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Marizza181 [45]
3 years ago
13

Executive Chalk is financed solely by common stock and has 25 million shares outstanding with a market price of $10 a share. It

announces that it intends to issue $160 million of debt and use the proceeds to buy back common stock. Assume that the MM assumptions hold (i.e., no taxes, no costs of financial distress). a) What is the value of the firm before and after the proposed capital structure change
Business
1 answer:
luda_lava [24]3 years ago
6 0

Answer: See explanation

Explanation:

First we will have to calculate the value of the firm before the debt issue. This will be:

= 25,000,000 × $10

= $250,000,000

We also calculate the value of the firm after after the proposed capital structure change. The value of equity will be:

= $250,000,000 - $160,000,000

= $90,000,000

Therefore, the value of debt will also be $160,000,000.

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3 years ago
Which assertion relates to the following statement? "Assets, liabilities, and equity interests are included in the financial sta
KengaRu [80]

Answer: Valuation

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The assertion that assertion relates to the statement that Assets, liabilities, and equity interests are included in the financial statements at appropriate amounts is the valuation assertion.

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2 years ago
Which of the following is not a typical adjustment made to the income statement for projection purposes?
ankoles [38]

Answer:

The correct answer is b. Adjusting revenues to only include organic revenue growth.  

Explanation:

One of the quantitative planning techniques is the projection of financial statements or also called pro forma statements.

The applications that can be had among others are the following:

Know how the year will end for tax purposes in terms of income and deductions in order to make decisions before the end of the year.

Another application will be to know the external financing needs for the period you want to know.

The most common and practical method of projecting financial statements is based on sales.

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3 years ago
Devon forgets to pay his credit card bill for three months. Which of the following statements is TRUE?
Mama L [17]
It is has to be option 4.
3 0
2 years ago
When positive externalities are present in a market a. private benefits will be greater than social benefits. b. social benefits
Oxana [17]

Answer:

b. social benefits will be greater than private benefits

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This is because the social benefit is the sum of the private benefit plus the sum of the external benefit.

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5 0
3 years ago
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