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blagie [28]
3 years ago
15

2. Buckeye Industries has a bond issue with a face value of $1000. The value of Buckeye’s asset is $1200. In one year they will

be worth either $800 or $1400. The going rate on T-bill is 4 percent. What is the value of debt, equity, and interest rate on debt?
Business
1 answer:
Leto [7]3 years ago
8 0

Answer:

Buckeye Industries has a bond issue with a face value of $1000. The value of Buckeye’s asset is $1200. In one year they will be worth either $800 or $1400. The going rate on T-bill is 4 percent. What is the value of debt, equity, and interest rate on debt?

Explanation:

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Net cash flow from (OA) operating activity = $5000

Net cash flow from (I) investing  = $10000

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Net cash increase = Operating activity cash flow + Financing activity cash flow - Net cash flow from investing  

Net cash increase = 5000 + 50000 – 10000

Net cash increase = 45000

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the resource-based model.

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