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bearhunter [10]
3 years ago
5

Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan

I, the company would have 175,000 shares of stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding and $2.23 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes.
a. Use M&M Proposition I to find the price per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the value of the firm under each of the two proposed plans? (Do not round intermediate calculations and round your answers to the nearest whole dollar amount, e.g., 32.)
Business
1 answer:
amid [387]3 years ago
5 0

Answer:

A) total debt = $2,230,000 and it represents 175,000 - 125,000 = 50,000 outstanding shares

price per share = $2,230,000 / 50,000 = $44.60 per share

B) enterprise value = 175,000 x $44.60 =  $7,805,000

According to M&M proposition I, the enterprise value is the same with or without any outstanding debt. So the company's value is the same for both alternatives.

You might be interested in
The interest rate charged to AAA corporate borrowers is 7.8% for 5 year bonds. The interest rate charged to BBB corporate borrow
azamat

Answer:

Answer is option c.

Default Risk and Liquidity Risk

Explanation:

  • Default risk - because AAA and BBB differ in credit quality
  • Liquidity risk - because BBB could potentially have lower liquidity than AAA bond (more stable and could be more traded)
5 0
3 years ago
When command is transferred, then all personnel involved in the incident should be told.
olga nikolaevna [1]

Based on the principle of formality, the correct answer goes:

  • The effective time and date of the transfertransfertransfertransfer

<h3>Command of transfer</h3>

When command is transferred, then all personnel with a need to know should be told: The effective time and date of the transfer.

In conclusion, we can conclude that the correct answer is as informing about effective time and date.

Learn more about transferring officer here: brainly.com/question/10721205

6 0
3 years ago
The class trip is going to cost each of the fifty
Alex

Answer:

$6,825.00

Explanation:

50x$130=$6,500.00

$6,500 × 5% = $325.00

$325.+$6,500=6,825.00

8 0
3 years ago
The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $182 with a resulting contrib
k0ka [10]

Answer:

Year 3 cashflow:

current system: 243,360

alternative system: 102,240

Present cost:

current system PV -$971,665.9146

alternative system PV  -$1,075,964.17

Explanation:

<u>Current Scenario:</u>

42,000 inspection cost

<u>Repairs:</u>

1,520 identified x  $75 = 114,000

<u>Refunds:</u>

480 units x $182 = 87,360

Total yearly cost: 243,360

PV of an annuity of $243,360 during 5 years:

Present Value of Annuity  

C \times \displaystyle \frac{1-(1+r)^{-time} }{rate} = PV\\  

C 243,360

time 5

rate 0.08

243360 \times \displaystyle \frac{1-(1+0.08)^{-5} }{0.08} = PV\\  

PV $971,665.9146  

<u>New Scenario:</u>

Inspection cost: $42,000  + $25,000 = $77,000

Repair cost: 350 units x $41 = $14,320

Refunds: 50 units x $182 x 120% = $10,920

Total yearly cost: $102,240

F0 cost:

470,000 workers trainings

210,000 purchase cost

Total F0 cost: 680,000

Present Value of Annuity  

C \times \displaystyle \frac{1-(1+r)^{-time} }{rate} = PV\\  

C 102,240

time 5

rate 0.08

102240 \times \displaystyle \frac{1-(1+0.08)^{-5} }{0.08} = PV\\  

PV $408,214.6742  

PV of residual value:

PRESENT VALUE OF LUMP SUM  

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  18,000.00

time   5.00  

rate  0.08

\frac{18000}{(1 + 0.08)^{5} } = PV  

PV   12,250.50  

Net present value:

- 680,000 -408,214.67 + 12,250.50 = 1,075,964.17

4 0
2 years ago
What job do you want when your older and why?
Arisa [49]

Answer:

Iv had a good interest in locomotives since I was about 7. There were tracks a few blocks down the road from where I lived, and about 3-8 would pass a day. They passed by so much that I learned which horn went with each train. There were about 5 different trains and I remember one of the engine's numbers to be 2524, which is ironically the last numbers for my phone. This went on till I was 13 when we moved and I had to say goodbye to all of those trains. I even named when, which only made it worse when I moved. They were: Thomas (why not), James, Elif, Mack, and Karen. Karen had the loudest horn, which made sense. Thomas was #2524, James only came on the weekends and was a coal train, Elif had a flame on the front, and Mack had the loudest engine out of them all but hustled quickly. But back to what your asking, I want to be a conductor, or really anything that has to do with trains. I have and always will have a love for them. Plus, you can travel anywhere them tracks take you, and the pay is worth the 6 hours of sleep you get. Not alot but that sums that up :)

8 0
3 years ago
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