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Stella [2.4K]
3 years ago
12

Nichols Corporation's value of operations is equal to $600 million after a recapitalization (the firm had no debt before the rec

ap). It raised $150 million in new debt and used this to buy back stock. Nichols had no short-term investments before or after the recap. After the recap, wd = 25%. What is S (the value of equity after the recap)? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to the nearest whole number.
Business
1 answer:
Daniel [21]3 years ago
8 0

Answer:

The answer is $750 millions

Explanation:

After recapitalization, the Weight of Debts of Nichols Corporation is 25%. Hence, its Weight of Equity Capital is: 100% - 25% = 75%.

The formula of Value of Operations as follows:

Value of Operations = Weight of Debts x Value of Debts + Weight of Equity Capital x Value of Equity Capital

Because Nichols Corporation's value of operations is equal to $600 million after recapitalization, we have the following equation with S as the value of equity after the recap:

600 = 25% x 150 + 75% x S

=> S = (600 - 25% x 150) / 75% = 750

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The correct answer is There will be no real change in the sales of those subliminally advertised items.

Explanation:

Subliminal advertising is one whose message is transmitted below the threshold of consciousness, whether using images, sounds or other techniques that are not readily noticeable. The objective of this type of advertising is to influence the wishes of consumers by generating impulses and needs that encourage them to buy or perform a certain marketing action, but without being aware of that influence.

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You will receive annual payments of $800 at the end of each year for 12 years. The first payment will be received in Year 3. Wha
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Answer:

Option (d) $5,549.96

Explanation:

Data provided in the question:

Annual payments = $800

Time, n = 12 years

Discount rate, r = 7% = 0.07

Now,

PV2 = Annual payments × ((1 - (1 + r)⁻ⁿ)) ÷ r ) × (1 + r)

=  $800 × ( (1 - ( 1 + 0.07)¹²)) ÷ 0.07) × (1 + 0.07)

PV2 = $6,354.15

Therefore,

Present value today = PV2 ÷ (1 + r )²

= $6,354.15 ÷ (1 + .07)²

or

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3 0
3 years ago
An auto insurance company is implementing a new bonus system. In each month, if a policyholder does not have an accident, they w
andrey2020 [161]

Answer:

50,400

Explanation:

Using application of total expectation, E;

N= Number of policy holders who have zero accidents in one month

P= Probability

N|Low = 400

N|High=600

P|Low=0.9

P|High=0.8

Therefore E = (N|Low*P|Low)+(N|High*P|High)

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7 0
3 years ago
Kelchner Corporation has provided the following contribution format income statement. Assume that the following information is w
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Answer:

The contribution margin ratio is closest to 40%

Explanation:

The contribution margin ratio calculates the percentage of sales that will contribute to cover fixed costs and earn a profit. The contribution margin is the difference between the selling price per unit and the variable cost per unit of a product. The contribution margin ratio is the contribution margin per unit represented as a percentage of selling price per unit or total contribution margin represented as a percentage of total sales revenue.

CM Ratio = Total contribution margin / Total Sales revenue

CM ratio = 72000 / 180000  =  0.4 or 40%

7 0
3 years ago
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