Answer: $1,849 million.
Explanation:
From the question above, we are given that; The after-tax cashflow from assets (FCFF) for the year ending 2018 = $145 million and the estimated WACC = 10%.
Then, if the Growth rate = 2%, the value of the firm can be calculated as below;
The value of the form can be determined or calculated by using the formula below;
XYZ Inc. company(value of the firm) =(Cash flow) × (1+ Growth rate)/(WACC-Growth rate).
XYZ Inc. company value (value of the firm) = ( 145 ) × ( 1 + 2% )/( 10% - 2% ).
XYZ Inc. company value (value of the firm) =147.9/0.08.
XYZ Inc. company value (value of the firm) =1848.75. = 1849.
Answer: A. 101
Explanation:
Amortization is done on the premium of the bond if elected to be done by the owner.
Bonds at par are worth 100 so a 102 bond has a premium of 2.
If amortized, this premium will have to be amortized over the period till maturity which in this case is 4 years.
Amortization per year = 2 points / 4 years
= 0.5
In 2 years the amortization would therefore be 1 point.
Cost basis of Bond = 102 - 1
= 101
Answer: D - A single-family home
Explanation:
Highest and best use can be described as the use of a vacant site that creates the highest value after construction costs and alternative uses of the vacant lot has been sybtracted. The area where the empty lot is located is residential, therefore it would be inappropriate to situate a factory there. Also a store is located nearby,so it would be unnecessary to build a store on the empty land. Same goes with a parking lot, a parking lot shouldn't be situated in a residential area; it would not be needed in a residential area.
Answer: $2 billion
Explanation:
Okun's law posits that for every percentage point that actual unemployment rate is above the natural unemployment rate, actual GDP will be lower than potential GDP by 2%.
Actual rate of unemployment here is:
= (Labor force - Employed) / Labor force
= (800,000 - 760,000) / 800,000
= 5%
Actual unemployment - Natural unemployment:
= 5 - 4
= 1%
Potential GDP lost is:
= (1% * 2) * 100 billion
= 2% * 100 billion
= $2 billion
Answer: 18,000
Explanation:
Liability policy:
= 2,000
Insurance expense 2018:
= No. of months from 1 Jan 2018 to 31 Dec 2018 × Insurance expense per month
= 12 × 2,000
= 24,000
Prepaid insurance balance for liability policy on 31 Dec, 2018:
= Prepaid Insurance for liability policy - Insurance expense 2018
= 36,000 - 24,000
= 12,000
Crop damage policy:
= 500
Insurance expense 2018:
= No. of months from 1 Jan 2018 to 31 Dec 2018 × Insurance expense per month
= 12 × 500
= 6,000
Prepaid insurance balance for crop damage policy on 31 Dec, 2018:
= Prepaid Insurance for crop damage policy - Insurance expense 2018
= 12,000 - 6,000
= 6,000
Therefore,
Total prepaid insurance balance on 31 Dec 2018:
= Prepaid insurance balance for liability policy on 31 Dec, 2018 + Prepaid insurance balance for crop damage policy on 31 Dec, 2018
= 12,000 + 6,000
= 18,000
