1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
aliina [53]
3 years ago
10

Levered, Inc., and Unlevered, Inc., are identical in every way except their capital structures. Each company expects to earn $29

.3 million before interest per year in perpetuity, with each company distributing all its earnings as dividends. Levered’s perpetual debt has a market value of $94 million and costs 8 percent per year. Levered has 2.6 million shares outstanding that sell for $108 per share. Unlevered has no debt and 4.8 million shares outstanding, currently worth $83 per share. Neither firm pays taxes. What is the value of each company's equity? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
Business
1 answer:
Ugo [173]3 years ago
7 0

Answer:

Levered -  $280,800,000

Unlevered - $398,400,000

Explanation:

The formula to compute the equity value is shown below:

Equity value = Number of outstanding shares × current worth per share

For Levered, the equity value would be

= 2,600,000 shares × $108

= $280,800,000

For Unlevered, the equity value would be

= 4,800,000 shares × $83

= $398,400,000

We simply multiply the number of outstanding shares with the current worth per share so that the equity value can come.

You might be interested in
Question Number 5) UPS management feels that one of the main advantages ________ provides to the company is structure a union sa
matrenka [14]

One of the main advantages of C. The Union in a workplace is that it helps to provide a structure.

<h3>What is a Labor Union?</h3>

This refers to a group that protects the rights and interests of workers to have better working conditions and remunerations.

Hence, we can see that the importance of labor unions cannot be overemphasized as according to UPS management, they believe that one of the main advantages of C. The Union in a workplace is that it helps to provide a structure

Read more about labor unions here:

brainly.com/question/881501

7 0
2 years ago
The contracting of physical distribution tasks to third parties who do not have managerial authority within the marketing channe
mote1985 [20]

Answer: The contracting of physical distribution tasks to third parties who do not have managerial authority within the marketing channel is known as outsourcing.

Explanation: Outsourcing can be a great move for many companies because often times they are able to receive the product cheaper through cheaper labor or have a supplier that focuses on just that one thing develop it better. Outsourcing allows someone who is better skilled in a particular area make a good or act on a service rather than the initial company.

5 0
3 years ago
Red and White Company reported the following monthly data: Units produced 2,400 units Sales price $ 29 per unit Direct materials
saveliy_v [14]
Lolhtdcc dad ytt try to tu to tho go in rn go go
4 0
3 years ago
Whereas ______________ are often associated with a low-cost leader strategy, ______________ are frequently an important aspect o
valina [46]

Answer:

banks

Explanation:

banks is it

3 0
3 years ago
Sultan Services has 1.2 million shares outstanding. It expects earnings at the end of the year of $6.0 million. Sultan pays out
Kisachek [45]

Answer:

A) $60.00

Explanation:

to calculate the value of Sultan's stocks, we need to use the growing perpetuity formula:

stock price = dividend / (required return rate - growth rate)

  • dividend = ($6,000,000 x 60%) / 1.2 million shares = $3,600,000 / 1.2 million shares = $3 per share
  • required return rate = 10%
  • growth rate = 5%

stock price = $3 / (10% - 5%) = $3 / 5% = $60 per share

5 0
3 years ago
Other questions:
  • Even though many valuable, rare, and inimitable resources were generated at Xerox's Palo Alto Research Center (PARC), the manage
    5·2 answers
  • Select the correct statement regarding managerial and financial accounting. Multiple Choice Timeliness is more important in fina
    13·2 answers
  • A machine costs $1,000 and has a 3-year life. the estimated salvage value at the end of three years is $100. the project is expe
    12·1 answer
  • Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither
    9·1 answer
  • Which of these items is a tax deduction?. a)cash awards. b)interest from bonds. c)interest on a home mortgage
    15·1 answer
  • All competitive advantages do not accrue to large-sized firms. A major advantage of smaller firms are that they ____ (A) have mo
    14·1 answer
  • You want to have $13,000 in 9 years for a dream vacation. If you can earn an interest rate of .4 percent per month, how much wil
    8·1 answer
  • The _____ tells us that the expected return on a risky asset depends only on that asset's nondiversifiable risk.
    6·1 answer
  • ABC Company had addition to retained earnings for the current fiscal year just ended of $395,000. The firm paid out $195,000 in
    12·1 answer
  • What is Walmart's cash ratio for the year of 2018 (round it to 3 numbers after the decimal point -&gt; 0.112)
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!