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
hram777 [196]
2 years ago
9

Consider a single period problem where the riskless interest rate is zero, and there are no taxes. A firm consists of a machine

that will produce cash flows of $210 if the economy is good and $80 if the economy is bad. The good and bad states occur with equal probability and the covariance of these states with the market portfolio is zero (no systematic risk). Initially, the firm has 100 shares outstanding and debt with a face value of $50 due at the end of the period. What is the share price of the firm
Business
1 answer:
kifflom [539]2 years ago
8 0

Assuming the firm has 100 shares outstanding and debt with a face value of $50 due at the end of the period. The share price of the firm is $0.95.

<h3>Share price</h3>

First step is to calculate the expected payoff to equity

Expected equity=[($80 ×0.5) + ($210 × 0.5)]-$50

Expected equity=($40+$105)-$50

Expected equity = $145-$50

Expected equity=$95

Now let calculate the share price

Share price=$96/100 shares

Share price=$0.95

Inconclusion the share price of the firm is $0.95.

Learn more about share price here:brainly.com/question/1166179

You might be interested in
6. Twins Barbara and Mary are both age 27. Beginning at age 27, Barbara invests $2,000 per year for 10 years and then never sets
Dmitriy789 [7]

Answer:

Barbara will have $210,349

Mary will have $188,922

Explanation:

Total time of investment is 40 years = age 67 - age 27

After 10 years, Barbara will have  $27,633 (this figure used "FV" calculation in excel = FV(7%,10,2000)

Then Barbara put all $27,633 in next 30 years then she will have $210,349 = 27,633 x (1+7%)^30

Mary didn't now invest in first 10 years, but then  invests $2,000 per year for the next 30 years, so she will have $188,922 = FV(7%,30,2000)

4 0
3 years ago
Ralph was involved in a bar fight and sustained a blow to the back of the head from a beer bottle. he was dazed and could not se
My name is Ann [436]
Occipital lobe

The occipital lobe is one of the four major lobes in the brain's cerebral cortex. It is located at the back of the head (see attached image). The occipital lobe's primary function is processing and making sense of visual information we receive through our eyes. Damage or trauma to the occipital lobe (in John's case when he got hit on the back of his head) can cause temporary or permanent vision impairment, subject to the severity of the trauma. 

6 0
3 years ago
Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 9% annual coupon rate and were issue
miv72 [106K]

Answer:

The answer is 9.85%

Explanation:

The number of periods N = 9years(10 years minus 1 year ago)

Yield to Maturity (I/Y) = ?

Present value of the bond (PV) = $950.70

Future value of the bond(FV) = $1,000

Annual payment (PMT) = $90 (9% x $1,000)

Using a financial calculator to solve the problem ( BA II plus Texas instruments):

Yield to Maturity (I/Y) = 9.85%

8 0
3 years ago
Your company manufactures riding lawn mowers.One of your customers,Marie,writes a claim,demanding a compensation for her faulty
Alekssandra [29.7K]

Answer: D) As stated in our contract,we are liable to pay compensation only when our personnel repair the equipment

Explanation:

Based on the information given in the question, the best way to phrase the refusal of Marie's claim for adjustment is that "As stated in our contract, we are liable to pay compensation only when our personnel repair the equipment".

Since a service executive in the company discovers that the mower was dismantled by someone, then Marie's claim for adjustment can be refused since it wasn't dismantled by someone from the company.

4 0
3 years ago
On January 1, 2018, Gillock Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cos
Licemer1 [7]

Answer:

Pension Expense = EBE = $593440 for income statement

Explanation:

The opening balance of the Plan asset is made by the 40000 from 2018 plus interest of 32000 and the new 400000 made this year. Why include it? Because an opening balance are the funds in an account at the beginning of the year either from last year or are from current year but should be the first entry in the books of the current year.

                                                                 DBO                plan asset       EBE

opening balance                                   (600000)            832000             -

interest                                                   ( 60000)              66560            6560

current year's service cost                    (600000)                               (600000)

                                                            (  1260000 )            898560      <u> 593440</u>

 balance sheet liability = 361440

5 0
3 years ago
Read 2 more answers
Other questions:
  • You are faced with a dilemma. You want very much to go to the park with your friends and hang out. However, your mother left you
    7·1 answer
  • Which of the following statements reflect negative outcomes known to result from work teams? Check all that apply.
    12·1 answer
  • An advertiser wants to create ads that target potential customers in california. which targeting method should this advertiser u
    14·1 answer
  • The expression below shows a number in expanded form. What is the standard form of the number?(2×10)+(3×one tenth)+(9×one hundre
    14·1 answer
  • During May, Bergan Company accumulated 2,500 hours of direct labor costs on Job 200 and 3,000 hours on Job 305. The total direct
    10·1 answer
  • A goal of monetary policy and fiscal policy is to
    13·1 answer
  • If there are 3 spots on an employment application to list references, how many references do you need to list?
    6·1 answer
  • ABC Co. had 600,000 shares of Common Stock, 40,000 shares of Convertible Preferred Stock, and $3,000,000 of 6% Convertible Bonds
    9·1 answer
  • Lindsey Paradise is not selected for her sorority of choice at the University of Kansas. She has used all of her time rushing to
    9·1 answer
  • a manufacturer makes two types of rubber, butadiene and polyisoprene. the plant has two machines, machine-1 and machine-2, which
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!