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3 years ago

Without effective due diligence the

Business

1 answer:

gtnhenbr [62]3 years ago

5 0

Answer:

b. acquiring firm is likely to overpay for an acquisition.

Explanation:

Due diligence is the process of carefully evaluating a business from different perspectives before making a buy decision. It is a measure of prudence before committing to the acquisition process. Due diligence will involve scrutiny of legal aspects and financial status of a business.

From a legal point of view, due diligence will check legal impediments such as licensing. Other legal documents to review include employee and business contracts. Financial aspects of due diligence involve verification of the accuracy of financial statements as presented by the seller.

Sellers are likely to overstate the worth of a business to attract buyers. Their instances where sellers fail to disclose liabilities. Lack of conducting due diligence will lead to the acquisition of an overpriced entity.

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Assume that the expected future dividends (D) at end of periods 1,2, and 3, as well as the expected future price (P) at end of p

MariettaO [177]

Answer:

$66.9725

Explanation:

Data provided in the question:

Dividend:

D1 = $1.20

D2 = $1.40

D3 = $1.55

Expected future price, P3 = $82

Required return = 8.9 percent = 0.089

Now,

Stock price today = Present value of dividends and the future value

Stock price today = $\frac{1.20}{(1+0.089)}+\frac{1.40}{(1+0.089)^2}+\frac{1.55}{(1+0.089)^3}+\frac{82}{(1+0.089)^3}$

Stock price today = 1.1019 + 1.1805 + 1.2001 + 63.49

Stock price today = $66.9725

8 0

3 years ago

The abrupt end of long distance cattle drives in 1885 was primarily due toa. the development of railroad cars that could haul ca

vladimir1956 [14]

Answer:

a. the development of railroad cars that could haul cattle.

Explanation:

The abrupt end of long distance cattle drives in 1885 was primarily due to the development of railroad cars that could haul cattle.

It was the advent of expanding rail road lines that terminated the cattle drive through Kansas because the end points of the cattle trail shifted to meet expanding railroad lines.

It was logical that as the railroads expanded to meet the cattle drive, one had to give way to the other because cattle do stray and trains could haul cattle

8 0

3 years ago

The interest rate on short-term U.S. government bonds is 4 percent. The risk premium for any asset with a beta = 1.0 is 6 percen

Basile [38]

Answer:

The average expected rate of return on the market portfolio is 10 percent.

Explanation:

The CAPM (fixed asset pricing) model describes the relationship between systematic risk and expected return on assets, especially stocks. CAPM is widely used throughout the financial community to value high-risk securities and achieve the expected returns on assets when taking into account the risk of those assets and the cost of capital.

The formula for calculating the expected return on an asset taking into account its risk is as follows:

ERi = Rf + βi (ERm - Rf)

where:

ERi = expected return on investment

Rf = risk-free interest rate = 4 percent.

βi = beta inversion =1.0

(ERm −Rf) = market risk premium = 6 percent.

ERi = 4 + 1 ×(6) =10

The average expected rate of return on the market portfolio is 10 percent.

6 0

3 years ago

Assets Liabilities and Net Worth Reserves $51 Checkable Deposits $140 Loans 109 Stock Shares 130 Securities 100 Property 10 Refe

erastovalidia [21]

Answer:

$9 billion

Explanation:

Calculation to determine what The commercial banking system has excess reserves of

Using this formula

Excess Reserve= Net Worth Reserves -Required reserve

Let plug in the formula

Excess Reserve=$51 billion - (.30*$140 billion)

Excess Reserve=$51 billion-$42 billion

Excess Reserve=$9 billion

Therefore The commercial banking system has excess reserves of $9 billion

5 0

3 years ago

Use the following items to determine the toata assets ,total liabilities , net worth , total cash inflows and total cash outflow

kicyunya [14]

Answer:

Determining the total assets, total liabilities, net worth, total cash inflows, and total cash outflows:

1. Total assets

Cash in checking account $ 450

Savings account balance $ 1,890

Current value of automobile $8,800

Household possessions 3,400

Video equipment $ 2,350

Personal computer $ 1,200

Value of stock investment 860

Total assets $18,950

2. Total liabilities

Rent for the month $ 650

Balance of educational loan 2,160

Credit card balance $ 235

Total liabilities $3,045

3. Net worth

Total assets $18,950

Total liabilities ($3,045)

Net worth $15,905

4. Total cash inflows

Monthly take-home salary $ 2,185

5. Total cash outflows

Spending for food $ 345

Telephone bill paid for month 65

Loan payment 80

Auto insurance $ 230

Payment for electricity 90

Lunches/parking at work $ 180

Donations 160

Clothing purchase $ 110

Restaurant spending 130

Total cash outflows $1,390

Explanation:

a) Data and Calculations:

Rent for the month $ 650

Monthly take-home salary$ 2,185

Spending for food $ 345

Cash in checking account$ 450

Savings account balance $ 1,890

Balance of educational loan 2,160

Current value of automobile $8,800

Telephone bill paid for month 65

Credit card balance $ 235

Loan payment 80

Auto insurance $ 230

Household possessions 3,400

Video equipment $ 2,350

Payment for electricity 90

Lunches/parking at work $ 180

Donations 160

Personal computer $ 1,200

Value of stock investment 860

Clothing purchase $ 110

Restaurant spending 130

3 0

2 years ago