Answer:
a) 12.87%
b) 11.03%
Explanation:
EBIT with no debt = $111,000
net income = $111,000 x (1 - 22%) = $86,580
total value of the firm with no debt = $86,580 / 12% = $721,500
value of the firm after debt is taken = $721,500 + ($165,000 x 22%) = $757,800
debt to equity ratio after debt is taken = $165,000 / ($757,800 - $165,000) = 27.834%
new cost of equity (Re) = 12% + [(12% - 8%) x 27.834% x (1 - 22%)] = 12.87%
WACC = (0.72166 x 12.87%) + (0.27834 x 8% x 0.78) = 9.288% + 1.737% = 11.025$ = 11.03%
Answer:
He withdraws counteroffer before it is accepted by the buyer.
Explanation:
Offer is a formal acceptance by a person to either purchase or sell a property or thing available or put for sale. A counteroffer is made by the other party by rejecting the offer made by the offeror and putting forth another offer before the offeror.
A counteroffer if accepted by the offeror stands valid and the offeree cannot revoke it. However, he may revoke it before the offeror accepts the counteroffer.
In this case, the owner can accept the better offer if the offeror has not accepted the counteroffer.
Answer:
D) eminent domain.
Explanation:
In the US, eminent domain is the right of a government entity (local, state or federal government) to take private land and assign a public use to it. This government expropriation is carried out with a compensation payment done to the landowner.
In this case, the municipal government of Orlando is going to expropriate Neil's land and use it to expand a thoroughfare (road or avenue) through the city. The city will pay Neil a certain amount of money for taking away his land and suing it for a public service.
The 5th amendment of the US Constitution states that eminent domain must be carried out only after the landowner has been compensated for his/her loss.
Answer:
Trade balance
Explanation:
A positive trade balance will result in currency appreciation because more goods are exported than imported, which means that there is a net inflow of the home country's currency, increasing its value against foreign currency.
This can lead first to more foreign direct investment because a trade balance is a sign of a strong economy, however, in the long run there can be a radical change in the business cycle: the appreciated currency will make the home country's goods more expensive, reducing the demand for them abroad, in turn decreasing exports, turning the trade balance into negative numbers, and causing a net ouflow of foreign direct invesment due to the weaker economy, and the capital losses because of the currency depreciation.
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.