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amid [387]
3 years ago
10

Gulf Shores Inn is comparing two separate capital structures. The first structure consists of 300,000 shares of stock and no deb

t. The second structure consists of 252,000 shares of stock and $1.78 million of debt. What is the price per share of equity
Business
1 answer:
tangare [24]3 years ago
6 0

Answer:

The price per share of equity is $37.083

Explanation:

The first capital structure is purely equity based and Guld Shores will sell 300000 shares at price x to raise the needed capital.

The second structure is a mixed or leveraged structure where both debt and equity components are involved. The capital that needds to be raised remains constant.

Gulf has to give up 300000 - 252000 = 48000 shares and raise 1.78 million dollars from debt. We assumed that the amount that Gulf will raise is the ame from both th structures. Then 48000 shares at price x are equal to $1.78 million debt.

So, Price per share of equity is,

1,780,000 = 48000x

1780000 / 48000 = x

x or price per share = $37.083

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Cutler Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:Year Cash Flow0 –$ 39,800,000 1
muminat

Answer:

The two IRRs are: - 76.49% and 36.79%

Explanation:

To simplify our "Hard work", let's denote the cash flow numbers in terms of '000 (To reduce the number of zeros).

IRR is that discount rate R, for which NPV = 0

NPV is the sum of discounted cash inflows and outflows. Therefore,

NPV ($'000) = - 39,800 + (63,800 / (1 + R) - [12,800 / (1 + R)2]

When NPV = 0 [If R is the IRR],

0 = - 39,800 + [(63,800 / (1 + R)] - [12,800 / (1 + R)2]

[12,800 / (1 + R)2] - [(63,800 / (1 + R)] + 39,800 = 0

To simplify further, let's put N = 1 + R. Also, let's divide both sides by 200 [Note: We're only doing arithmetical simplification to reduce the large numbers]]:

[64 / (N)2] - (319 / N) + 199 = 0

Multiplying all terms by (N2):

64 - 319N + 199 (N)2 = 0

that is,

199 (N)2 - 319N + 64 = 0

This is a quadratic equation with large coefficients. Solving quadratic equation is outside scope of this question (it belongs to Algebra), so I've used an Online Quadratic equation solver**, which returns following values of N:

N = 1.3679, and N = 0.2351

So:

1 + R = 1.3679, Or 1 + R = 0.2351

R = (1.3679 - 1) or R = (0.2351 - 1)

R = 0.3679 or R = - 0.7649

The two IRRs are: - 76.49% and 36.79%

4 0
3 years ago
HELLLPPPP
marin [14]

Answer: Mary

Explanation:

GDP simply means the gross domestic product and it is the value in terms of money based on the goods and services that a country produces.

With regards to the question, Mary is right as the GDP can be used to denote economic growth and also know how a particular economy is doing. Wealthy nations usually have a huge GDP.

3 0
2 years ago
Genent​ Industries, Inc.​ (GII), developed standard costs for direct material and direct labor. In​ 2017, GII estimated the foll
Alex_Xolod [135]

Answer:

The quantity variance = -900 unfavorable

Explanation:

Direct materials flexibel - budget variance:

standard

0.7 pounds $30 per pound

3,000 x 0.7 = 2,100 standard pounds

actual

2,400 pound $29 per pound

quantity variance:

30(2,100 - 2,400) = -900

6 0
3 years ago
Wealth that is earned, saved and loaned out to make a profit is called _______________.
Elena L [17]
The correct answer is (a.) capital. The wealth that is earned, saved and loaned out to make a profit is called capital.Capital is also the money or wealth that an entrepreneur must have to produce services and good for the consumers.
8 0
3 years ago
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In the airline industry, the ______________ of offering international routes restricts movement between hub-and-spoke and point-
andreyandreev [35.5K]

In the airline industry, the exit barrier of offering international routes restricts movement between hub-and-spoke and point-to-point airlines.

<h3>What is the exit barrier?</h3>

This is the term that is used to describe all of the challenges and the impending difficulties that may prevent a company from exiting a market.

This question tells us that it is a barrier of exit and restriction of movement between hub-and-spoke and point-to-point airlines.

Read more on exit barrier here: brainly.com/question/2975624

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