Answer:
2250
Explanation:
Assumption: <u>Par value of the bonds to be issued is $1000 </u>
Current Capital structure is 100% equity financed of Dirty Don's Bicycle Shop.
Share capital of Dirty Don's bicycle shop = 1,00,000 shares × $50
= $5000000
After restructuring, the capital structure shall comprise of 45% debt and 55% equity.
Hence, the proportion of debt = 45% of $50,00,000 = $22,50,000
Assumed: par value of bond is $ 1000
In this case, the number of bonds to be sold = = 2250 bonds
Thus, 2250 bonds will have to be sold at $1000.
Bonds refer to debt instruments whereby the borrower raises long term finance in exchange for making periodic coupon payments in the form of interest and principal repayment upon date of maturity.
Answer:
$1.07
Explanation:
The marginal cost measures the change in total cost of adding on more worker divided by the change in product for this additional worker (marginal product of labor). When adding one more worker, costs will increase by $80 (wage rate), while product will increase by 75. Therefore, the marginal cost is:
The marginal cost is $1.07.