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gogolik [260]
3 years ago
14

You are considering a stock investment in one of two firms (Lots of Debt, Inc. and Lots of Equity, Inc.), both of which operate

in the same industry. Lots of Debt, Inc. finances its $34.25 million in assets with $32.25 million in debt and $2.00 million in equity. Lots of Equity, Inc. finances its $34.25 million in assets with $2.00 million in debt and $32.25 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Calculate the equity multiplier. (Round your answers to 2 decimal places.)
Business
1 answer:
Luden [163]3 years ago
6 0

Answer:

Debt Ratio = Total Debt Total/ Assets

Equity Multiplier = Assets/Equity

<h2>Lots of Debt</h2>

Debt Ratio

= 32.5/34.25

= 0.95

Equity Multiplier

= 34.25/2

= 17.13

<h2>Lots of Equity </h2>

Debt Ratio

= 2/34.25

= 0.06

Equity Multiplier

= 34.25/32.25

= 1.06

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Firm A has earnings-per-share of $3.00. Firm B has earnings-per-share of $2 and a price-per-share of $30. Using the Price/Earnin
stealth61 [152]

Answer:

Company A's price per share is $45

Explanation:

The P/E ratio of one company can be used by investors and analysts to determine the value of another companie's stock in the industry. This is called apples-to-apples comparism.

The P/E ratio is used to value a company by comparing its share price to earnings per share.

P/E ratio= market value of shares/ earnings per share

For company B

P/E ratio= 30/2= $15

Using company B's P/E ratio as a benchmark for company A

15= Price per share /3

Price per share = 15*3= $45

8 0
3 years ago
At its present rate of output, Barrel O' Biscuits, a perfectly competitive firm, finds that its marginal cost exceeds its margin
Delvig [45]

Answer: Reduce output

Explanation:

 According to the given question, the barrel O' Biscuits is one of the type of perfectly competitive organization in which its overall marginal cost increasing the company's marginal revenue.

 For maximizing the profit of an organization then we should reduce the output as in the perfect competition the company majorly affected the output only and for shift the overall marginal cost of the company we reducing the output.

 Therefore, Reduce output is the correct answer.      

 

3 0
3 years ago
Suppose that the marginal propensity to consume in Frugalia is 0.60. The government of Frugalia enacts a stimulus program that i
fgiga [73]

Answer:

option (c) $25 million

Explanation:

Data provided in the question:

The marginal propensity to consume in Frugalia, MPC = 0.60

Increase in spending = $10 million

Now,

The total increase in income

= \frac{\textup{1}}{\textup{1-MPC}}  × Increase in spending

on substituting the respective values, we get

= \frac{\textup{1}}{\textup{1-0.6}}  × $10 million

=  \frac{\textup{1}}{\textup{0.4}}  × $10 million

or

= 2.5 × $10 million

or

= $25 million

Hence,

The answer is option (c) $25 million

5 0
3 years ago
Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs t
erastovalidia [21]

Answer:

Balance for the Factory Overhead account: 19,000 credit

Explanation:

We will first, calculate the overhead rate based on the predetermination overhead rate:

\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate

The total manufacturing cost will be distributed over the cost driver. In this case, labor cost:

360,000/180,000 = 2 overhead rate

Then, we calculate the applied overhead 203,000 x 2 = 406,000

Now, the balance for factory overhead account:

Actual overhead: 387,000 debit

        payable, accumulated depreicaiton and other 387,000 credit

WIP 406,000 debit

Applied Overhead 406,000 credit

Balance:

406,000 - 387,000 = 19,000 credit

8 0
3 years ago
What is NOT affected by decisions of the federal Open Market Committee?
natka813 [3]

I believe the answer is: D. bond prices


Bond prices is determined by the mutual agreement between the company who issue the bond and the investors who bought them along with its value in the market. federal Open Market Committee only has the jurisdiction in United States Treasury securities and banking operation.

5 0
3 years ago
Read 2 more answers
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