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xxTIMURxx [149]
3 years ago
15

Schwartz Industry is an industrial company with 102.6 million shares outstanding and a market capitalization​ (equity value) of

$ 3.49 billion. It has ​$2.05 billion of debt outstanding. Management have decided to delever the firm by issuing new equity to repay all outstanding debt. a. How many new shares must the firm​ issue? b. Suppose you are a shareholder holding 100​ shares, and you disagree with this decision. Assuming a perfect capital​ market, describe what you can do to undo the effect of this decision.
Business
1 answer:
Whitepunk [10]3 years ago
6 0

Answer:

a. How many new shares must the firm​ issue?

We first find the price per share. We divide the market capitalization value by the number of shares outstanding:

Price per share = $3,490,000,000/102,600,000

                         = $34.01

Now, we divide the debt outstanding by the price per share

Shares to be issued = $2,050,000,000/34.02

                                 = 60,266,476

Thus, Schwartz industry must issue 60,266,476 new shares to pay all outstanding debt.

b. Suppose you are a shareholder holding 100​ shares, and you disagree with this decision. Assuming a perfect capital​ market, describe what you can do to undo the effect of this decision.

All you can do is to even out your position under the new circumstances. To do so, you must buy a proportional number of newly issued shares.

In this case, at first the total number of shares outstanding is 102,600,000, and you hold 100 of those. That means that you hold the 0.000097% of the shares.

Now, the total number of shares outstanding is 162,866,476, and the 0.000097% of that is 157, thus, to keep your position, you must buy 57 of the newly issued shares.

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Rex loves to work with his hands and is very good at making small figurines. Three years ago, Rex opened Bronze Age Miniatures (
VLD [36.1K]

Solution:

a. $14,900 AR is $6,250

   AP = 14,900 - 6250 = $8650

∴ $8650 * 25% = 2162.5

( 25% = Positive adjustment that is added for 4 years is 25% for an year)

b. $54,800

Sale to the HRU

c. With the help of deferral method for accrual , the amount obtain is follows:

2 mos. $21 for unit  x 600 units

= $25,200

d. $17,496

Sales for Sci-fi convention

e. Will only deduct money i.e. Considered as noncollectable or else expense for schedule c

= $2100

For the accrual method given income at the time of sale

= $233100

f. Costs of goods which are sold

= $159840

g. As $610 airfare in addition with + $165 convention fee also + $222 for lodging +$68 for cab fee+ $164 for meals

= $1229

h. As the earlier payment qualifies comes under the 12-month rule and which is payment liability thus it meets the economic performance test when it pays the insurance company in august

= $5040

i. For depreciation $8450

j. Economic performance for rent expense happens for the rental period

Due to no expenditure has happened , the 12 month rule is inapplicable

Rex may only deduct rent for 11 months it was renting the property ( 11 months * $1710  )

= $18810

K. As the expended immediately = $41,250 ; $41,250 / 180 months = 229

229 * 12 = 2750 other expense for schedule c

L. As $7900 is un-deduct able due to liability which is not constant

Economic preference for the $4200 occurs as AWU provides services

Also BAM may only cut the portion of this extra credit that relates to

December ( 4200 / 12 ) = $350

M. As tax payment liabilities are economic performance and the deduction occurs BAM pay taxes

= $5100

6 0
3 years ago
Crane Company incurred the following costs for 88000 units: Variable costs $528000 Fixed costs 392000 Crane has received a speci
Anton [14]

Answer:

The minimum price is $6.8

Explanation:

Giving the following information:

Crane Company incurred the following costs for 88000 units: Variable costs $528000 Fixed costs 392000 Crane has received a special order from a foreign company for 3000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $2400 for shipping.

Because it is a special order and there is unused capacity, we will not have into account the fixed costs.

Unitary cost= (528,000/88,000) + (2,400/3,000)= $6.8 per unit

The minimum price is $6.8

7 0
3 years ago
How do i figure out a months ending capital
stealth61 [152]

Ending capital for the month = The month's beginning capital + Additional capital inflow for the month - additional capital outflow for the month

For example: if had $500 at the beginning of a month, you got a dividend of $100 during the month and also spend $50 on entertainment during the month, the ending capital would be 500 + 100 -50 = $550

3 0
3 years ago
Lloyd is the chief financial officer (CFO) for a firm that uses Incentive stock options (ISOs) as part of its executive compensa
Nata [24]

Answer:

the gross pay of Lloyd is $6,250

Explanation:

The computation of the gross pay is shown below:

= Amount received annually ÷ number of months

= $150,000 ÷ 24

= $6,250

Hence, the gross pay of Lloyd is $6,250

we simply applied the above formula so that the correct value could come

The other things would be irrelavant

4 0
3 years ago
Infinity Corporation purchased equipment with a 10-year useful life and zero residual value for $10,000. At the end of the fifth
sesenic [268]

Answer:

a capital gain of $1,000.

Explanation:

Given,

The cost price of Equipment = $10,000

Useful life of the equipment = 10 years

Residual value = $0

Depreciation (Straight-line method) = Cost price/useful life

Depreciation (Straight-line method) = $10,000/10 = $1,000

Since, it is a straight line method, the depreciation will remain same each year. Therefore, at the end of the fifth year, the depreciation of equipment = $1,000 x 5 = $5,000

At the end of the fifth year,

The book value of the equipment= Equipment - Accumulate depreciation= $(10,000 - 5,000) = $5,000

If the company sales the equipment after the end of the fifth year,

there will be a capital gain.

Capital Gain of equipment = Sales price of equipment - book value of equipment

Capital Gain of equipment = $6,000 - 5,000 = $1,000. The journal entry will be -

Cash/Bank                              Debit       $6,000

Accumulated Depreciation   Debit       $5,000

Gain on sale of equipment                  Credit       $1,000

Equipment                                            Credit      $10,000

5 0
3 years ago
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