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777dan777 [17]
3 years ago
14

Wilson Dover Inc. The total value (debt plus equity) of Wilson Dover Inc. is $500 million and the face value of its 1-year coupo

n debt is $200 million. The volatility (σ) of Wilson Dover's total value is 0.60, and the risk-free rate is 5%. Assume that N(d1) = 0.9720 and N(d2) = 0.9050. Refer to the data for Wilson Dover Inc. What is the yield on Wilson Dover's debt? a. 7.05% b. 6.04% c. 6.70% d. 7.42% e. 6.36%
Business
1 answer:
Nutka1998 [239]3 years ago
6 0

Answer:

7.42%

Explanation:

Value = 500 million

Amount of debt = 200 million

Time = year

Volatility = 6%

Risk free rate = 0.05

Nd1 = 0.9720

Nd2 = 0.9050

We have to calculate the value =

500 - (500 x 0.9720 - 200 x e^-0.05 x 0.9050)

= 186.17 million

We now calculate the yield

(200/186.17)^1 - 1

= 0.0742

= 7.42%

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Answer:

warrant expense 51,000 debit

          cash                       6,000 credit

          warranty liability 45,000 credit

--to record warrant-related accounts--

interest payable 16,667 debit

interest expense  3,333 debit

          cash                  20,000 credit

--to record interest expense for the loan and installment--

Manufacturing Facilities 5,192,772  debit

              Cash                    5,000,000 credit

              Restoration Liability 192,772 credit

-- to record the payment to contractor--

Explanation:

Warranty: the additional expected expense are considered warranty laibility

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That is: 200,000 x 10% x 10/12 months = 16,667 payable

At February 28th we recognize the last two month of interest

200,000 x 10% x 2/12 months = 3,333 expense

in total we have 16,667 + 3,333 = 20,000 cash outlay

Facility: the asset should add to all the cost necessary to acquire it:

As the conversion into community center is mandatory it is part of the cost:

present value of the 500,000 in ten years:

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  $500,000.00

time  10.00

rate  0.10000

\frac{500000}{(1 + 0.1)^{10} } = PV  

PV   192,771.6447

Total cost:

5,000,000 cashg + 192,772 liability = 5,192,772

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Answer:

you want me to do a whole project?!

Explanation:

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Answer:

Calculating the cost of each activity,

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Counting = $ 37,500

Inspecting = $54,450

Explanation:

Given:

Unloading lease = $15,000 per year

Fuel for the forklift = $3,600 per year

Maintenance for the forklift = $1,500 per year

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Operating cost = $750.

Receiving employees average salary = $50,000 per year

Salaries; 3 × 50,000 = 150,000

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Inspecting salary = 35% × 150,000 = 52,500

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Equipment               15,000                                                             1,200

Fuel                           3,600

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"Many service companies collect data via a follow-up survey of their customers. Suppose, in order to ascertain customer sentimen
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