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juin [17]
2 years ago
15

Monsters Incorporated (MI) in ready to launch a new product. Depending upon the success of this product, MI will have a value of

either $100 million, $150 million, or $191 million, with each outcome being equally likely. The cash flows are unrelated to the state of the economy (i.e. risk from the project is diversifiable) so that the project has a beta of 0 and a cost of capital equal to the risk-free rate, which is currently 5%. Assume that the capital markets are perfect.
1. Suppose that MI has zero-coupon debt with a $125 million face value due next year. The total value of MI with leverage is closest to:

(1) $133 million
(2) $140 million
(3) $147 million
(4) $125 million


2. Assuming that in the event of default, 20% of the value of MI’s assets will be lost in bankruptcy costs, the initial value of MI’s equity without leverage is closest to:

(1) $150 million
(2) $147 million
(3) $140 million
(4) $133 million


3. Assume that in the event of default, 20% of the value of MI’s assets will be lost in bankruptcy costs and suppose that MI has zero-coupon debt with a $125 million face value due next year. The total value of MI with leverage is closest to:

(1) $140 million
(2) $100 million
(3) $125 million
(4) $134 million
Business
1 answer:
irga5000 [103]2 years ago
3 0
A and then d i’m pretty sure
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<h3 /><h3>Sole Proprietorships</h3>

It is a form of company in which only one person is responsible for management, with no legal distinction between the owner and the company.

The advantages are the less bureaucracy and lower interest rate. The disadvantages are the difficulty in obtaining financing and business credit.

<h3 /><h3>Partnerships</h3>

It is a professional relationship between two or more people to carry out a business. The advantages are the sharing of risk and responsability. The disadvantages are related to the loss of autonomy and conflicts.

<h3 /><h3>Corporations</h3>

It is an entity that has a legal status separate from its owners. The advantages are the ease of obtaining credit and protection from the liability of partners. The disadvantages relate to greater bureaucratization and formalities.

<h3 /><h3>Franchises</h3>

It is a business system where royalties are paid to a franchisor for the right to sell the same products and services. The advantages of franchising is the value of the brand and customer perception. The disadvantages are the high investment and maintenance of the business.

<h3>Nonprofit Organizations</h3>

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Find out more information about Sole Proprietorships here:

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6 0
2 years ago
Of the following occupations, which is predicted to have the greatest job growth?
d1i1m1o1n [39]
Hello
the answer is a
have a nice day
8 0
3 years ago
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Three graduate business students are considering operating a fruit smoothie stand in the Harbor Springs, Michigan, resort area d
Leviafan [203]

Answer:

a. 8,000 + 1,000 + 3.2Q

b. 27,000 + 3.2Q

c. 15,000 Units

Explanation:

a. The accounting cost function is shown below:-

Accounting cost function = Fixed Leasing and insurance cost + material cost and supplied cost

= 8,000 + 1,000 + 3.2Q

b. The economic cost function is shown below:-

Economic cost function  = Accounting cost + Opportunity cost

= 9,000 + 3.2Q + 3*6,000

=27,000 + 3.2Q

c. The computation of break even point is shown below:-

Break even Point = Total Fixed Cost ÷ Price - Average Variable cost

= 27,000 ÷ 5 - 3.2

= 15,000 Units

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3 years ago
in which model of team development is the ""midpoint"" of the team’s project considered most important?
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According  to Gersick's punctuated team development model is the midpoint of team's project.

<h3>What is Gersick's model?</h3>

Gersick's punctuated equilibrium model suggest that group develop through the sudden formation , maintainence and sudden revision of a framework for performance.

<h3>What are the three stages of group development? </h3>

1) Getting established and transitioning .

2) Connecting and producing .

3) Consolidating and forecasting .

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When the activity level changes, ______. Multiple select question. total variable cost changes variable cost per unit changes to
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When there is a change in activity level, then:

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<h3>What happens when activity level changes?</h3>

As a result of the change in activity level, the variable cost will change in total because it increases when there is an increase in number of units produced.

The unit variable cost will however remain the same as the company incurs the same variable cost per unit produced.

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