If demand for a good falls, but the opportunity cost of making the good increases, then production of the good will:_______

Charisma, Inc., has debt outstanding with a face value of $6 million. The value of the firm if it were entirely financed by equi

Gnesinka [82]

Answer:

$660,000

Explanation:

According to M & M proportion I with taxes, the value of the levered firm is:

V (Firm) = V (Equity) + V (Debt)

= $28,400,000 + 0.25(6,000,000)

= $28,400,000 + $1,500,000

= $29,900,000

Total market value of the firm:

= Market value of the debt + Market value of equity

= $6,000,000 + stock outstanding × Selling price per share

= $6,000,000 + 415,000 × $56 per share

= $29,240,000

With non-marketed claims, such as bankruptcy costs, we would expect the two values to be the same.

The differences are the non-marketed claims:

Expected bankruptcy costs = $29,900,000 - $29,240,000

= $660,000

4 0

2 years ago

Johns Company manufactures products R, S, and T from a joint process. The following information is available: Product R S T Tota

Kryger [21]

Answer:

C) $ 80,000 $ 70,000

Explanation:

R = ($48,000/$120,000) x $200,000

=0.4×$200,000

= $80,000

S = $200,000-$50,000-$80,000

= $70,000

Therefore the sales value at split-off for products R is $80,000 and S $70,000

6 0

2 years ago

A stock has a beta of 1.4, an expected return of 17.2 percent, and lies on the security market line. A risk-free asset is yieldi

andrew-mc [135]

Answer:

the portfolio's return will be Ep(r)= 9.2 %

Explanation:

if the stock lies on the security market line , then the expected return will be

Ep(r) = rf + β*( E(M)- rf)

where

Ep(r) = expected return of the portfolio

rf= risk free return

E(M) = expected return of the market

β = portfolio's beta

then

Ep(r) = rf + β*( E(M)- rf)

E(M) = (Ep(r) - rf ) / β + rf

replacing values

E(M) = (Ep(r) - rf ) / β + rf

E(M) = ( 17.2% - 3.2%) /1.4 + 3.2% = 13.2%

since the stock and the risk free asset belongs to the security market line , a combination of both will also lie in this line, then the previous equation of expected return also applies.

Thus for a portfolio of β=0.6

Ep(r) = rf + β*( E(M)- rf) = 3.2% + 0.6*(13.2%-3.2%) = 9.2 %

Ep(r)= 9.2 %

5 0

3 years ago

Jerry has $50,000 in his savings account and the average new car price is $23,000. does jerry have a demand for a new car? quest

OLEGan [10]

The answer is ‘not necessarily. Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car.’ Because willingness goes hand in hand with this scenario. Many people has the ability to buy things since they have the money for it but unfortunately, the lack the willingness to buy something can affect this scenario. If he lacks willingness, he won't able to buy the new car. The question here is, is he willing to buy the car?

3 0

3 years ago

While business plans are designed to change, a company’s mission statement should remain the same.

bogdanovich [222]

Answer:

I believe that the answer would be true

Explanation:

4 0

2 years ago

If demand for a good falls, but the opportunity cost of making the good increases, then production of the good will:________