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Nitella [24]
3 years ago
9

When a firm changes its capital structure by issuing or retiring debt, for example, this change alters the firms unlevered free

cash flow.True / False.
Business
1 answer:
liubo4ka [24]3 years ago
7 0

Answer:

True

Explanation:

Unlevered free cash flows represent the amount of cash a business has before meeting it's financial obligations such as operating expenses or periodic interest payments on borrowed funds.

When a firm issues further debt, it's available funds increase. Similarly, if a firm retires or repays it's debt, it's available funds decrease.

Therefore, change in capital structure by issue or retirement of debt alters a firm's unlevered free cash flows.

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While it sounds reasonable that companies should focus on making the products it knows how to make really well, one downside of
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Customer may not want the product which the company is making well.

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The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking u
icang [17]

Answer:

A) NPV= - $428,888.89 B) Company would break Even if g = 5.68%

Explanation:

Hi, we have to bring to present value all the inflows and outflows of cash, this is the formula to use and the math of it.

NPV=-Invesment+\frac{CashFlowYr1}{(return-growth)}

NPV=-1440000+\frac{91000}{(0.12-0.03)} = -428888.89

The question says that "at what constant growth rate would the company just break even..." and well, a NPV=0 is not precisely break even, actually, it means that the company is obtaining exactly what is asking for any investment, but let´s assume that the question was, what should the growth rate be for the company to accept this project?. So we have to solve the first equation for "g", that is:

g=\frac{(Invesment*return-CashFlowYr1)}{Invesment} =\frac{(1440000*0.12-91000)}{1440000} =0.0568

So the constant growth rate has to be at least 5.68% for the company to accept this project (NPV=0)

Best of luck

6 0
3 years ago
If the Fed increases the discount rate, which of the following accurately describes the system, finally leading to a decline in
AnnyKZ [126]

Answer:

B

Explanation:

Reserves J: Excess reserves J: Loans J: Deposits ;Money supply

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