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Bingel [31]
2 years ago
10

Bassett Fruit Farm expects its EBIT to be $377,000 a year forever. Currently, the firm has no debt. The cost of equity is 13.3 p

ercent and the tax rate is 39 percent. The company is in the process of issuing $2.7 million worth of bonds at par that carry an annual coupon of 6.5 percent. What is the unlevered value of the firm
Business
1 answer:
skelet666 [1.2K]2 years ago
4 0

Answer:

$1,729,098

Explanation:

Given that,

EBIT = $377,000

No debt.

Cost of equity = 13.3 percent

Tax rate = 39 percent

Value of issuing bonds at par = $2.7 million

Coupon rate = 6.5%

Therefore,

Unlevered value of the firm:

= [EBIT × (1 - Tax rate)] ÷ Cost of equity

= [$377,000 × (1 - 0.39)] ÷ 0.133

= $229,970 ÷ 0.133

= $1,729,098

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The Darwin Company reports the following information that occurred during the current period: Sales commissions expense $15,600
ch4aika [34]

Answer:

The Darwin Company

Calculation of Manufacturing Overhead costs:

= $17,200

Explanation:

a) Data and Calculations:

Depreciation on factory equipment        $4,700

Indirect labor                                              5,900

Factory rent                                                4,200

Factory utilities                                            1,200

Indirect materials used                               1,200

Total Manufacturing overhead costs = $17,200

b) Darwin's manufacturing overhead costs will include only the above listed costs.  Sales commissions, direct materials, direct labor, and office salaries expense do not form part of the manufacturing overhead costs.  The manufacturing overhead costs are neither direct materials or labor costs or selling and administration costs.

8 0
2 years ago
Emery mining inc. recently reported $170,000 of sales, $75,500 of operating costs other than depreciation, and $10,200 of deprec
jonny [76]
<span>Net Income After Tax = Net Income Before Tax - Tax Net Income Before Tax = 170,000-75,500-10,200+(16,500*0.0725)=85,496.25 Tax = 0.35*Net Income Before Tax=0.35*85,496.25= 29,923.69 Net Income After Tax = 85,496.25- 29,923.69 = 55,572.56</span>
5 0
2 years ago
A budget line shows the Multiple Choice alternative combinations of two goods that will yield the same level of total utility to
GuDViN [60]

Answer:

Option (d) is correct.

Explanation:

A budget line is a graphical representation which shows the combination of two goods that are to be purchased by the consumer with his available income. A budget line also known as the budget constraint.

The budget line is represented by the following equation:

Suppose that there are two goods: A and B.

(Price of good A × Quantity of good A) + (Price of good B × Quantity of good B) = Income of the consumer

4 0
2 years ago
Data integrity with real-time systems involves the ACID test, which involves ________.
leva [86]

Answer:

The correct answer is letter "B": Atomicity, consistency, isolation, and durability.

Explanation:

Atomicity, Consistency, Isolation, and Durability (<em>ACID</em>) is a database that allows computer software to guarantee the accuracy of transactions even in front of events such as power failures. The system also takes care of how information can be recovered -if lost any- when those situations arise.

6 0
2 years ago
$1,000 par value zero-coupon bonds (ignore liquidity premiums).
Crazy boy [7]

10.70% - Option D

<u>Explanation:</u>

One-year interest rate one year from now:

=(1+.2750)^{\wedge} 2 /(1+16 \%)-1

=1.275 * 1.275 / 0.16

= 1.625625 divide by 0.16

=10.160

Therefore, an approximate answer is 10.70%

Respect Maturity (YTM) – in any case alluded to as recovery or book yield – is the theoretical pace of return or loan cost of a fixed-rate security, for example, a security. The YTM depends on the conviction or understanding that a financial specialist buys the security at the present market cost and holds it until the security has developed (arrived at its full worth), and that all premium and coupon installments are made in a convenient manner.

7 0
2 years ago
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