20
= $4.512 million
Value of levered firm is $4.512 million.
Since tax rate is zero, so value of levered firm equal to value of unlevered firm.
So value of unlevered firm is $4.512 million.
He may be liable for<u> "damages, fines, or imprisonment."</u>
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Answer:
0.17
Explanation:
The computation of the expected return on investment is shown below:
= (Expected return of the outcome 1 × Probability of the outcome 1) + (Expected return of the outcome 1 × Probability of the outcome 1) + (Expected return of the outcome 1 × Probability of the outcome 1)
= (0.15× 0.50) + (0.25 × 0.30) + (0.10 × 0.20)
= 0.075 + 0.075 + 0.02
= 0.17
Answer:
The correct answer is option B, C, and E.
Explanation:
Transaction cost refers to the cost incurred on resources and time necessary for facilitating exchange of goods and services.
Among the given options, the examples of transaction cost is cost of monitoring an agreement, the cost of drafting a contract or agreement, and the time required to negotiate an agreement.
All these costs are incurred in order to facilitate exchange of goods and services.
The problem of externalities can have efficient private solution if these transaction costs are low otherwise the governement has to intervene to efficiently allocate resources.
