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Artyom0805 [142]
4 years ago
11

Dabney Electronics currently has no debt. Its operating income is $20 million and its tax rate is 40%. It pays out all of its ne

t income as dividends and has a zero growth rate. The current stock price is $40 per share, and it has 2.5 million shares of stock outstanding. If it moves to a capital structure that has 40% debt and 60% equity (based on market values), its investment bankers believe its weighted average cost of capital would be 10%. What would its stock price be if it changes to the new capital structure
Business
1 answer:
ValentinkaMS [17]4 years ago
6 0

Answer:

$29 per stock

Explanation:

WACC=PBIT*(1-tax)/Market value of firm

10%=$20,000,000*(1-40%)/Market Value of the firm

Market Value of the firm=$20,000,000*60%/10%=$120,000,000

Stock price for all shares=$120,000,000*60%=$72,000,000

Stock price per share=$72,000,000/2,500,000=$29 per share

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kotykmax [81]

<u>This is an example of "outsourcing".</u>


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Outsourcing can enable organizations to lessen work costs essentially by outsourcing certain assignments. Organizations can likewise dodge costs related with overhead, gear and innovation.  

4 0
4 years ago
What is one reasons why mixed economies exist?
xxTIMURxx [149]

Answer:Capitalism had too many limits

Explanation:

5 0
4 years ago
Consider a firm with a contract to sell an asset for $151,000 four years from now. The asset costs $96,000 to produce today. a.
abruzzese [7]

Answer:

a) loss of 3,388.87

b) it will break even at 11.99%

Explanation:

we will discount the 151,000 at 13% to know the current sales revenue at the sale

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

Maturity 151,000

time  4 years

rate  0.13

\frac{151000}{(1 + 0.13)^{4} } = PV

PV   92,611.13

the present value is 92,611.13 while the cost is 96,000

there is a loss of 3.388,87‬

To know at which rate the firm break even:

PV = 96,000

\frac{151000}{(1 + r)^{-4} } = 96,000

\sqrt[-4]{96,000/151,000} - 1 = r

r =  0.11989  

6 0
3 years ago
Your manager requires that you, as the cashier, immediately enter each sale. Recently, lunch hour traffic has increased and the
Anastaziya [24]

Answer:

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Even if the assistant manager thinks that not entering the sales is the most efficient idea at the moment, it would be wise to<u> stick to the upper level manager's requirement.</u>

The second course of action would <u>approve the assistant manager's requirement.</u> However, you would have to put out to your upper level manager, in a straightforward manner, that you listened to the assistant manager's suggestion. This is the course of action to opt for if you strongly think that the idea of not entering the sales is correct and won't cause damage that you and the assistant manager will be liable for afterwards.

4 0
3 years ago
Cami is the marketing manager for a regional furniture maker. She closely monitors the impact of each marketing campaign on over
morpeh [17]

Answer:

B) experimentation.

Explanation:

Experimentation is the process by which a business strategy is tested on a smaller scale before it is adopted on a wider scale. A business process or product can be introduced to a particular test group and based on the results extrapolated to other areas.

In this scenario Cami the marketing manager for a regional furniture maker monitors each marketing campaign on overall sales. She also tries novel promotional offers to first time customers in a bid to test efficacy. This is use of experimentation.

6 0
4 years ago
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