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Mashcka [7]
3 years ago
6

A key difference between the APV, WACC, and FTE approaches to valuation is: how debt effects are considered; i.e. the target deb

t to value ratio and the level of debt. how the initial investment is treated. how the ratio of equity to debt is determined. how the unlevered cash flows are calculated. whether terminal values are included or not.
Business
1 answer:
Over [174]3 years ago
5 0

Answer: how debt effects are considered; i.e. the target debt to value ratio and the level of debt.

Explanation:

The Weighted Average Cost of Capital (WACC) values a project by using a discount rate that encompasses all the costs of raising capital. It therefore includes the effects of debt financing in that rate.

Adjusted Present Value (APV) on the other hand, takes the net present value of a project assuming it was solely financed by equity and then adds the present value of the benefits of debt financing such as interest tax shields and costs of debt issuance. Debt is therefore not included in the model like WACC and so considers the effects of debt differently.

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An account is said to have a debit if
NemiM [27]
A is correct.

Hope this helps! Good luck!
6 0
3 years ago
Company X has 100 shares outstanding. It earns $1,000 per year and expects to pay all of it as dividends. If the firm expects to
Leno4ka [110]

Answer:

The stock price after the dividend payment is $100 per share

Explanation:

According to the data the Dividend per year is $1,000  and the Required Rate of Return is 10% .

Hence, in order to calculate the stock price after the dividend payment we have to use the following formula first:

Stock price = [Total Dividend amount / Required rate of return]

Stock price  = [$1,000 / 0.10]

Stock price = $10,000

Finally the Stock price after the dividend payment. = [Total Stock Value / Number of outstanding shares]

Total Stock value = $10,000

Number of outstanding shares = 100 shares

Stock price after the dividend payment = [$10,000 / 100 shares]

Stock price after the dividend payment = $100 per share

4 0
3 years ago
Select the correct locations on the image
Maurinko [17]

Answer:

Denise should provide positive feedback by highlighting the places where he excelled. Then let him know the mistake he made.

Explanation: If she goes and jumps on him its not going solve anything.

5 0
3 years ago
You want to retire exactly 30 years from today with $1,980,000 in your retirement account. If you think you can earn an interest
iren [92.7K]

Answer:

$841

Explanation:

Let the amount of deposit you need to fund each month is a

n= 30 years = 30 x 12 = 360 months

The amount of money you desire to have in 30 years (FV) = $1,980,000

i/r = 10.19%/year = 0.849%/month

Based on these given information, you can either choose to:

1) Solve the following equation:

a x 1.00849^360 + a x 1.00849 ^359 + a x 1.00849^358 + ... + a x 1.00849^1 + a = $1,980,000

2) Input given information into excel/financial calculator:

n = 360

FV = $1,980,000

i/r = 0.849

PV = 0

Find PMT (a). PMT (a) = $841

3 0
3 years ago
Jafee Corp. common stock is priced at $36.50 per share. The company just paid its $0.50 quarterly dividend. The continuously com
seraphim [82]

Answer:

(d) $1.55≤VP(0)<$1.76

Explanation:

VP(0) =VC(0) +Ke-rT-FP0

T(S) =VC(0) +Ke-rT-S(0) +De-rt1+De-rt2

Using the formulae

= 3.20 + 35e-0.06/2-36.50 + 0.50e-0.06/4+ 0.50e-0.06/2

=1.64.

The priceVP(0) of a 6-month, $35.00 strike put option is 1.64

3 0
3 years ago
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