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kramer
3 years ago
12

Faris currently has a capital structure of 40 percent debt and 60 percent equity, but is considering a new product that will be

produced and marketed by a separate division. The new division will have a capital structure of 70 percent debt and 30 percent equity. Faris has a current beta of 1.1 but is not sure what the beta for the new division will be. AMX is a firm that produces a product similar to the product under consideration by Faris. AMX has a beta of 1.6, a capital structure of 40 percent debt and 60 percent equity, and a marginal tax rate of 40 percent. Assuming Faris's tax rate is 40 percent, estimate the levered beta for the new product division.
Business
1 answer:
sineoko [7]3 years ago
8 0

Answer:

Levered beta = Unlevered beta x  (1  + (1 - T)D/E

Levered beta  = 1.6 x  (1 + (1 - 0.4)70/30

Levered beta = 1.6  x  (1  +  0.6)70/30

Levered beta = 1.6 x (1.06)70/30

Levered beta = 3.96

Explanation:

Levered beta is also known as equity beta. It is calculated as unlevered beta multiplied by 1 + (1 - Tax rate) multiplied by debt-equity ratio of the division.

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kirill115 [55]

Answer:

Explanation:

1- It starts an unhealthy cycle. Often, when you stress spend, you’re doing it to relieve stress and even bring some happiness. But it’s rather quick fix, In fact, it could cause more stress once you see you’re racking up debt. Rather than spend more, take time to actually address the problem.

2- It takes away from your financial goals. Whether you’re saving for a house, car, vacation, or retirement, you’re working toward some sort of financial goal. But, unfortunately, those dreams can often get lost amongst the shortcuts and spending sprees we go on when we’re stressed.

3- It all adds up. That car you just bought That’s $15. Or what about that burger you hurriedly grabbed for lunch the other day? That’s another $10. Maybe you’re drinking more beer than usual, and you’ve been a frequent bat customer. Even if you go on a stress-spending spree for only a few weeks, it’s definitely enough time to still wreak havoc on your finances. Just remember: small expenses add up.

7 0
2 years ago
David paid $975,000 for two beachfront lots in coastal South Carolina, with the intention of building residential homes on each.
Gnoma [55]

Answer:

The correct answer would be, Yes South Carolina would be compensating David as his property is now economically valueless.  

Explanation:  

Under the taking clause, 'The Beachfront Management Act was properly and validly designed to preserve South Carolina's beaches', which means that no one will be allowed to do any development project near beaches in order to save the beaches.  

Though it is already written in the Act, The Beachfront Management Act barred any further development on the coasts of Carolina, which makes the purchased property of David as economically valuless, so South Carolina would be compensating him as the law has passed and they won't allow further development but they need to compensate the people who purchased the property on the beaches for the purpose of future business.

7 0
3 years ago
Like many other marketing strategy specialists, Mike relies heavily on creativity and originality. Members of his team are selec
damaskus [11]

Answer:

<u>Brainstorming.</u>

Explanation:

The situation exposed in the question above is an example of brainstorming, which can be defined as a group dynamics technique where there is the generation of ideas for a given project.

This activity is developed with the main objective of exploring the creative and innovative capacity of an individual or a group, stimulating the team's creativity, collecting ideas and the maximum amount of information, visions and possibilities in order to achieve a determined objective.

8 0
3 years ago
SOMEONE PLEASE HELP ME ASAP PLEASE!!!!
mojhsa [17]

Answer:B

Explanation:

This is because as one's income increases his aggregate demand also increases as they both have direct relationship with each other.

5 0
3 years ago
ginnie has an interest-only home equity loan at an annual interest rate of 7%. if her monthly payment is $1,458, how much is the
sergiy2304 [10]

What is Loan Principal Balance
Principal is the initial sum of a loan in the context of borrowing; it can also refer to the balance still owed on a loan. The principal of a $50,000 mortgage, for instance, is $50,000. If you pay down $30,000, the remaining $20,000 is the primary balance. The principal of a loan determines how much interest you pay. The amount of your monthly loan installments is applied to the accrued interest first and only then to the principle when you make a payment. The only method to lower the amount of interest that accrues each month is to reduce the loan's principal.

Main content
$250,000
$1,458 x 12 months = 17,496
17,496 / 0.07 =$249,942

To learn more about Principal Balance
brainly.com/question/12157435
#SPJ4

3 0
1 year ago
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