Answer:
$1,879,215.61
Explanation:
Given that,
EBIT = $320,000
Current cost of equity = 12.3%
Tax rate = 40 percent
Value of perpetual bonds = $936,000
Annual coupon rate = 6.5 percent at par
Value of the unlevered firm:
= [EBIT × (1 - Tax rate)] ÷ Current cost of equity
= [$320,000 × (1 - 0.4)] ÷ 0.123
= $192,000 ÷ 0.123
= $1,560,975.61
Value of the levered firm:
= Value of the unlevered firm + (Tax rate × Value of perpetual bonds)
= $1,560,975.61 + (0.34 × $936,000)
= $1,560,975.61 + $318,240
= $1,879,215.61
Answer:
(a) $56,730
(b) $36,330
(c) $ 51,800
(d) $24,800
(e) $36,230
Explanation:
(a) Gross profit for the Dalmatian Division:
= Net sales - Total Cost of goods sold
= $87,000 - $30,270
= $56,730
(b) Income from operations from the Dalmatian Division:
= Gross Profit - Direct operating expenses
= $56,730 - $20,400
= $36,330
(c) Gross profit for the Beagle Division:
= Net sales - Total Cost of goods sold
= $99,000 - $47,200
= $ 51,800
(d) Income from operations from the Beagle Division:
= Gross Profit - Direct operating expenses
= $51,800 - $27,000
= $24,800
(e) Total income from operations;
= $36,330 + $24,800
= $61,130
Earnings before interest and taxes:
= Total income from operations - General overhead
= $61,130 - $18,160
= $42,970
Earnings before taxes:
= Earnings before interest and taxes - Interest expense
= $42,970 - $2,040
= $40,930
Net income = Earnings before taxes - Income taxes
= $40,930 - $4,700
= $36,230
Answer:
6.125%
Explanation:
Calculation for what yield must municipals offer for the investor to prefer them to corporate bonds
The after-tax yield on the corporate bonds is: 8.75% x (1 - 0.30)
The after-tax yield on the corporate bonds is= 0.0875x 0.7
The after-tax yield on the corporate bonds is= 0.06125*100
The after-tax yield on the corporate bonds is= 6.125%
Therefore what yield must municipals offer for the investor to prefer them to corporate bonds is
6.125%
The correct answer is : C. Manufacturing jobs in the U.S have declined significantly
A lot of companies choose to manufacture their products in a developed country like China, south America, or the South East Asia, since they have a cheaper source of material and they can get cheaper workers since their cost of living is lower than the U.S
Answer:
An increase in Price and decrease in Quantity.
Explanation:
Please see the attached Decrease in Supply when Demand is Constant Diagram for further explanation:
<em>Supply Curve </em>is always upward because Supply and Price are directly proportional as shown in attached diagram as S
.
<em>Demand Curve</em> is always downward because Demand and Price are inversely proportional as shown in attached diagram as D
.
The point where Demand Curve and Supply curves meet each other or intersect each other is called <em>Equilibrium </em>as shown in the attached diagram as E. At this the point Quantity Demanded and Quantity Supplied are equal.
The point at which Equilibrium touches the price is called Equilibrium Price as shown in the attached Diagram as P. At this point the Quantity Demanded and Quantity Supplied are equal.
The Point at which Equilibrium touches the quantity is called <em>Equilibrium Quantity</em> as shown in the attached Diagram as Q. At this point the Quantity Demanded and Quantity Supplied are equal.
Since the Demand is constant D and Supply is decreasing, So when the Supply decreases it shifts towards its left side as shown in the attached diagram as S'.
After decrease in Supply the changes it brings a new Equilibrium point as E' at which Equilibrium Price rises to P' and Equilibrium Quantity falls to Q' as shown in the attached diagram. At this point the Quantity Demanded and Quantity Supplied are equal.
