Consumers should be concerned about high interest rates because high interest rates _________

You are considering buying a company using leveraged buyout. The company is projected to have sales of 500 million each year in

worty [1.4K]

Answer:

Net income= $33 million

Explanation:

A leveraged buyout is a buyout of an entity by it's own managers/board members mostly through debt financing. Now the expected sales after the buyout is 500 million, we are asked to calculate net income only in the first year. First of all lets see what net income is. Net income is the remaining amount of income after having paid all the expenses which is mostly the residual income available for either distribution to shareholders or transfer to retained earnings.

The formula for net income is as follows:

Net income/profit= Sales revenue - COGS - Administrative expenses- depreciation and amortization - Interest expense - Tax

Let first calculate COGS & other administrative expense, depreciation and interest expenses first.

COGS & ADMIN: 500*0.6=300 m

Depreciation: 500*0.05 =25m

Interest expense for the year: 1500 * 0.08= 120m

Now lets substitute values in the formula mentioned above:

Income before taxes: 500m - 300m - 25m - 120m

Income before taxes: 55m

Income after taxes; 55m - 22m (taxes= 55*40%)

Net income= $33 million

4 0

4 years ago

b. draw the following four graphs with an economy experiencing an inflationary gap: money market, investment demand, aggregate d

3241004551 [841]

The central bank decreases the money supply. The relationship between the unemployment rate and the rate of inflation is one of the key concepts in economics, and the short run Phillips curve illustrates this relationship.

The relationship between this shift in the aggregate demand curve in the short run and the emergence of unemployment and inflation is shown by the curve. Additionally, it displays the short-term shift in the economy's aggregate supply curve.When the economy shifts from its short-run equilibrium to its long-run equilibrium.

The following things will occur the cost will decrease.There will be less demand for money. Note that a decrease in the moment supply will cause the moment supply to move to the left. A smaller money supply will also result in a smaller overall demand. Therefore, the price level and money demand will both decrease as the economy moves from its short-run equilibrium to its long-run equilibrium.

To know more about Aggregate demand visit:

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6 0

2 years ago

The following data pertain to the Vesuvius Tile Company for July:

ivann1987 [24]

Answer:

The following data pertain to the Vesuvius Tile Company for July:

Work in process, July 1 (in units) .......................................................................................................................20,000

Units started during July ...................................................................................................................................? 45,000

Total units to account for ..................................................................................................................................65,000

Units completed and transferred out during July ................................................................................................? 50,000

Work in process, July 31 (in units) .....................................................................................................................15,000

Total equivalent units: direct material .................................................................................................................65,000

Total equivalent units: conversion ......................................................................................................................?56.000

Work in process, July 1: direct material .............................................................................................................$164,400

Work in process, July 1: conversion ...................................................................................................................?79,800

Costs incurred during July: direct material .........................................................................................................?371,850

Costs incurred during July: conversion ..............................................................................................................659,400

Work in process, July 1: total cost .....................................................................................................................244,200

Total costs incurred during July .........................................................................................................................1,031,250

Total costs to account for ..................................................................................................................................1,275,450

Cost per equivalent unit: direct material .............................................................................................................8.25

Cost per equivalent unit: conversion ..................................................................................................................?13.20

Total cost per equivalent unit ............................................................................................................................21.45

Cost of goods completed and transfered out during July ......................................................................................?1,072,500

Cost remaining in ending work-in-process inventory: direct material ...................................................................?202,950

Cost remaining in ending work-in-process inventory: conversion .........................................................................79,200

Total cost of July 31 work in process .................................................................................................................202,950

3 0

4 years ago

A hedge fund with net asset value of $71 per share currently has a high water mark of $78. Suppose it is January 1, the standard

Leto [7]

Answer:

Answer :The annual incentive fees according to Black Scholes Formular =2.5

Explanation:

a)Find the value of call option using below parameter

current price (st)=$71

Strike price(X)=$78

Rf=4%

std=42%

time=1

value of call option=15.555

Annual incentive=16% x 15.555=2.5

The annual incentive fees according to Black Scholes Formular =2.5

(b) The value of annual incentive fee if the fund had no high water mark and it earned its incentive fee on its return in excess of the risk-free rate? (Treat the risk-free rate as a continuously compounded value to maintain consistency with the Black-Scholes formula.)

current price (st)=71

Strike price(X)=78

Rf=(e^4%)-1 = 4.08%

std=42%

time=1

value of call option=17.319

Annual incentive=16% x 17.319=2.77

7 0

4 years ago

Tony is the owner of Tony’s Taqueria. Tony is a profit-maximizing owner whose firm operates in a competitive market. An addition

Lisa [10]

Answer:

(c) $5

Explanation:

Remember, To calculate marginal cost, we divide the change in production costs by the change in quantity.

In this example, the change in production cost is $200 (for hiring an additional worker) while the change in quantity of taco is 40 (increase in marginal productivity).

The marginal cost= $200/40

we get $5 as the marginal cost.

5 0

3 years ago

Consumers should be concerned about high interest rates because high interest rates __________.