Answer:
1. $3,59,666.66
2. $4,10,066.66
Explanation:
1. The computation of value of firm is shown below:-
As the Earning before interest and tax given remains the same, this impact that there is no growth rate in the earnings to consider.
= Earning before interest and tax × (1 - Tax) ÷ Cost of equity
= $83,000 × (1 - 0.35) ÷ (0.15)
= $53,950 ÷ 0.15
= $3,59,666.66
2. The computation of value of levered firm is shown below:-
Value of unlevered firm + Debt × Tax rate
= 3,59,666.66 + ($144,000 × 35%)
= $4,10,066.66
Answer:
Percentage change in price = -5.33 * 0.00005
Explanation:
Percentage change in price = - modified duration * (Change in yield in BP/100)
Percentage change in price = -5.33 * ((0.01/2)/100)
Percentage change in price = -5.33 * (0.005/100)
Percentage change in price = -5.33 * 0.00005
Answer:
<u>Predatory pricing</u>
Explanation:
A "predator" refers to an animal who survives by "preying" on other animals.
Predatory pricing in a similar sense refers to that form of excessively low pricing which in a way consumes other firms by taking away their share of industry revenues. Such form of pricing is considered illegal and is against healthy competition.
Such pricing eliminates competitors from the market and gradually leads to emergence of a monopoly i.e supremacy of a single firm in the whole industry and thus considered an illegal practice.
In the given case, the retail chain can be alleged to have followed predatory pricing which is substantiated by the fact that it cuts it's prices excessively i.e even below cost , thereby forcing smaller companies to exit the industry.
Answer:
The answer is A. $1,791.60
Explanation:
Annual interest payment on the loan is:
6% x $125,000
=$7,500
Therefore, monthly interest payment is $625($7,500/12 months).
Monthly payments (which comprise principal and interest payment) is $2,416.60.
The carrying value decrease when the first payment is made on January 31 was made will be:
$2,416.60 - $625
= $1,791.60
Answer: y = 66x - 1200
Explanation: The charity organisation has to sell a number of tickets to cover their production costs of $1,200. It is given that after selling 200 tickets they retain a net profit of $12,000. Net profit is deduced as: Total sales - total costs. Sales is calculated as total tickets x selling price per ticket.
If we let b represent the sales earned from selling tickets, then:
Net profit = total sales - total costs
12,000 = 200b - 1,200
We can then solve for b by taking the 1200 to the other side of the equal sign. When we do that the sign of that number changes. This is also the same as adding 1200 to both sides of the equal sign:
∴12000 + 1200 = 200b
13200 = 200b
To get the price of one single ticket, b, we need to divide both sides by 200.
∴ b = 66
This means that each ticket's selling price is $66.
So when when we take it back to the calculation of net profit then it becomes:
Net profit = total sales - total costs
y = 66x - 1200
To test:
y = 66x - 1200
= 66 (200 tickets) - 1200
= $12,000
