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viva [34]
3 years ago
12

The Master Manufacturing Company has just announced a tender offer for its own common stock. Master is offering to buy up to 100

% of the company's stock at $20 per share contingent on at least 64% of the outstanding shares being tendered. After the announcement of the offer, the stock closed on the NYSE up 2.50 at $18.75. A customer has 100 shares of Master stock in his cash account. The customer tells you that he wishes to "cash out" his position. You should recommend that the customer:
Business
1 answer:
ololo11 [35]3 years ago
6 0

Answer:

It should be recommended that the customer should sell long.

Explanation:

As the offer in the question is contigent on 64% of the tendered shares, this makes the tender be inappropriate if the customer wants to cash out the position.

The right step to take is by selling the long position that has a new higher market price.

Therefore, it should be recommended that the customer should sell long.

Note that to sell long implies that stocks or any other financial investment instrument are purchased now for the purpose of selling them at a higher future price in order to make a profit.

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Alexis Company was started in Year 1. At the end of Year 1 the Company had the following accounting equation.Assets = Liabilitie
swat32

Answer:

Company's assets at the end of Year 2 were provided by creditors = 20%

Explanation:

<u>Calculation of Cash at the end of Year 2 </u>

Cash balance at the end of Year 1     $600

Less: Paid off to notes payable          ($500)

Add: Earned cash revenue                 $700

Less: Paid cash expenses                   ($400)

Less: Paid cash dividend                     <u>($100)</u>

Cash balance at the end of Year 2    <u>$300</u>

Notes payable at the end of Year 2 = Beginning balance - Paid off

= $1,000 - $500

= $500

<u>Calculation of Notes Payable at the end of Year 2 </u>

Notes Payable at the end of Year 1     $1000

Less: Paid off to notes payable            <u>($500)</u>

Notes Payable at the end of Year 2 <u>$500</u>

Total assets at the end of Year 2 = Cash + Land

= $300+2200

= $2500

Creditors at the end of the Year 2 (Notes payable) = $500

Company's assets at the end of Year 2 were provided by creditors = Creditors * 100 / Total assets

= $500 * 100 / $2500

= 20%

5 0
2 years ago
Assume there are two people in a society. Person A is willing to pay $140 to have one unit of a public good produced and Person
Shtirlitz [24]

Answer:

$300

Explanation:

Given:

Society A

Society B

Society A will pay $140 per unit  

Society B will pay $160 per unit  

Commonly pay $140 for two units produced.

Computation:

Society will pay total amount for the public goods = $160 + $140  

Society will pay the total amount for the public goods = $300

Therefore, $300 Is the total amount paid by society.

7 0
3 years ago
Toy Town is considering a new toy that will cost $49,100 in startup costs. The toy is expected to produce cash flows of $47,500
Tasya [4]

Answer:

NPV with a 14.9% discount rate: 6,329.06

The toy should be produced as the NPV is positive.

IRR = 26.65%

Explanation:

First we calculate for the NPV using the given discount rate of 14.9%

We will calculate the present value of each year cash inflow:

\frac{inflow}{(1 + rate)^{time} } = PV  

Year 1 cash inflow: 47,500.00

time   1.00

rate  0.149

\frac{47500}{(1 + 0.149)^{1} } = PV  

PV   41,340.30

Year 2 cash inflow:  18,600.00

time   2.00

rate  0.149

\frac{18600}{(1 + 0.149)^{2} } = PV  

PV   14,088.76

Then, we add them and subtract the investment to get NPV

NPV = 14,088.76 + 41,340.3 - 49,100 = 6,329.06

The toy should be produced as the NPV is positive.

Now for the IRR

That is the rate at which NPV equals zero we can solve for this using the quadratic equation as there are only two cash flow:

Year 1 will discount at (1+IRR)

Year 2 will be discount at (1+IRR )^2

So we can express and recreate the quadratic formula:

18,600 X^2 + 47,500 X - 49,500 = 0

A = 18,600

B = 47,500

C = -49,100

x_1 = \frac{-b+\sqrt{b^{2} -4ac}}{2a}\\x_2 = \frac{-b -\sqrt{b^{2} -4ac}}{2a}

We can solve and get:

x1 =  0.78957

x2 = -3.3433

We take the positive value.

and now solve for IRR

\frac{1}{1+ IRR} = 0.78957\\IRR = \frac{1}{0.78957} -1

IRR = 0,2665121 = 26.65%

This will be the IRR for the project.

4 0
3 years ago
Rearden Metals is considering opening a strip mining operation to provide some of the raw materials needed in producing Rearden
melomori [17]

Answer:

The correct answer is C.

Explanation:

Giving the following information:

The initial purchase of the land and the associated costs of opening up mining operations will cost​ $100 million today. The mine is expected to generate​ $16 million worth of ore per year for the next 12 years. At the end of the 12th year Rearden will need to spend​ $20 million to restore the land to its original pristine nature appearance.

We need to sum each cash flow until the total initial investment is paid:

Number of years= 100,000,000/16,000,000= 6.25 years

To be exact:

0.25*365= 95 days

It will take 6 years and 95 days to recover the initial investment.

5 0
3 years ago
Had columbus's voyage acquired wealth for spain, he was supposed to keep what amount?
kotegsom [21]
He was supposed to keep 10%.
The 10% share was one of the columbus demand' when both columbus and the crown agreed to the terms for his voyage fundinsg.
But, since <span>he had been relieved of his duties as governor, the Crown no longer feel obligated to honour the term of the contract.</span>
5 0
3 years ago
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