Answer:
$587,500
Explanation:
You are required to calculate the value of the levered firm;
vL = vU + Dt, whereby;
vL = Value of levered firm
vU = value of unlevered firm
Dt = debt * tax ; which is the tax shield
Find value of unlevered firm;
vU = [EBIT(1-tax) ]/ rE
= [100,000(1-0.30)] / 0.16
= 437,500
Value of levered firm;
vL = 437,500 + (500,000*0.30)
= 437,500 +150,000
= $587,500
Answer:
b. false
Explanation:
A loss making treasury stock sale will decrease the paid-in-capital account by the amount of loss only.
In case of Loss
Dr. Cr.
Cash xxx
Paid-In -Capital xxx
Treasury xxx
In case of Profit
Dr. Cr.
Cash xxx
Paid-In -Capital xxx
Treasury xxx
As Paid-In-Capital account is part of equity account and it has credit balance. Hence Paid-In-Capital balance will only be reduced in case of loss making treasury shares sale.
Answer:
Statements A, B and, C are correct.
Explanation:
Calvin can make decals faster and Hobbs can make chains faster. In other words, we can say that Calvin has a comparative advantage in making decals, while, Hobbs has a comparative advantage in making chains.
This means that Calvin has a low opportunity cost for producing decals and Hobbs has low opportunity cost for producing chains.
The output will be maximized if Calvin makes decals and Hobbs makes chains.
If both divide their time equally between making decals and chains, the output will not be maximized.
Answer:
Within walking distance from your home, there are a plethora of fast-food restaurants including Koala Express, Cabo Bob's Burritos, Oodles of Noodles, and Hanz's Hearty Hamburgers.
Explanation:
Monopolistic competition refers to a market where there are a large of suppliers that offer differentiated products to a large number of consumers. The restaurant industry are the most common example of monopolistic competition.
The other options are wrong:
Sprint, AT&T, Verizon, and T-Mobile own a large portion of the U.S. cellular market share. OLIGOPOLISTIC MARKET (FEW SUPPLIERS AND MANY CONSUMERS)
Farmers grow navel oranges throughout the United States. PERFECT COMPETITION (MANY SUPPLIERS AND MANY CONSUMERS THAT SUPPLY SIMILAR PRODUCTS)
The local gas company owns all of the gas lines that supply natural gas and heating to the residents in the town of Madison, Wisconsin. MONOPOLY, ONLY ONE SUPPLIER AND MANY CONSUMERS
Answer:
(a) 8 times
(b) 45.6 days
Explanation:
Given that,
Cost of goods sold = $500,000
Average inventory = $62,500
Assume 365 days a year.
(a) Inventory turnover ratio:
= Cost of goods sold ÷ Average inventory
= $500,000 ÷ $62,500
= 8 times
(b) Number of days' sales in inventory days:
= 365 days ÷ Inventory turnover ratio
= 365 days ÷ 8
= 45.6 days