Answer:
a. What is the value today of Steinberg's debt and equity?
b. What is the value today of Dietrich's debt and equity?
c. Steinberg’s CEO recently stated that Steinberg’s value should be higher than Dietrich’s because the company has less debt and therefore less bankruptcy risk. Do you agree or disagree with this statement?
- A. Disagree: a company's value is determined by by its operating income (EBIT), not by there capital structure (M&M theory).
Explanation:
economic expansion 80% chance, EBIT $3.5 million
economic recession 20% chance, EBIT $1.9 million
expected EBIT = (3.5 x 0.8) + (1.9 x 0.2) = $2.8 million + $0.38 million = $3.18 million
Steinberg's debt obligations $980,000 at the end of next year
Dietrich's debt obligations $2,000,000 at the end of next year
total company value = $3.18 million / (1 + 10%) = $2,890,909
The American system of democracy would be in serious trouble without
- The reporting of skilled journalists
<h3>What is Democracy?</h3>
This is simply a system of government that is based on the principle of representative government where the people are represented in government.
With this in mind, we can see that skilled journalists are responsible for holding the American leaders responsible to the people by making reports of their actions and inactions and without this, democracy would be in serious trouble.
Read more about democracy here:
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The answer for the given statement above would be TRUE. What makes this true is that traffic patterns should be taken into consideration because this is the space in the room that people can walk through. Therefore, such furniture placements should be observed very well.
The security itself serves as collateral in a repurchase agreement.
Option A is correct
What is Repurchase Agreement ?
A short-term secured loan referred to as a repurchase agreement (repo) involves the sale of securities to a third party with an agreement to later repurchase those securities at a better price. The securities act as security. The interest paid on the loan, or repo rate, is that the difference between the securities' original purchase price and their repurchase price.
Reverse repurchase :
The exact opposite of a repo transaction is a reverse repurchase agreement (reverse repo). during a reverse repo, one party buys securities and promises to resell them for a profit at a later time, frequently as soon because the next day. Repo's are often overnight, although they will also be longer.
To learn more about Repurchase agreement :
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