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DerKrebs [107]
3 years ago
5

Find a mutually profitable price for this acquisition, that is, a price such that, on average or in expectation, the owners of b

oth the target and the private equity firm expect to profit. It helps to know that, when any outcome between a and b is equally likely, the expected or average outcome is a+b−a2 What is the lowest price the target's owners are willing to accept for the firm?

Business
1 answer:
borishaifa [10]3 years ago
6 0

Answer:

The lowest price the target's owners are willing to accept for the firm is 50

Explanation:

Solution

It is known that in the market there are two firms. while one is target, the other is equity firm.

The target has several projects  at hand bu the firm's worth is uncertain. it lies anywhere between 0 and 100.

Now,

The equity believes that the target is not well managed and with a good management it's value can be increased by 50%

Now,

The owner of the target does not know the firm's worth. so, it may be profitable  or the firm to accept the average outcome

Note: Kindly find an attached copy of the complete question for this example below.

Average outcome  0 + 100/2

= 100/2 = 50

Therefore, the lowest price the target's owners are willing to accept for the firm is 50

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Theresa owes $9,000 on her car loan. If the value of her car is $15,000, what is her equity in the car?
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Theresa has $6,000 in equity.

Explanation:

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Urban Window Company had gross wages of $320,000 during the week ended July 15. The number of wages subject to social security t
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Answer:

wages expense  320,000 debit

              cash                                     218,400 credit

              FICA tax payable                     2,160 credit

             SUTA tax payable                       240 credit

              Social security payable        24,000 credit

             wages income tax payable   75,200 credit

--to record July 15th payment to employees wages--

payroll tax expenses   26,400  debit

FICA tax payable                     2,160 credit

SUTA tax payable                       240 credit

Social security payable        24,000 credit

---to record the payroll tax for the week ended July 15th--

Explanation:

We multiply the wages subjet to taxation by each rate:

social security:

320,000 x 7.5% = 24,000

SUTA

40,000 x 5.4% = 2,160

FICA

40,000 x 0.6% =    240

For this three concepts, the employee will have liability for the same amount for payroll taxes

Income tax 75,200

net wages: 320,000 - 24,000 - 2,160 - 240 - 75,200 = 218,400

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