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Shalnov [3]
3 years ago
11

Digital Fruit is financed solely by common stock and has outstanding 40 million shares with a market price of $20 a share. It no

w announces that it intends to issue $310 million of debt and to use the proceeds to buy back common stock. There are no taxes. a. What is the expected market price of the common stock after the announcement
Business
1 answer:
Marina CMI [18]3 years ago
3 0

Answer:

Digital Fruit

The expected market price of the common stock after the announcement is:

$20 per share.

Explanation:

Outstanding number of shares = 40 million

Market price of outstanding shares = $20 a share

Total market capitalization = $800 million

Debts introduced = $310 million

Market capitalization after the debt issue = $490 million ($800 - 310 million)

Number of shares bought back = $310 million /$20 = 15,500,000

Outstanding number of shares after the buy-back = 40 million minus 15.5 million

= 24,500,000 shares

Expected market price of the common stock after the announcement

= $490,000,000/24,500,000

= $20 per share

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Answer:

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Explanation:

This is the very definition of an indifference curve. The points in an indifference curve are the combinations of the quantities (level of consumption) of two different goods which will produce the very same utility to the consumer. The consumer will perceive any of those combinations as having the same utility for him.  

For example, a usual graph of various indifference curves will look like the graph attached.

In this graph the combination of 2 pairs of shoes and 15 pants will be perceived as having the same utility as the combination of 5 pairs of shoes and 4 pants. Both are combinations in the same indifference curve, the green one, and the utility of any combination lying in that green curve will be rated the same: u = 1.

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3 years ago
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As a marketing term, __________ generally includes not only physical goods, but also services and ideas. Multiple Choice marketi
steposvetlana [31]

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