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notka56 [123]
3 years ago
5

Medallion Cooling Systems, Inc., has total assets of $10,000,000, EBIT of $2,000,000, and preferred dividends of $200,000 and is

taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment:,
a. Calculate earnings per share for each level of indebtedness.,

b. Use Equation 13.12 and the earnings per share calculated in part a to calculate a price per share for each level of indebtedness.,

c. Choose the optimal capital structure. Justify your choice

Business
1 answer:
liraira [26]3 years ago
4 0

Answer:

Explanation:

The two attached pictures shows the explanation for this problem. I hope it help you. Thank you

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Suppose the demand for hard-wood flooring increases, while the demand for wall-to-wall carpeting decreases. Based on this change
Daniel [21]

Answer:

<em>Frictional unemployment created by sectoral shifts </em>

Explanation:

Frictional unemployment <em>happens throughout a phase when employees are looking for new jobs or are transferring from old jobs to newer ones.</em>

It can even be defined as natural unemployment as it is not directly linked to factors that contribute to an economy that is performing poorly.

A new global trade agreement leads to higher demand for export-sector workers and lower demand for workers in import-competing sectors. Workers need time to change sectors, and sectoral shifts lead to frictional unemployment

4 0
3 years ago
Metroplex Corporation will pay a $2.50 per share dividend next year. The company pledges to increase its dividend by 4.70 percen
postnew [5]

Answer: $27.47

Explanation:

Given: Growth rate =  4.70% per year = 0.0470 per year

Dividend of next year = $2.50

Expected rate of return on Stock =  13.80% =0.1380

Current price = (Dividend of next year ) ÷ (Expected rate - Growth rate)

= (2.50)÷ (0.1380-0.0470)

= (2.50) ÷ (0.091)

≈  $27.47

Hence,   you will pay  $27.47 for the company's stock today.

7 0
3 years ago
Kline Corp. recognizes revenue over time to account for long-term contracts. The contract price is $5 million, total constructio
dlinn [17]

Answer:

The journal entry which is to be recorded is shown below:

Explanation:

Contract Price A/c...................................Dr    $500,000

Cost of constructionA/c.........................Dr   $150,000

                 Revenue A/c................................Cr   $2,000,000

As the company recording the revenue, so the revenue account is credited. It involves the cost of construction which is debited and the contract price account is debited.

Note: The options are missing. So, proving the journal entry in the answer.

7 0
3 years ago
Orchid Corp. has a selling price of $15, variable costs of $12 per unit, and fixed costs of $27,000. If Orchid sells 11,500 unit
Helga [31]

Answer:

Total contribution margin= $34,500

Explanation:

Giving the following information:

Selling price= 15

Unitary variable cost= 12

<u>First, we need to calculate the unitary contribution margin:</u>

Unitary contribution margin= selling price - unitary variable cost

Unitary contribution margin= 15 - 12 = 3

<u>Now, the total contribution margin for 11,500 units:</u>

Total contribution margin= 3*11,500= $34,500

6 0
3 years ago
In making decisions for commercial janitorial &amp; maintenance services, inc., isaiah uses a cost-benefit analysis. this analys
harkovskaia [24]
<span>The cost-benefit analysis Isaiah used is part of a systematic approach, a process where business decisions are analysed. In this case, the benefits acquired from using the commercial janitorial and maintenance are summed up, and the costs associated with taking their services are subtracted from it. The outcome of this analysis will help determine Isaiah if the commercial janitorial and maintenance services, inc. is financially beneficial to the company or not.</span>
3 0
3 years ago
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