Answer:
The answer is option B. For a levered firm, flotation costs should <u>be spread over the life of a project, thereby reducing the cash flows for each year of the project.</u>
Explanation:
When a company’s securities are listed on a public exchange, there is a general saying that securities are floated on the exchange. That is how the name flotation costs came about.
Flotation is actually the costs incurred by a company in issuing its securities to public. it is also called issuance costs.
Examples of Flotation costs include charges paid to the investment bankers, lawyers, accountants, registration fees of the securities regulator and the exchange on which the issue is to be listed.
Flotation cost would vary based on several factors, such as company’s size, issue size, issue type (debt vs equity),
In summary, Flotation costs are the cost a company incurs to issue new stock making new equity cost more than existing ones.
Business analysts argue that flotation costs are a one-time expense that should be adjusted out of future cash flows in order to not overstate the cost of capital forever.
It is based on this premise that i chose option B, which states that flotation costs be spread over the life of a project thereby reducing the cash flows for each year of the project at levered firms.
Answer: <em>Clan Culture</em>
Explanation:
A clan culture is generally referred to or known as a tribe-like or family-like kind of organization environment that tend to emphasize on the consensus and also on the commonality of values and goals. Clan cultures are often viewed as a collaborative and also one of the least competitive corporate culture models which often exist in an organization.
Answer:
The money invested does not build wealth
Explanation:
Answer: The correct answer is e). 3.67%
Explanation: An ordinary annuity is a series of payments made at the end of each period.
The formula for ordinary annuity is PV = PMT × ((1 - (1 + r) ^ -n)/ r)
Where; PMT = the periodic cash payment; r = the interest rate per period; n = the total number of periods and PV = present value.
Therefore; 3500000 = 250000×((1-(1+r)^-20)/r
This will give the rate as 3.67%
Answer:
you should have 2 apple trees
Explanation:
<u>you can have</u> <u>savings</u> <u>costs</u> <u>net payoff</u>
no tree at all 0 0 0
1 apple tree $130 $100 $30
1 orange tree $90 $70 $20
1 pear tree $145 $120 $25
<u>2 apple trees $260 $200 $60</u>
2 orange trees $180 $140 $40
2 pear trees $290 $240 $50
1 apple + 1 pear tree $275 $220 $55
1 apple + 1 orange tree $220 $170 $50
1 orange + 1 pear tree $235 $190 $45
