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Soloha48 [4]
3 years ago
11

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:
jek_recluse [69]3 years ago
7 0
A and then d i’m pretty sure
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What is the value today of a money machine that will pay $4,010.00 per year for 13.00 years?
Maurinko [17]

Answer:

The present value of the machine is $35499

Explanation:

The annual amount or annuity amount = $4010 per year.

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Here, the interest rate is not given so we just assume the interest rate = 6% per annum.

Since we have a total number of years and annual payment that occurs for 13 years. We are required to find the present value of the machine. So use the formula to find the present value of the annuity.

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The present value of machine = (4010(1 – (1+6%)^-13) ) / 6%

The present value of machine = $35499

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A department is looking for an entry-level cashier. One of the job applicants is a cashier with 30 years of experience as a cash
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The reason why the manager wants the person with 6 months of experience is the fact that a person with 30 years of experience is overqualified for an entry level position.

<h3>What is an entry level position?</h3>

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