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STALIN [3.7K]
2 years ago
8

A high level of information asymmetry between insiders and outsiders encourages a greater use of debt relative to equity, as wel

l as a greater reliance on short- term debt than on long- term debt in the capital structure. This statement is __________.
Business
1 answer:
Cerrena [4.2K]2 years ago
4 0

Answer: True

Explanation:

Information asymmetry has to do with the study of decisions taken in transactions where one party has better or more information than the other party. These differences in information or asymmetry leads to a power imbalance in transactions, which can lead to transactions going awry.

When high level of information asymmetry exists between the insiders and outsiders in a business environment, it encourages higher use of debt relative to equity, and more reliance on short- term debt rather than on long- term debt.

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Global Tek is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 16 percent
Tpy6a [65]

Answer:

The value of the stock is $2.558

Explanation:

We need to calculate the present value of future cash flows to calculate the Stock value

First Calculate each year's Dividend

Use the following formula to calculate the expected dividend

Expected Dividend = Current Dividend x ( 1 + Growth rate )^n

Year ______ Working _________ Dividend

1 ______ $0.20 x ( 1 + 16% )^1 ____ $0.232

2______ $0.20 x ( 1 + 16% )^2 ____ $0.269

3______ $0.20 x ( 1 + 16% )^3 ____ $0.312

4______ $0.20 x ( 1 + 16% )^4 ____ $0.362

5______$0.362 x ( 1 + 3.5% ) _____$0.375

Now calculate the present value of each year's dividend using following formula

PV = Dividend / ( 1 + required rate of return )^numbers of years

Year _____ Working ______________________ PRESENT VALUES

1 ______ $0.232 / ( 1 + 15.5% )^1 _____________ $0.201

2______ $0.269 / ( 1 + 15.5% )^2 _____________$0.202

3______ $0.312 / ( 1 + 15.5% )^3 _____________ $0.203

4______ $0.362 / ( 1 + 15.5% )^4 _____________$0.203

5______$0.375 / (15.5% - 3.5% ) ) / ( 1 + 15.5% ) __$1.749

Now calculate the sum of present value of all the dividends

Value of stock = $0.201 + $0.202 + $0.203 + $0.203 + $1.755

Value of stock = $2.558

8 0
2 years ago
In a small open economy, if consumer confidence falls and consumers decide to save more, then the real exchange rate:______. a.
bulgar [2K]

Answer:

D. Falls, and net export rises.

Explanation:

When consumers decide to save more in a given economy due to consumer's confidence falling, the net export rises as producers and sellers would seek alternative measures in trying to sell their goods and services. So they begin to export their goods and services in order to offset the decrease in demand for that good or service locally.

Also, real exchange rate will also fall. This is as a result of increase in exportation and reduction in the prices of export.

3 0
3 years ago
Spotnick Enterprises is exploring options for entering into international markets. The key stakeholders have expressed that the
Rufina [12.5K]

Sputnik Enterprises is exploring options for entering into international markets. The key stakeholders have expressed that the primary concern is that Spotnick maintains the maximum amount of control possible to protect its proprietary technology. A greenfield venture entry would be best for Spotnick.

<h3>What Is a Green-Field Investment?</h3>

A green-field (also "greenfield") investment is a type of foreign direct investment (FDI) in which a parent company creates a subsidiary in a different country, building its operations from the ground up. The strategy involves building everything the company needs from the ground (or green field) up. This can include all facets of the business, from plant construction to marketing and distribution channels.

To learn more about Green-Field Investment visit the link

brainly.com/question/15104691

#SPJ4

3 0
2 years ago
1. Beginning inventory plus net purchases equals
Morgarella [4.7K]

Answer:

D. cost of goods available for sale.

Explanation:

The cost of goods available for sale, also known as the total inventory, represents the total amount of finished products that a company had in its store for selling. The calculation of costs of goods available for sale involves adding beginning stock to the net purchases.

Beginning inventory is the ending balance in the previous financial period. It is the finished product balance brought forward of the prior period. Net purchases are the purchases adjusted for discounts and purchase returns. The costs of goods available for sale minus ending inventory will equal to the costs of goods sold.

5 0
3 years ago
abc and xyz agree to maximize joint profits. However, while ABC produces the agreed upon amount, XYZ breaks the agreement and ea
Marat540 [252]

Answer:

The answer is "$ 140".

Explanation:

The company produces the quantity MR = MC and if there is no quantity MR = MC, the amount throughout the case MR is just greater and closest to MC to maximize profit.

Here MR = marginal income and marginal cost =MC

MR =\frac{Overall \ sales \ change}{Quantity\ shift}

In the above table, we could see that the amount MR = MC = 8 isn't available. Thus it produces the amount where the MR

is only larger but nearest to MC.

25 unit MR =\frac{TR \ change}{Quality \ change}

= [TR (when \ Q = 25) -TR \frac{(when \ Q = 20)]}{(25 - 20)}

= \frac{(450 - 400)}{5}= 10

(Minimum and superior to MC)

MR of 30 units=\frac{(480 – 450)}{(30–25)}=6, similarly MR of 30 units.

Consequently, 25 units were produced and 12.5 units were produced.

Currently, XYZ breaks the agreement and produces three more so thus maximum quantity produced on a market = 25 + 5 = 30 and through the above table they see which if quantity = 30, price = 16.

XYZ produces 12.5 + 5 = 17.5 output from 30 units.

Cost Total = TVC + TFC

Total TVC = Total Cost for Variable TFC = Maximum Cost of TFC = 0.

If MC is stable, TVC = MC \times Q = 8 \times q, where Q = exposed to the real produced and XYZ produces 17.5 in this case.

Total expenditure (TC+) is TVC = TFC = 8 \times 17.5.

Take control = TR - TC = TC = 16 \times 17.5 - 8 \times 17.5 = 150.

So the business XYZ is profiting = 140

7 0
3 years ago
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