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Luba_88 [7]
4 years ago
5

Galt Industries has 50 million shares outstanding and a market capitalization of $1.25 billion. It also has $750 million in debt

outstanding. Galt Industries has decided to delever the firm by issuing new equity and completely repaying all the outstanding debt. Assume perfect capital markets.The number of shares that Galt must issue is closest to:A) 15 millionB) 25 millionC) 30 millionD) 40 million
Business
1 answer:
lesya692 [45]4 years ago
6 0

Answer:

Market price per share = <u>Total market capitalization</u>

                                          No of shares outstanding

                                      = <u>$1.25 billion</u>

                                           $50 million

                                      = $25 per share

Number of shares to issue to repay debts

= <u>Total value of debt</u>

  Market price per share

= <u>$750 million</u>

    $25

= 30 million shares

Explanation:

In this case, we need to calculate the market price per share by dividing the total market capitalization by the number of shares outstanding.

Thereafter, we will derive the number of shares needed to repurchase debt by dividing the value of debt by the market price per share.

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On January 1, 2020, Castaway Corp. issued 5,000 shares of preferred stock ($15 par value) at $45 per share. Each share of prefer
Anarel [89]

Answer: C. A decrease to assets for $45,000.

Explanation:

When shareholders redeem their stock, the company pays them for the redeemed stock at a certain price which in this case is $45.

The total cost of redemption is therefore:

= 45 * 1,000

= $45,000

The company uses cash to pay for this which is an asset. Assets will therefore reduce by $45,000 which is the amount of cash paid.

6 0
3 years ago
"Domingo has a health insurance policy with the following provisions: $500 deductible, $50 copay, and 80/20 coinsurance provisio
Mila [183]

Answer:

$1,150

Explanation:

Domingo first has to pay the deductible ($500), then the copay ($50) and finally he must pay for 20% of the medical expenses resulting from the accident (= $3,000 x 20% = $600). So Domingo's total expenses will be = $500 + $50 + $600 = $1,150

The deductible is a fixed amount that needs to be paid by the insured before the insurance company starts to pay its share of medical bills.

The copay is a fixed amount paid for each health care service provided.

The 80/20 provisions means that the insured is responsible for paying 20% of the medical expenses.

6 0
3 years ago
NoFly Corporation sells three different models of a mosquito "zapper." Model A12 sells for $61 and has variable costs of $43. Mo
Minchanka [31]

Answer:

See explanation

Explanation:

We first calculate weighted avg total break even point.

The formula or this is,

Total Break even = Total fixed costs / Weighted avg contribution

Weighted avg contribution = (Contribution of A12 * Weight of A12) + (Contribution of B22 * Weight of B22) + (Contribution of C124 * Weight of C124)

Contribution/ Product =

A12 = 61 - 43 = $18

B22 = 108 - 78 = $30

C124 = 413 - 316 = $97

Thus,

Weighted avg Contribution = (18*0.56) + (30*0.27) + (97*0.17) = $34.67

Total Break even = 249624/ 34.67 = 10085 units in total

Simply multiply total break even units with each products weight to calculate qty for each product to b produced.

A12 = 10085*0.56 = 5647.6 units

B22 = 10085*0.27 = 2722.94 units

C124 = 10085*0.17 = 1714.45 units

as per the sales mix.

We can also calculate how many units of each individual product are required for break even as,

A12 = 249624/18 = 13868 units

B22 = 249624/30 = 8320.8 units

C124 = 249624/97 = 2573.44 units

Hope that helps.

7 0
4 years ago
Increasing the federal tax on gasoline would cause shipping costs in the United States to​ increase:________
GalinKa [24]

Answer:

Positively

Explanation:

In the e-commerce sector, consumers would often feel the effects of an increase in Federal gas tax since the shipping cost of products they purchase would be based on the prices of gasoline.

In effect, retailers of these products would transfer the increased shipping cost of this products resulting from higher gas tax to the consumers.

7 0
3 years ago
Favorable direct manufacturing labor efficiency variances are​ ________.
Anna35 [415]
Always credits.

Have a great day! :D
8 0
3 years ago
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