Answer:
D) The value of operations is calculated by discounting the horizon value, the tax shields, and the free cash flows before the horizon date at the unlevered cost of equity.
Explanation:
The adjusted present value method is very similar to the NPV method, but with some "adjustments". It determines the NPV of a project if it was financed solely with equity. Then it includes the tax benefits that could be obtained if the project was financed by debt. The benefits are basically lower taxes due to interest payments that reduce taxable income.
The APV uses the company's WACC as the discount rate.
Answer:
External users
Explanation:
External users of accounting information do not directly run the organization and have limited access to its accounting information
Answer:
a. True
Explanation:
A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. Thus, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.
Hence, a public utility company is an example of a monopoly because they serve as the only power utility provider to the general public.
Additionally, a public power company refers to a company that provides power (electricity) utility to the general public of a society.
Hence, one of the ways in which some monopolistic competitors try to become more like monopolists is through the use of designer labels.
This ultimately implies that, when there are barriers to entry it may result in monopolistic competition among the sellers of goods having no close substitutes. These barriers consist of economies of scale, network externalities, copyright law, trademark, patent, governmental policies etc.
Answer:
$9,800
Explanation:
The computation of the supplemental operating cash flow for the first year is shown below:-
For computing the supplemental operating cash flow for the first year first we need to follow some steps to reach the answer which is here below:-
Total Inflows = Annual savings in cost + Increase in earning
= $5,000 + $6,000
= $11,000
Earnings before tax = Total Inflows - Depreciation
= $11,000 - $8,000
= $3,000
Tax = Earnings before tax × 40%
= $3,000 × 40%
= $1,200
Earning after tax = Earnings before tax - Tax
= $3,000 - $1,200
= $1,800
Cash flow in year 1 = Earning after tax + Depreciation
= $1,800 + $8,000
= $9,800
So, for computing the cash flow in year 1 we simply added earning after tax with depreciation.
Answer:
C. The portion of the investment opportunity set which includes the portfolios with the lowest standard deviation.
Explanation:
Standard deviation is the criterion used in measuring risky assets. Harry Markowitz proposed the Efficient Frontier in the year 1952. Through a graph, portfolios which have the highest potential for returns can be depicted.
For securities to be considered worthy, their standard deviation ought to be lower than the standard deviation of individual securities. When a portfolio measures up to this criterion, then it can be represented on the efficient frontier.