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Art [367]
3 years ago
11

BDE Inc. is an unlevered firm which expects to generate a net cash flow of $25 million per year in perpetuity. The firm’s requir

ed return on equity is 10%. Assume that the Modigliani and Miller assumptions hold. (15 points) For questions 27 and 28 assume that the corporate tax rate is zero. 27. What is the value of the unlevered firm?
Business
1 answer:
anzhelika [568]3 years ago
7 0

Answer:

$250 million

Explanation:

If taxes do not exist and the firm has no outstanding debt, then the value of unlevered firm = total enterprise value of BDE

we can use the perpetuity formula to determine the total enterprise value:

total enterprise value = FCF / cost of equity

total enterprise value = $25 million / 10% = $250 million

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Answer:

c. GDP fails to account for the quality of the environment.

Explanation:

Gross domestic product is defined as the sum total of all goods and services produced in a country within a specific time.

It measures the level of wealth in the economy. However it is not a true reflection of personal well being of the citizens of a country because it does not consider the quality of the environment in which people live.

GDP only measures.activities in the market place but does not evaluate other factors like leisure, quality of the environment, health levels, and education.

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3 years ago
Compute the new national income given MPC = 0.9, and an autonomous injection of $100B from federal government stimulus spending.
Helen [10]

Answer:1200

Explanation:

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4 years ago
Prepare the 2017 and 2018 common-size balance sheets for just dew it. (do not round intermediate calculations. Enter your answer
Nina [5.8K]

Answer:

The accounts and other information were missing, so I looked them up:

                JUST DEW IT CORPORATION

                                 Balance Sheet

                              For 2017 and 2018

                                               2017        2018        Cash

                                                                             source / use

Assets:

Current assets

Cash                                    $12,157     $14,105    source

Accounts receivable        $29,382     $32,815    use

Inventory                           $54,632    $57,204     use

Total current assets           $96,171    $104,124

Non-current assets

Net plant and equip.       $367,241   $375,830    use

Total assets                     $463,412   $479,954

Liabilities and stockholders' equity:

Current liabilities

Accounts payable            $46,382     $49,276      source

Notes payable                  $18,246       $19,784     source

Total current liabilities     $64,628     $69,060

Long term debt

Long-term debt                $49,000     $45,000     use

Owners’ equity

Common stock and

paid-in surplus                 $50,000      $50,000        -

Retained earnings          $299,784     $315,894     source

Total owners' equity       $349,784    $365,894

Total liabilities and

stockholders' equity:       $463,412    $479,954

3 0
3 years ago
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Answer:C. $50,000

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Explanation:

4 0
3 years ago
The change in period-to-period operating income when using variable costing can be explained by the change in the
wolverine [178]

Answer:

Unit sales level multiplied by a constant unit contribution margin.

Explanation:

The change in period-to-period operating income when using variable costing can be explained by the change in the Unit sales level multiplied by a constant unit contribution margin.

Hope this helps!

6 0
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