1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
slava [35]
2 years ago
13

You currently own 900 shares of JKL which is an all-equity firm with 250,000 shares of stock outstanding at a market price of $4

0 a share. The company's earnings before interest and taxes are $120,000. JKL has decided to issue $1 million of debt at 6.5 percent interest and use the proceeds to repurchase shares of stock. How many shares of JKL stock must you sell to unlever your position if you can loan out funds at 6.5 percent interest
Business
1 answer:
Wittaler [7]2 years ago
3 0

Answer:

90 shares

Explanation:

Calculation to determine How many shares of JKL stock must you sell to unlever your position if you can loan out funds at 6.5 percent interest

First step is to calculate Your initial investment

Your initial investment = 900 x $40

Your initial investment = $36,000

Second step is to calculate JKL value of stock

JKL value of stock = [250,000 - ($1M/$40)] x $40 JKL value of stock = $9M

Third step is to calculate JKL Total value

Value of Debt = 1M

JKL Total value = 9M + 1M

JKL Total value = 10M

Fourth Step is to calculate You new stock position

JKL Wight Stock = 9M/10M = 9/10

You new stock position = [9/10($36,000)]/10

You new stock position= $32,400/40

You new stock position=810 shares

Now let calculate the Number shares sold

Number shares sold = 900 Shares - 810 Shares

Number shares sold = 90 shares

Therefore the numbers or shares of JKL stock that must you sell to unlever your position if you can loan out funds at 6.5 percent interest is 90 shares

You might be interested in
Which statement best describes a musical motive?
arlik [135]

the answer is b im not too sure tho

4 0
3 years ago
Read 2 more answers
When can interest be included in the acquisition cost of a plant asset?
hammer [34]

Answer:

a. during the the construction period of a self-constructed asset

Explanation:

"Determining the cost of constructing a new building is often more difficult. Usually this cost includes architect’s fees; building permits; payments to contractors; and the cost of digging the foundation. Also included are labor and materials to build the building; salaries of officers supervising the construction; and insurance, taxes, and interest during the construction period."

Reference: Porter, Debbie, and Tidewater Community College. “Principles of Accounting I.” Lumen, 2019,

7 0
3 years ago
An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Home Loa
aleksandrvk [35]

Answer: a par

Explanation:

From the question, we are informed that an investor wishes to buy a new issue of U.S. Government agency bonds and was recommend that the customer purchase Federal Home Loan Bank bonds with a 20 year maturity.

It should be noted that new issues that relate to agency securities are typically sold by a selling group which will be appointed by the agency and such groups are usually made up of broker dealers and large banks.

The group will then sell the issue to the public at par and out of the revenue that is made, a selling concession will be paid by the agency to the selling group.

8 0
3 years ago
After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distr
zloy xaker [14]

Answer:

.

Explanation:

Entrepreneurs innovate sometimes by commercializing inventions and ideas. They look for new business opportunities and find resources they can use in exploiting them. Commercializing an invention was done by Jeff Bezos in this instance. He saw the distribution opportunities available in the internet, and with the growing percentage increase of the internet users per month, he decided to create Amazon. He transformed the invention of the internet into the innovation of Amazon.

The ability to posses this characteristics is one of the qualities of a good entrepreneur.

6 0
3 years ago
Gambrinus is a large company that owns and operates the breweries that produce Moosehead Lager, Bridgeport Ale, Pete's Wicked Al
svlad2 [7]

Answer:

The answer is departmentalization by product.

Explanation:

Departmentalization refers to the divisions of different work areas. Each one specializes in a specific job, most companies use departmentalization and train their employees, making them specialists in their role.

The main objective of departmentalization is to specialize in activities and facilitate processes while maintaining control in the organization. The departmentalization is usually divided by product, function, process, project, clients, and territory.

For example, in the case of departmentalization by-products, it is used by large companies to divide the area where the product is developed and those in charge of product delivery, thus obtaining better control, organization, and production.

<em>I hope this information can help you.</em>

7 0
3 years ago
Other questions:
  • Average distance 8 mile and per gallon cost is 83 cent how much is the journey cost
    15·1 answer
  • If the effects of pollution on society as a measure of welfare were included in GDP calculations, that measure level of GDP woul
    11·1 answer
  • Cleopatra delivered a forged instrument to Julius Caesar for some goods she had purchased. Cleopatra has committed the crime of:
    5·1 answer
  • NewPlastic, Inc., a manufacturer of hats, had two recent contracts for hats, one from WannabecomeBig, Inc. and the other from Wa
    12·1 answer
  • In order to save $57,000 in five years, John will start saving money next month. He already has $10,000 in his account. The acco
    11·1 answer
  • Discretionary fiscal policy that might occur is​ ______. Automatic fiscal policy that might occur is​ ______. A. a decrease in t
    6·1 answer
  • current assets and current liabilities were $100 million and $40 million, respectively. The prior year, 2018, Jones and Co. repo
    12·1 answer
  • The "Fashion Place" carries a carefully selected and distinctive assortment of traditional women's
    11·1 answer
  • Estimated cash flows appear below for an investment project. The project is required rate of return (IRR) is 11.40%. What is the
    7·1 answer
  • One of the departments at Yolo Industries has entered into a 9 year lease for a piece of equipment. The annual payment under the
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!