Answer:
a. return rate ,r =24%
b. Yes
c. see the explanation below
Explanation:
a. Let's represent customer’s expected return if she borrows the money with 'r'
100 -90 = $106/(1+r) - 90*1.04/(1+r)
10= 12.4/(1+r)
1+r= 1.24
r=24%
b. It is obviously true that borrowing makes investment more attractive .
c. In both operating periods and bankruptcy, the debt has a fixed life and has a priority claim on cash flows. This is due to the fact that interest is paid before the claims to equity holders, and should in case the company fails on interest payments, it will be declared bankrupt, its assets will be sold, and before any payments are made to equity holders, the amount owed to debt holders will be paid
Answer:
a) The Maximum Liam should be willing to pay is $23,089
Explanation:
The maximum amount Liam should be willing to pay for the investment is the present value of the future amount of 52,000 discounted at 7%.
The present value of a future sum is its worth in today's terms.This represents how much Liam should be offered now to make him indifferent about the choice of receiving $52,000 in the future.
For example, It is the amount that should be invested today at 7% to become $52,000 in 12 years time.
The present value (PV) of a future sum (FV) can be ascertained using the formula below:
PV = FV × (1+r)^(-n)
PV = 52,000× (1+0.07)^(-12)
= 52,000×0.4440
= 23,088.62
= $23,089
The Maximum Liam should be willing to pay is $23,089
I think small stuff makes such a difference for businesses because you have to take risk if you want to be successful and with those little risks the businesses are successful
Answer:
$14,760 million
Explanation:
The computation of the free cash flow is shown below:
= EBIT × (1 -Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - net capital Expenditure.
= $17,400 + $0 - $30 million - $2,610 million
= $14,760 million
Simply we deduct the changes in net working capital and net capital expenditure from the EBIT (1 - tax rate) so that the accurate value can come.
Answer:
a. continue only if Eleni and Frey consent
Explanation:
A General Partner within a limited partnership organization manages the business and has unlimited personal liability for the debts and obligations of that firm/organization. Therefore if there are more than one then all decisions must be made in unison because it affects each member personally. So in this scenario if Derry Dies the partnership can continue only if Eleni and Frey both consent.