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Scorpion4ik [409]
3 years ago
10

A firm with no debt has 200,000 shares outstanding valued at $20 each. Its cost of equity is 12%. The firm is considering adding

$1 million in debt to its capital structure. The coupon rate would be 8% and the bonds would sell for par value. The firm's tax rate is 34%. How much will the firm be worth after adding the debt? A) $4.033 million B) $4.180 million C) $4.340 million D) $4.660 million E) $5.000 million
Business
1 answer:
Kipish [7]3 years ago
7 0

Answer:

Option (C) is correct.

Explanation:

Given that,

No. of shares = 200,000

Market value per share = $20 each

Tax rate = 34%

Debt amount = $1,000,000

Market value of firm:

= Market value of equity + (Tax rate × Debt)

= (No. of shares × market value per share) + (Tax rate × Debt amount)

= (200,000 × $20) + (0.34 × $1,000,000)

= $4,000,000 + $340,000

= $4,340,000

= $4.340 million

The firm be worth after adding the debt is $4.340 million.

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antoniya [11.8K]

The behavior of the United States to block China's chip research was to encourage its industries to develop theirs.

<h3>What led to U.S. decision?</h3>

Aftermath of the ban of United states platform in China has led to numerous backlashes from the U.S. authorities as well.

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2 years ago
Neoclassical economists believe that economic growth can be achieved through the increase in the potential level of GDP. This ca
11111nata11111 [884]

Answer:

The correct answer is the option D: All of the above.

Explanation:

To begin with, the neoclassical theory of economic growth is considered to be one of the most well known and important theory in the economics sciences due to the fact that it establishes how the economy can grow and more important what are the key factors that need to be affect in order to that growth happens. Moreover, it states that a steady growth rate can be achieved only by the combination of three major factors that are: the labor, the capital and the technology. That is why that with the purpose to increase the GDP there will be a need in rise the productivity through an investment in human capital, in physical capital and in technology as well.

7 0
3 years ago
In September 2017, Gaertner Corp. commits to selling 150 of its iPhone-compatible docking stations to Better Buy Co. for $15,000
Liono4ka [1.6K]

Answer:

Journal Entries

Dr. Cost of Station supply...($54 x 90 stations)....$4,860

Cr. Inventory of station supplies..........................................$4,860

Dr. Cash...........................................................................$9000

Cr. Supply of Stations.....($100 x 90).....................................$9,000

Explanation:

(a)

Prepare the journal entry for Gaertner for the sale of the first 90 stations. The cost of each station is $54.

Journal Entries

Dr. Cost of Station supply...($54 x 90 stations)....$4,860

Cr. Inventory of station supplies..........................................$4,860

Dr. Cash...........................................................................$9000

Cr. Supply of Stations.....($100 x 90).....................................$9,000

(b)

Prepare the journal entry for the sale of 10 more stations after the contract modification, assuming that the price for the additional stations reflects the standalone selling price at the time of the contract modification. In addition, the additional stations are distinct from the original products as Gaertner regularly sells the products separately.

<u>Journal Entries</u>

Dr. Cost of Station supply...($54 x 10 stations)....$540

Cr. Inventory of station supplies...................................... $540

Dr. Cash.........................................................................$950

Cr. Supply of Stations.....($95 x 10)....................................$950

(c)

Prepare the journal entry for the sale of 10 more stations (as in (b)), assuming that the pricing for the additional products does not reflect the standalone selling price of the additional products and the prospective method is used.

<u>Journal Entries</u>

Dr. Cost of Station supply...($54 x 10 stations)....$540

Cr. Inventory of station supplies........................................ $540

Dr. Cash.......................($95 x 10)...............................$950

Dr. Supply discount..($5 x 10 stations).....................$50

Cr. Supply of Stations.....($100 x 10)....................................$1000

5 0
3 years ago
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Tatiana [17]

Answer:

Option C, fall which by itself would decrease aggregate demand, is the right answer.

Explanation:

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65% of 70 what is the answer to this equation?
iren2701 [21]

Answer:

65% of 70 is 45.5

4 0
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