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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.

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sergey [27]

The answer & explanation for this question is given in the attachment below.

5 0
3 years ago
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A company can sell any mix of Product A and Product B at full capacity. The company has 100,000 hours of capacity. The demand fo
Marta_Voda [28]

Answer:

Company A produce 100,000.

Explanation:

According to the question , the computation is shown below:-

Particulars                                     Product A      Product B

Contribution margin per unit         $20                 $30

Hours per unit                                1                       2

Contribution margin per unit         20                    15

As we can see that the company A produces 100,000 and the same is the answer

8 0
3 years ago
Andrew is offered a job in Little Rock, where the CPI is 80, and a job in New York, where the CPI is 125. Andrew's job offer in
RSB [31]

Answer:

The job in New York should offer $65,625.

Explanation:

Andrew is offered a job in Little Rock, where the CPI is 80, and a job in New York, where the CPI is 125.  

Andrew's job offer in Little Rock is $42,000.  

To represent the same purchasing power salary in New York should be

= \frac{CPI\ in\ New\ York}{CPI\ in\ Little\ Rock}\ \times\ Salary\ in\ Little\ Rock

= \frac{125}{80}\ \times\ \$ 42,000

= $65,625

7 0
3 years ago
17. When a business hires another company to
Lady bird [3.3K]

Transferring risk

Explanation:

<u>To transfer risk is in a way to test grounds of a volatile business by using a smaller company as bait and seeing how the market reacts to it before committing completely</u> for the catch once the company decides what to do there.

Transference of risk is possible for big firms and allows them to get a real view of the scenarios they can expect to see when they set up operations in a place.

7 0
2 years ago
Bob, age 17, has entered into a contract to buy a car. The contract is: a. voidable. b. void. c. voidable only if Bob can return
AysviL [449]

Answer:

The correct answer is letter "A": voidable.

Explanation:

Voidable contracts are those that cannot be enforced because one or the two parties involved are not legally eligible to go on in such an agreement. Reasons to void a contract include but are not limited to failure to disclose material facts, legal incapacity to enter a contract or inconsistent contractual terms.

Thus, <em>Bob's contract to purchase a car is voidable since he is legally incapable of signing agreements due to his age (17 years old).</em>

4 0
3 years ago
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