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Sphinxa [80]
3 years ago
8

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 value (in millions) of Wilson Dover's debt if its equity is viewed as an option?
a. $167.57
b. $186.19
c. $204.81
d. $225.29
e. $247.82
Business
1 answer:
svlad2 [7]3 years ago
8 0

Answer:

b. $186.19

Explanation:

Value of Nd1 = 0.9720

Value of Nd2 = 0.9050

Risk free rate = 5%

Value of the option = $500 million

Value of the coupon debt = $200 million

Value of option = [P*Nd1 - X*e^(risk free rate*time) * ND2]

Value of option = [500*0.9720 - 200*e^(-0.05) * 0.9050]

Value of option = [486-190.24 * 0.9050]

Value of option = $313.82 million

Value of Wilson Dover's debt = $500 million - $313.82 million

Value of Wilson Dover's debt = $186.18 million

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Answer:

A) save domestic jobs

Explanation:

Domestic jobs: These are the categories of jobs that are available in the national country of the company or within the boundary of the country, which has a preference for the local population and has more responsibility toward national´s resources, however, foreign companies have less responsibility toward national´s resources and their sole motive is to earn profit at a lesser cost.  

In the given case, Japanese company´s export to the U.S have affected the domestic jobs as their motive is to maximize profit, which leads to an argument for protection of domestic job in U.S auto industry, therefore, US government have limited the export of Japanese automaker.

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3 years ago
In 2019, Bonita Industries sold 3000 units at $1000 each. Variable expenses were $700 per unit, and fixed expenses were $780000.
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Answer:

Bonita’s break-even point in units for 2020 is 812.50 units.

Explanation:

Break-even point in units refers to the number of units of commodity that must sold by a company in order for its cost to be equal to revenue and therefore make no profit but also no loss. This can be determined for Bonita Industries as follows:

Selling price in 2020 = Selling price in 2019 * (100% - Percentage cut in selling price) = $1,000 * (100% - 40%) = $1,000 * 96% = $960

Variable expenses = $700

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Contribution per unit = Selling price in 2020 - Variable expenses = $960 - $700 = $260

Bonita’s break-even point in units for 2020 = Fixed expenses / Contribution per unit = $780,000 / $960 = 812.50 units

Therefore, Bonita’s break-even point in units for 2020 is 812.50 units.

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3 years ago
The production possibilities frontier will shift outward
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Answer:

E. if technological advances occur is the correct answer.

Explanation:

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