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3 years ago

The Coase Theorem states that

1 answer:

7 0

Answer:B. if transaction costs are low, private bargaining will result in an efficient solution to the problem of externalities.

Explanation:

The coarse theorem:

If there is a conflict between parties this will lead to an effecient results irrespective of who won the right to the property as long as the transaction cost related to the price negotiation is insignificant.

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A company forecasts free cash flow in next year to be $20 million, $25 million in second year, and 30 million in third year. Aft

Norma-Jean [14]

Answer:

Current value from operations is $534.71 million.

Explanation:

The value from operations can be calculated by discounting back the free cash flow of the firm. The first three year's FCF will be discounted back using the WACC and when the growth rate o FCF becomes constant after Year 3, the terminal value will be calculated and discounted back too.

The current value from operations = FCF1 / (1+WACC) + FCF2 / (1+WACC)² + FCF3 / (1+WACC)³ + [FCF3 * (1+g) / WACC - g] / (1+WACC)³

Current value from operations = 20 / (1+0.1) + 25 / (1+0.1)² + 30 / (1+0.1)³ + [30 * (1+0.05) / (0.1 - 0.05)] / (1+0.1)³

Current value from operations = $534.71 million

8 0

3 years ago

Read 2 more answers

A "Name That Tune" contest has a grand prize of $500,000. However, the contest stipulates that the winner will receive just $200

Alexxx [7]

Answer:

The correct answer is (C) $401,302

Explanation:

To get how much the contest winner actually won, we have to calculate the amount receive at the end of each year discounted at this moment. Then, we added all the payments.

For example, the first payment in $200,000 at this moment, so we add $200,000.

At the end of the first year we receive $30,000, and the rate of discount is 8%

The formula of discount is P=A/ (1+r)ⁿ

A=Final amount

P= Principal

r= interest rate

n= time

Year 1 = A/ (1+r)ⁿ =$30,000/1,08¹= 27777,77

Year 2 =$30,000/1,08²= 25720,16

Year 3=23814,96

Year 4=22050,89

Year 5=20417,49

Year 6=18905,08

Year 7=17504,71

Year 8=16208,06

Year 9=15007,46

Year 10=13895,80

Total 401302,44

3 0

3 years ago

The atmospheric pressure at a place is 650 mm of Hg. Convert this pressure

EleoNora [17]

Ans Solution

Explanation:

4 0

2 years ago

You are considering purchasing a put option on a stock with a current price of $26. The exercise price is $28, and the price of

Goshia [24]

Answer: $4.24

Explanation:

According to the Put-Call Parity, the value would be expressed by;

Put Price = Call price - Stock price + Exercise price *e^-(risk free rate *T)

T is 90 days out of 365 so = 90/365

= 2.65 - 26 + 28 * 2.71 ^ (-0.06 * 90/365)

= $4.24

4 0

3 years ago

Read 2 more answers

The Peach Corporation provides restricted stock to certain executives. Under the plan, the company granted 30 million shares on

daser333 [38]

Answer:

1. Determine the total compensation cost pertaining to the restricted stock.

30 million x $14 = $420 million

2. Prepare the appropriate journal entries

December 31, Year 1:

Dr Stock compensation expense 105,000,000

Cr Additional paid in capital - restricted stock 105,000,000

December 31, Year 2:

Dr Stock compensation expense 105,000,000

Cr Additional paid in capital - restricted stock 105,000,000

December 31, Year 3:

Dr Stock compensation expense 105,000,000

Cr Additional paid in capital - restricted stock 105,000,000

December 31, Year 4:

Dr Stock compensation expense 105,000,000

Cr Additional paid in capital - restricted stock 105,000,000

January 1, Year 4, the stocks are handed out:

Dr Additional paid in capital - restricted stock 420,000,000

Cr Common stock 420,000,000

6 0

3 years ago