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Kitty [74]
3 years ago
15

Blueline Publishers is considering a recapitalization plan. It is currently 100% equity financed but under the plan it would iss

ue long-term debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change the company's total assets, nor would it affect the firm's basic earning power, which is currently 15%. The CFO believes that this recapitalization would reduce the WACC and increase stock price. Which of the following would also be likely to occur if the company goes ahead with the recapitalization plan?
The company's earnings per share would decline.

The company's cost of equity would increase.

The company's ROA would increase.

The company's ROE would decline.

The company's net income would increase.
Business
1 answer:
BaLLatris [955]3 years ago
4 0

Answer:The company earning per share will decline

Explanation:

This will be as a result of increased expenses from interest payment on the long term debt which reduces earning available for distribution which itself still remains unchanged , at 15% . The numbers of shareholders that will share the left over earnings have also increased compared to last year.

You might be interested in
d $22000 for her dream vacation. If she is able to earn 9% per annum on an investment, how much will she need to set aside at th
DENIUS [597]

Answer:

The question is incomplete, the complete question is:

Jane wants to set aside funds to take an around the world cruise in four years. Jane expects that she will need $22000 for her dream vacation. If she is able to earn 9% per annum on an investment, how much will she need to set aside at the beginning of each year to accumulate sufficient funds?

= $22000 / (4.50611 × 1.09)

= 22000 / 4.911

=$4479

She need to set aside $4479 at the beginning of each year to accumulate sufficient funds for the world tour.

6 0
3 years ago
If a cable news channel decides to report on a senator's financial indiscretions rather than report on a piece of congressional
bagirrra123 [75]

Answer:

e. Agenda Setting

Explanation:

Agenda setting refers to a practice adopted by news channels to place higher emphasis on a news, and making it appear important by consistently and repetitively covering such news.

Such a practice influences an individual's thoughts not with what he/she thinks, but what he/she should think about and consider important.

Through such a practice, the news channels underline the extent to which an issue is important i.e assign significance and importance to an issue by affecting the perceptive mindset of the viewer.

So if a political issue gets covered and getting telecast too frequently, it affects the viewers interpretation regarding the sensitivity or significance of the issue.

Many a times, through agenda setting, the media indirectly feeds it's own biased views in the thought process of the viewers. So rather than making the viewer think on his own and assign weight-age, the media itself assigns importance to an issue.

In the given case, the cable news channel preferred the topic of senator's financial indiscretion over a congressional legislation which wasn't passed. So the channel emphasized upon one issue which as per it was more important than the other and thus follows agenda setting.

6 0
3 years ago
When the Federal Reserve decreases bank's reserves through an open-market operation: ____________
Sedbober [7]

Answer:

d. the monetary base decreases, loans decrease, and the money supply decreases.

Explanation:

In the case when the federal reserve reduce the reserve of the bank via open market operation so it would be resulted in decrease in the monetary base, reduction in the loan and the reduction in the money supply. Overall, all three things would be decrease

Therefore as per the given situation, the option d is correct

And the same would be  relevant

8 0
3 years ago
An economist conducted a study of the possible association between weekly income and weekly grocery expenditures. The particular
krek1111 [17]

The answer cannot be determined from the information provided.

Answer: Option B.

<u>Explanation:</u>

A linear regression line has an equation in the form Y = a + bX, where X stands for the explanatory variable and Y is used to denote the dependent variable in the equation. The slope of the line is b, and a is the intercept (the value of y when x = 0).

A regression line (LSRL - Least Squares Regression Line) is a straight line that explains how a dependent variable y changes as an explanatory variable x changes. The line is a mathematical model used to predict the value of y for a given x. Regression requires that we have an explanatory and response variable.

4 0
3 years ago
Two of the economy’s most important financial intermediaries are
svet-max [94.6K]

Answer:

d. banks and mutual funds.

Explanation:

Financial intermediaries are bodies or individuals that connect surplus and deficit agents. These institutions serve as middlemen among diverse parties in financial transactions. These include banks, mutual funds, pension funds, building societies etc. Banks and mutual funds are two of the economy's most important financial intermediaries.

6 0
3 years ago
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