Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies _______

Alexandria's Dance Studio is currently an all-equity firm with earnings before interest and taxes of $338,000 and a cost of equi

andreyandreev [35.5K]

Answer:

$1,306,986

Explanation:

Calculation to determine What is the levered value of the equity

First step is to calculate the VL

VL = {[$338,000 × (1 - .34)] / .142} + (.34 × $400,000)

VL= $1,706,986

Now let calculate the levered value of the equity (VE)

VE = $1,706,986 - $400,000

VE = $1,306,986

Therefore the levered value of the equity is $1,306,986

8 0

3 years ago

Specter Co. combines cash and cash equivalents on the balance sheet. Using the following information, determine the amount repor

myrzilka [38]

Answer:

Specter Co.

The amount reported on the year-end balance sheet for cash and cash equivalents is:

= $31,100.

Explanation:

a) Data and Calculations:

Cash deposit in checking account = $16,000

Bond investment due in 20 years = $46,000

US Treasury bill due in 1 month = $11,500

3-year loan to an employee = $850

Currency and coins = $3,600

Accounts receivable $1,150

Cash and Cash Equivalents:

Cash deposit in checking account $16,000

US Treasury bill due in 1 month 11,500

Currency and coins 3,600

Total cash and cash equivalents = $31,100

b) Cash and Cash Equivalents are Specter's assets that are in the form of cash (currency and coins) and Specter's assets that can be readily converted into cash (Treasury bills and notes, commercial papers. certificates of deposit, money market funds, and cash management pools).

4 0

2 years ago

Payton Corporation provided the following information for the year: Beginning Balancelong dashWork-in-Process Inventory $ 25 c

lukranit [14]

Answer:

$1,133,000

Explanation:

The computation of the cost of goods manufactured is shown below:

= Direct materials used + Direct labor cost + Manufacturing overhead cost + beginning work-in-process inventory - ending work-in-process inventory

where,

Direct material used is

= Opening balance of raw material + purchase made - ending balance of raw material

= $83,000 + $361,000 - $62,000

= $382,000

The manufacturing overhead is

= Indirect labor + Depreciation on Factory Plant and Equipment + Plant Utilities and Insurance

= $18,000 + $22,000 + $272,000

= $312,000

And, the other items would remain the same

So, the cost of goods manufactured is

= $382,000 + $469,000 + $312,000 + $25,000 - $55,000

= $1,133,000

We simply applied the above formula to determine the cost of goods manufactured

4 0

3 years ago

firm has 2,000,000 shares of common stock outstanding with a market price of $2 per share. It has 2,000 bonds outstanding, each

Yuki888 [10]

Answer:

A Firm

The firm's WACC is:

= 12.16%

Explanation:

a) Data and Calculations:

Common Bonds

Stock

Outstanding shares/bonds 2,000,000 2,000

Market price per unit $2 $1,200

Total market value $4,000,000 $2,400,000

Total value of debt and equity = $6,400,000

Weight 62.5% 37.5% ($2,400/$6,400*100)

Cost of bonds (coupon rate) = 10%

Tax rate = 34%

Firm's beta = 1.5

Risk-free rate = 5%

Market risk premium = 7%

After-tax cost of bonds = 6.6% (1 - 0.34) * 10%

Cost of common stock =

Risk Free Rate + Beta x (Market Return - Risk Free Rate)

= 5% + 1.5 x (7%)

= 5% + 10.5%

= 15.5%

WACC = 15.5% * 62.5% + 6.6% * 37.5%

= 0.096875 + 0.02475

= 0.1216

= 12.16%

7 0

2 years ago

Christina is evaluating Maximum Brands as an investment opportunity. She is very concerned about future financial performance by

Artemon [7]

Answer:

There is CEO duality

Explanation:

What is a CEO duality

CEO duality refers to the situation when the CEO also holds the position of the chairman of the board.

The board of directors is basically designed to keep an eye on managers such as the CEO on the behalf of the shareholders. They design compensation contracts and hire and fire CEOs. The benefit of having a dual CEO in the firm is because he or she could work closely with the board to create value.

Christina in this sense is tryinb to bring more value to the firm and in ghe capacity of just the CEO her hands are tied. She probably wants more authority or power to do much more.

6 0

3 years ago

Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies ________.