Answer:
$6.3 per share
Explanation:
There are two method of Valuation of the firm
- Weighted average cost of the capital (WACC)
- Free cash flow to equity (FCFE)
We have to calculate the value of the firm using FCFE. Free cash flow to equity (FCFE) is the amount of cash flow generated by the business and potentially available for distribution among the stockholders.
Value of firm = Free cash flow / required rate of return = $120,000 / 12% = $1,000,000
Market value of Equity = Total value of firm - Market value of Debt - Market value of Preferred share
Market value of Equity = $1,000,000 - $300,000 - $70,000 = $630,000
Value of Patrick's stock = Market Value of equity / shares of stock outstanding = $630,000 / 100,000 = $6.3 per share
Answer and Explanation:
The completion of the second, fourth, and fifth columns of the given table is to be shown in the attachment below:
As we know that
Profit = Total revenue - total cost
Total revenue is the revenue earned by the company by multiplying the price with the quantity demanded
While the total cost is
= Fixed cost + variable cost
The marginal revenue comes from
= Change in total revenue ÷ change in quantity
We simply use these formulas in the spreadsheet below.
Answer:
P.Ed at p = 5 :- 0.26
Revenue maximising price = 8.5 ; Maximum Total Revenue = 1222
Explanation:
Price Elasticity of Demand shows responsive change in demand, due to change in price. P.Ed = ( dq / dp ) x ( p / q )
q = 216 - p^2
dq / dp = - 2p
P.Ed = dq / dp x ( p / q )
So, PEd = ( -2p ) x ( p / q )
[ (- 2p) (p) ] / [ 216 - p^2 ]
(- 2p^2 ) / ( 216 - p^2 )
Putting value of P = 5 in P.Ed
<u>- 2(25) </u>
216 - 25
= - 50 / 191
P.Ed = 0.26
Revenue is the total value of receipts from sale of goods & services. TR = p x q
q = 216 - p^2
TR = 216p - p^3
To find price maximising TR , we will derivate TR function with respect to 'p'
d TR / d p = 216 - 3p^2
d TR / d p = 216 - 3p^2 = 0
3p^2 = 216
p^2 = 216 / 3
p^2 = 72
p = √ 72
p = 8.5
Finding maximum revenue ; Putting price = 8.5 in TR function
TR = 216p - p^3
216 (8.5) - (8.5)^3
1836 - 614
1222
Answer:
The correct answer is letter "B": The customer is likely to reject delivery of the asset.
Explanation:
In the corporate world, contract performance obligations are those established by two parties one to manufacture or render and deliver goods or services and the other to receive them. That contract can be signed in front of sales, resales, granting rights or constructing or developing an asset.
<em>Facts such as the right to payment for the goods, the client's risk of ownership of the title and the goods themselves can determine if the performance obligations are met or not but the possibility that represents the customer could reject the delivery of the product will not.</em>
Answer:
EPS
Plan I $2.03 per share
Plan II $1.78 per share
Explanation:
Plan I
As this plan is all equity plan, so there is no debt and no interest expense as well.
In the absence of taxes, We will use the EBIT in the calculation of EPS
EPS = Net Earning / Outstanding numbers of shares = $375,000 / 185,000 = $2.03 per share
Plan II
In this levered plan we have debt and equity combination. We also have to deduct the interest expense from EBIT to calculate the net income.
Interest Expense = $2,700,000 x 5% = $135,000
Net Income = EBIT - Interest Expense = $375,000 - $135,000 = $240,000
EPS = Net Income / Outstanding numbers of shares = $240,000 / 135,000 = $1.8 per share
