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Leah, Inc., is proposing a rights offering. Presently there are 400,000 shares outstanding at $54 each. There will be 25,000 new

MatroZZZ [7]

Answer: a. $22,725,000

b. 16.00 rights per new share

c. $53.47 per share

d. $0.53 per share

Explanation:

(a)-New Market Value

New Market Value = [Number of shares outstanding x Price per share] + [New shares issued x Price per share]

= [400,000 shares x $54 per share] + [25,000 shares x $45 per share]

= $21,600,000 + $1,125,000

= $22,725,000

(b)-Number of rights needed

Number of rights needed = Current number of shares outstanding / New shares issued

= 400,000 shares / 25,000 shares

= 16.00 rights per new share

(c)-Ex-rights price

Ex-rights price = New Market Value / Total number of shares outstanding

= $22,725,000 / [400,000 shares + 25,000 shares]

= $22,725,000 / 425,000 shares

= $53.47 per share

(d)-Value of a right

Value of a right = Current market price per share - Ex-rights price

= $54.00 per share - $53.47 per share

= $0.53 per share

7 0

3 years ago

Steven, age 43, earns $80,000 annually; and his wage replacement ratio has been determined to be 80%. He expects inflation will

julsineya [31]

Answer:

Steven will need a capital of $1,061,342.10

Explanation:

Annual Savings

= $80,000*0.8

= $64,000.00

Period

= 68 - 43

= 25

Future Value of annual savings

= FV

= $64000*(1 + 0.03)^25

= $134,001.79

Future Value of social security

= FV

= $26000*(1 + 0.03)^25

= $54,438.23

Annual Investment required at age of 68

= $134,001.79 - $54,438.23

= $79,563.56

Present value of a number of cash flows over his retirement years,

Inflation Adjusted Rate

= (1.08/1.03) - 1

= 4.85%

Period

= 90 - 68

= 22

Capital Required

= PV(4.85%,22,-79563.56)

= $1,061,342.10

Therefore, Steven will need a capital of $1,061,342.10

7 0

4 years ago

A decrease in the price of toothpaste in a tube can lead to a decrease in the purchase of toothpaste in a pump. This means: A. T

earnstyle [38]

Answer:

C. Toothpaste in a tube and in a pump are substitute goods and the demand curve for toothpaste in a pump will shift left.

Explanation:

toothpaste in a tube and toothpaste in a pump are substitute goods.

Substitute goods are goods that can be used in place of another good.

If the price of a good increases, the demand for the substitute increases and if the price of the good reduces, the demand for the substitute increases.

Only changes in price of a good can lead to movement along the demand curve for that good. A decrease in the price of toothpaste in a tube would lead to a movement downward along the demand curve

Other factors affecting demand leads to a shift of the demand curve either to the right or to the left.

A decrease in the price of toothpaste in a tube would lead to a decrease in the purchase of toothpaste in a pump. This would lead to a leftward shift of the demand curve of toothpaste in a pump to the left.

6 0

3 years ago

_______are independent businesses that do not own the products they sell. They act as intermediaries to brinna

ratelena [41]

Answer:

Agents and brokers

Explanation:

Agents and brokers connect buyers and sellers. They are contracted by either sellers or buyers to help them increase sales or find items to buy. Agents and brokers act on behalf of their clients.

Wholesalers and retailers take ownership of the goods they sell. They first buy the goods, which gives them title to the goods before selling to retailers or consumers. Agent and brokers do not buy goods. They look for buyers or sellers for their clients' merchandise.

3 0

3 years ago

Alicia sold her personal residence to Rick on June 30 for $295,000. Before the sale, Alicia paid the real estate tax of $4,425 f

schepotkina [342]

Answer:

$291,460

Explanation:

Data provided in the question:

Purchasing cost of the personal residence = $295,000

Real estate tax paid by Alice before the sale = $4,425

Property tax allocated to Alicia = $885

Property tax allocated to Rick = $3,540

Now,

Rick's basis in the residence will be

= Purchase cost - Property taxes allocated to Rick

= $295,000 - $3,540

= $291,460

7 0

3 years ago