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lisabon 2012 [21]
3 years ago
8

Tool Manufacturing has an expected EBIT of $ 39,000 in perpetuity and a tax rate of 33 percent. The firm has $ 80,000 in outstan

ding debt at an interest rate of 11 percent, and its unlevered cost of capital is 15 percent. The value of the firm is $____ according to MM Proposition I with taxes.
Business
1 answer:
Thepotemich [5.8K]3 years ago
3 0

Answer:

$208,530

Explanation:

The computation of value of levered firm is shown below:-

For computing the value of levered firm first we need to compute the Value of Unleavened firm

Value of unlevered firm = Earning before interest and tax × (1 - tax rate) ÷ Cost unlevered of Capital

= $39,000 × (1 - 33%) ÷ 15%

= $39,000 × 0.67 ÷ 15%

= $39,000 × 4.67

= $182,130

Now, the Value of levered firm = Value of unlevered firm + Outstanding debt × Tax rate

= $182,130  + $80,000 × 33%

= $182,130  + $26,400

= $208,530

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Explanation:

Microsoft is a giant technology company with worldwide influence.

Its success and reputation have ensured the company the position of the most valuable company in the world by market capital.

The popularization of the Windows Operating System, worldwide, was the product that consolidated the company as a giant in the business world. Technological companies, should focus on innovation, as each day more advances in technology appear to correct possible system errors, make the user's performance and use better and make production costs cheaper. With regard to the Operating System for computers, Microsoft has always evolved in launching new, more evolved versions, and making the previous ones obsolete for use, but one of the company's failures was to have lost the timing to develop an OS aimed at the use in cell phones, since that the company tried to enter this market, but was unsuccessful, and was defeated by its biggest competitors: Google and Apple.

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3 years ago
Which of the following are examples of a primary market transaction? a. A company issues new common stock. b. An investor asks h
ella [17]

Answer:

d. Statements a and c are correct

Explanation:

The primary market is the market where for the first time the new securities such as shares, stocks, bonds, etc. are being sold to the general public or we can refer initial public offer. The initial public offer is an example of the primary market

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7 0
3 years ago
LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620
Gnom [1K]

Answer:

LeCompte Corp.

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A) 7.57%.

Explanation:

a) Data and Calculations:

Assets = $312,900

Common Equity = Assets = $312,900

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Net income after taxes = $24,655

Expected return on equity (ROE) = 15%

ROE (in amount) =  $312,900 * 15% = $46,935

Profit margin = Returns on Equity/ Sales * 100

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2 years ago
Dma corporation has bonds on the market with 16.5 years to maturity, a ytm of 7.7 percent, and a current price of $1,065. the bo
bonufazy [111]
With face value equal to $ 1000, present value equal to $ 1,065, we get nper = 16.5 * 2 = 33. Rate(ytm) is equal to 7.7%/2 = 3.85%.PMT (coupon payment)  = $ 42.01.Coupon rate = (42.01 / 1000) = 4.20%.Therefore, the annual coupon rate is equal to 4.2 * 2 which equates to 8.40%
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3 years ago
All of the following are prohibited practices under FINRA rules EXCEPT: A selling enough mutual funds to a customer to obtain a
Licemer1 [7]

Answer:

Option A is correct

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