1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
svet-max [94.6K]
3 years ago
10

Tropical Fruit Extracts expects its earnings before interest and taxes to be $218,000 a year forever. Currently, the firm has no

debt. The cost of equity is 16.3 percent and the tax rate is 35 percent. The company is in the process of issuing $2 million of bonds at par that carry a 6.5 percent annual coupon. What is the unlevered value of the firm
Business
1 answer:
katen-ka-za [31]3 years ago
3 0

Answer:

The unlevered value of the firm is $869325.15

Explanation:

For computing the value of unlevered firm, the following formula should be used which is shown below:

Value of levered firm = Earning before interest and taxes × (1 - tax rate) ÷ cost of equity

where,

Earnings before income and taxes are $218,000

Cost of equity is 16.3%

And, the tax rate is 35%

Now put these values on the above formula

So, the value would be equals to

= $218,000 × (1 - 0.35) ÷ 16.3%

= $141,700 ÷ 16.3%

= $869325.15

The other terms like bonds and the annual coupon should not be considered in the computation part because we have to calculate for unlevered firm which only includes equity and the bond is a debt security. Thus, it is irrelevant.

Hence,  the unlevered value of the firm is $869325.15

You might be interested in
Diamond Design Company makes custom chairs for individual customers. On September 1, there was one job in process, Job 243, with
Romashka [77]

Answer:

Net operating income= $3,152

Explanation:

Giving the following information:

Job 245 was completed on September 14 and the client was billed at cost plus 40%.

Job 245:

Direct Materials= $6,700

Direct Labor= $2,300

Overhead= 0.60*2300= $1,380

Total cost= $10,380

Sales= 1.4*10380= $14,532

Cost od goods sold= 10380

Gross profit= 4152

Selling and administrative expense= 1000

Net operating income= $3,152

3 0
3 years ago
MCDONALDS GIVE DIRECTIONS
Maslowich

Answer:

TAKE A LEFT

Explanation:

ON 123 SESAME STREET

3 0
2 years ago
Read 2 more answers
A collection of verbal and symbolic assertions that specify how and why variables are related, and the conditions under which th
Vladimir79 [104]

Answer:

-1 to +1

Explanation:

The correlation coefficient range is from -1 to +1.

-1 shows that there is perfect negative correlation.

+1 shows that there is perfect positive correlation.

0 shows there is no correlation.

Positive correlation shows that with the increase of let's say X, there would also be increase of Y. They would positively move together

Negative correlation shows that two variable move in opposite direction.

6 0
2 years ago
The decision situations wherein the decision-maker chooses to consider several possible outcomes and the probabilities of their
RUDIKE [14]

Answer: The correct answer is "a. decisions under risk.".

Explanation: The decision situations wherein the decision-maker chooses to consider several possible outcomes and the probabilities of their occurrence can be stated are called <u>decisions under risk.</u>

Decision-making under risk is one of the three possible decision-making scenarios based on the available information, this scenario presents an intermediate situation between decision-making under certainty or under uncertainty: each alternative, strategy or course of action has several possible consequences, but the person in charge of making the decision knows the probability of each of them.

5 0
3 years ago
The opportunity cost of receiving a 93 on the economics exam is ______ points on the statistics exam.
rosijanka [135]

The opportunity cost of receiving a 93 on the economics exam is productive efficient points on the statistics exam.

Whst is opportunity cost?

The "opportunity cost" of choosing one course of action over another is the potential profit lost due to a missed opportunity. Add all of the potential costs together to get the opportunity cost.

The economics are the examine the productive efficient of the opportunity cost. The production of the goods are the lowest cost as possible unit cost.

As a result, the opportunity cost of the 93 are the reciving of the productive efficient.

Learn more about on opportunity cost, here:

brainly.com/question/13036997

#SPJ4

6 0
1 year ago
Other questions:
  • When property rights are well defined and markets are: competitive market equilibrium violates the conditions for economic effic
    12·1 answer
  • In the fourteenth century, the Western African Emperor Kankan Musa traveled to Cairo where he gave away much gold, which was in
    12·1 answer
  • The term "current financial resources" refers to
    14·1 answer
  • The database of Aster Corp. was hacked and confidential data was leaked to its competitors. This resulted in a huge financial lo
    14·1 answer
  • Exotic Roses, owned by Margarita Rameriz, provides a variety of rare rose bushes to local nurseries that sell Rameriz's roses to
    12·1 answer
  • Which of the following mathematical equations is used to calculate a predetermined overhead rate? a.Predetermined Overhead Rate
    11·1 answer
  • What are some events that have significantly influenced and changed the sport industry? Please explain.
    11·1 answer
  • Beth and Bob Martin have total take-home pay of $5,000 a month. Their monthly expenses total $4,360. Calculate the minimum amoun
    9·1 answer
  • Which private equity firm has acquired a 60 % stake in Ramky Enviro Engineers for $ 530 million?
    8·1 answer
  • Who will be responsible for creating the disaster recovery plan and will likely be responsible for testing it and keeping up wit
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!