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
WINSTONCH [101]
4 years ago
7

Sunburn Sunscreen has a zero coupon bond issue outstanding with a $11,000 face value that matures in one year. The current marke

t value of the firm's assets is $13,100. The standard deviation of the return on the firm's assets is 29 percent per year. Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $43,000 that matures in one year. The current market value of the firm's assets is $46,600. The standard deviation of the return on the firm's assets is 35 percent per year. Suppose Sunburn Sunscreen and Frostbite Thermalwear have decided to merge. Because the two companies have seasonal sales, the combined firm’s return on assets will have a standard deviation of 19 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously. a-1 What is the combined value of equity in the two existing companies?
Business
1 answer:
7nadin3 [17]4 years ago
8 0

Answer:

1. a) EQUITY = $ 5,036.68

b) DEBT = $ 10,263.32

2. a) EQUITY = $ 4,852.29

b) DEBT = $ 12,247.79

3. PROJECT A

4. Yes

Explanation:

Current market value of the firm’s assets = $13,800

Total Value of Firm = $13800 a-1 NPV of Project A = $1,500 Total Value of Firm if selects Project A = Current Value + NPV of the new Project = $13800 + $1500 = $15,300 Value of debt = $12000 Value of Equity= Value of Firm -Value of Debt = $15300 - $12000 = $3300 a-2 NPV of Project B = $2300 Total Value of firm if selects project B = Current Value + NPV of the new Project = $13800 + $2300 = $16100 Value of Debt = $12000 Value of Equity = Value of Firm -Value of Debt = $16100 - $12000 = $4,100

Therefore,

1. a) EQUITY = $ 5,036.68

b) DEBT = $ 10,263.32

2. a) EQUITY = $ 4,852.29

b) DEBT = $ 12,247.79

3. PROJECT A

4. Yes

You might be interested in
Type the correct answer in the box. Spell all words correctly.
Vinvika [58]

Answer:

Being debt-free within 15 years is an example of a long-term goal.

Explanation:

One main characteristic of a long-term goal is that it involves a planning horizon that is more than 5 years during which some thoughts are paid to the goal, and the means of achieving it are marshalled out,  and rigorously pursued.  Long-terms goals are best broken into manageable, short-term,  and medium-term goals to enable the decision-maker to accomplish her goal.  The future is always uncertain, to achieve a long-term goal you must remain motivated.

3 0
3 years ago
Marketing Manager Joe Driscoll stated that the company believes that all brands and product categories can be​ reinvigorated, ac
Rufina [12.5K]
Jorkdlndodbekdohxndkdb
7 0
4 years ago
Fill in each blank with the correct number from the table.
klasskru [66]

Opportunity costs are the measures of things you must give up when you make a certain decision.

In this case, if country A decides to produce all petroleum, they are choosing not to produce 8 units of seafood. This is their opportunity costs because they are giving up the 8 units of seafood to make petroleum.

The same is true for country B. If they choose petroleum, they are giving up the ability to make 8 units of seafood.

3 0
3 years ago
Read 2 more answers
Sometimes those using the name multinational mean to imply that these companies have erased national allegiances, becoming itine
Bezzdna [24]

Answer: <em>True</em>

Explanation:

MNC is abbreviated as multinational corporation also referred to as the worldwide enterprise is known as the amalgamated organization which owns or has control over the production of commodities and services in an nation other than its domestic ground. A MNC can further be referred to as or known as the transnational enterprise or multinational enterprise.

6 0
4 years ago
2. You're interested in the proportion of students in your school who favor the elimination of a local curfew on teenagers. Assu
lara [203]

Answer: The minimum number of students you need if you want the margin of error to be 5% IS 278.

Explanation:

Cochran’s Sample Size Formula gives the minimum number of students as n= \frac{z^{2}pq }{e^{2} }

Where:

   e is the desired level of precision (i.e. the margin of error),

   p is the (estimated) proportion of the population which has the attribute in question and q is 1 – p.

The z-value  for 95% confidence interval is found to be 1.96 in a Z table.

Assuming that half of the teenagers favor the elimination of a curfew: this gives us maximum variability. So p = 0.5 and q=0.5.

Then n= (\frac{1.96^{2}*0.5*0.5 }{0.05^{2} } )

n= frac{0.9604}{0.0025} }

n= {384.16 }

Rounding up, n= \frac{385 }

But considering that 1000 is a small population,  we can modify the sample size we calculated above formula by using this equation:

s = \frac{n}{1 + \frac{n - 1}{N} }

Where s is the adjusted sample size, n is the original sample size we calculated and N is the population size.

s = \frac{385}{1 + \frac{385 - 1}{1000} }

s = \frac{385}{1 + \frac{384}{1000} }

s = 278

8 0
4 years ago
Other questions:
  • Mountain Top Markets has total assets of $48,700, net working capital of $1,100, and retained earnings of $21,200. The firm has
    12·1 answer
  • What is the cost price? markon percent is 21% and the selling price is $99.99
    10·1 answer
  • An item owned by a house hold or business that has a monetary value
    15·2 answers
  • Bird Enterprises has no debt. Its current total value is $47.2 million. Assume debt proceeds are used to repurchase equity.
    6·1 answer
  • Caro-Lind Inc. manufactures personalized baby quilts. An experienced embroiderer can personalize 8 quilts per hour. Because the
    10·1 answer
  • The owner of a new athletic-training facility decided to pay to have its ads appear on athletics and training-related search res
    9·1 answer
  • A company applies overhead at a rate of 150% of direct labor cost. Actual overhead cost for the current period is $1,150,000, an
    9·1 answer
  • How can a nation’s government invest in human capital?
    11·1 answer
  • What was a new deal program established to relieve unemployment during the great depression by providing national conservation w
    6·1 answer
  • The blurring of lines between the state and a special interest group in which a close alliance develops is called
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!