In a period of steep increases in interest rates, which issuer is most likely to be negatively affected

If the price of a product increases rev: 05_10_2018 Multiple Choice total revenue will definitely increase. consumer surplus wil

Gekata [30.6K]

Answer:

consumer surplus will decrease.

Explanation:

Consumer surplus is defined as the difference between the price customers are willing to pay for a product and what they actually pay.

On the demand and supply curve it is indicated by the shaded area between equillibrum and demand curve as illustrated in the attached diagram.

For example let's assume the price a customer was willing to pay for a product was $50 and market price was $30

Initial consumer surplus= 50- 30= $20

Assume bmarket price increase to $40

The new consumer surplus is= 50- 40

Present consumer surplus= $10

So a price increase causes a decrease in the consumer surplus.

6 0

3 years ago

You must estimate the intrinsic value of Noe Technologies’ stock. The end-of-year free cash flow (FCF1) is expected to be $27.50

emmasim [6.3K]

Answer:

= $52.78 per share

Explanation:

The value of a business can be determined using the free cash flow model. According to this model, the value of a firm is is the present value of its free cash flow discounted at the weigthed average cost of capital (WACC.)

The value of equity is the value of firm less value of other instruments (e.g debt and preferred stocks)

Value of equity = Value of the entire firm - Value of debt

We can work out the the value per share using the steps below:

Step 1

Calculate the total value of the firm

Value of firm = 27.50/(0.1-0.07)

= $916.66 million

Step 2

Calculate the value of equity

Value of equity = Value of the entire firm - Value of debt

= $916.66 million - $125.0 million

=791.666 million

Step 3

Calculate the value per share

Value per share = Value of equity/ units of common stock

=$791.666 million/15 million units

= $52.78 per share

3 0

2 years ago

Crane Company on January 1, 2018, granted stock options for 63000 shares of its $10 par value common stock to its key employees.

attashe74 [19]

The amount of compensation expense Crane should record for 2017 under the fair value method is $207000

Solution:

From the given,

Stock options for 63000 shares

$10 par value common stock

$25 per share and the option price was $20

Total compensation expense = $627000

On calculating we get,

$\Rightarrow\frac{627000}{3}= \$207,000$

We can conclude that there is $207,000 decrease. Therefore, the correct answer is option c.

3 0

3 years ago

Informative headings and subheadings..

aliina [53]

Answer: Is the business manegement?

Explanation: If what unit and lesson i did all

7 0

2 years ago

Required information Use the following information for the Exercises below. Skip to question [The following information applies

Lyrx [107]

Answer:

Follows are the solution to this question:

Explanation:

In point A:

The estimated amount of uncollectible allowance = $\$ \ 635,000 \times 4 \% = \$ \ 2,540,000$

In point B Journal

Titles and descriptions of accounts Debit Credit Calculation

Expenditure on bad debts $\$ \ 2,526,700$

Doubted debt allowance $\$ \ 2,526,700 \ \ (\$ \ 2,540,000 - \$ \ 13,300)$

(Bad Debts Expense recorded)

In point C Journal

Titles and descriptions of accounts Debit Credit Calculation

Expenditure on bad debts $\$ \ 2,553, 300$

Doubted debt allowance $\$ \ 2,553, 300 \ \ \ \ (\$ \ 2,540,000 + \$ \ 13,300)$

(Bad Debts Expense recorded)

5 0

3 years ago