The condition for a profit maximising point is where MR = MC.
When MR is greater than MC, the firm should increase production to take hold of the extra profit, therefore Mara should increase production.
Answer:
After tax cost of debt is 6.45%
Explanation:
In computing the after tax cost of debt, the starting point would be to ascertain the pre-tax cost of debt-yield to maturity-before applying the tax.
The yield to maturity can be calculated using the rate formula in excel ,given as :=rate(
nper,pmt,-pv,fv)
nper is the nuer of coupon interest the bond would pay which is 20
pmt is the annual payment of the bond which is 13%*$1000=$130
pv is the current price of the bond $1,181.96
fv is the face value of the bond which is $1000
=rate(20,130,-1181.96,1000)
rate=10.75%
Pretax cost of debt is 10.75%
After tax cost of debt=pretax cost of debt*(1-tax rate)
tax rate is 40%=0.4
=10.75%*(1-0.4)
=6.45%
Answer:
a-1. We have:
Recession EPS = $1.49
Normal EPS = $2.13
Expansion EPS = $2.45
a-2. We have:
Recession percentage change in EPS = -30.00%
Expansion percentage change in EPS = 15.00%
b-1. We have:
Recession EPS = $1.12
Normal EPS = $1.76
Expansion EPS = $2.08
b-2. We have:
Recession percentage change in EPS = -36.36%
Expansion percentage change in EPS = 18.18%
Explanation:
Note: See the attached excel file for the calculations of the EPS and the percentage changes in EPS.
From the attached excel file, we have:
a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued.
Recession EPS = $1.49
Normal EPS = $2.13
Expansion EPS = $2.45
a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession.
Recession percentage change in EPS = -30.00%
Expansion percentage change in EPS = 15.00%
b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization.
Recession EPS = $1.12
Normal EPS = $1.76
Expansion EPS = $2.08
b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession.
Recession percentage change in EPS = -36.36%
Expansion percentage change in EPS = 18.18%
Hello <span>Wahsorad4380 </span>
Question: The bretton woods agreement incorporated all of these features except ________.<span>
Answer: floating exchange rates
Hope This Helps!
<u>-Chris</u></span>
Answer:
$15,000 Increase
Explanation:
Calculation to determine what the effect on net income will be :
Effect on net income = (15,000 x $3.50) – ($2.50x 15,000)
Effect on net income = $52,500-$37,500
Effect on net income = $15,000 Increase
Therefore If Bluebird accepts this additional business , the effect on net income will be :$15,000 Increase