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beks73 [17]
2 years ago
8

Lamont Corp. is debt-free and has a weighted average cost of capital of 12.7 percent. The current market value of the equity is

$2.3 million and there are no taxes. According to M&M Proposition I, what will be the value of the company if it changes to a debt-equity ratio of .85? Multiple Choice $2,300,000 $2,705,882 $15,393,701 $18,110,236 $1,955,000
Business
1 answer:
Jobisdone [24]2 years ago
7 0

Answer:

Option A. $2,300,000

Explanation:

The first proposition of M & M model says that the debt to equity does not have any impact on the share value of the company because the value of the company shares are calculated on the basis of the discounted future cash flows generated by the company. So according to M&M Proposition I, the value of company shares calculated here is $2.3 million for 100% equity financed company which will remain same for all debt to equity structure.

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Joan Johnson is a paralegal for a large law firm that handles corporate and securities work. The lawyer for whom Joan works alwa
Mariulka [41]

Answer:

1. Based on her years of experience, Joan Johnson can answer the question by detailing the advantages and disadvantages of incorporating in each state for the client.

2. If Joan does not feel confident enough to address the question, then she can refer the matter to her supervisor.

3. If Joan answers, the client will derive immediate satisfaction and will be confident to continue the relationship with the firm.  This is because his awareness that the firm can address his questions is re-enforced.

4. If Joan does not answer the client immediately, the client may feel that the firm's personnel are not well-trained and are unable to handle not-too difficult technical issues.

Explanation:

A firm's clients usually require immediate clarifications whenever they ask their questions.  Therefore, an effective and efficient firm should ensure that its paralegal officers are well-trained and well-informed to handle initial client enquiries while the details are referred to their supervisors.

8 0
2 years ago
Helga runs a website on which she sells houseplants. She also earns through pay-per-click advertising that allows search engines
DerKrebs [107]

Answer: a. Gardening gloves

b. Terracotta planters

c. Garden scissors

d. Watering cans

Explanation:

From the question, we are informed that Helga runs a website on which she sells houseplants and that she also earns through pay-per-click advertising that allows search engines to show targeted ads on her site.

All the products will be advertised on her website. The gardening gloves, terracotta planters, garden scissors and the watering cans are all materials that are required for plant growth to provide water and keep weeds away.

6 0
2 years ago
Orleans Corporation, a U.S. corporation, reported U.S. taxable income of $2,000,000. Included in the computation of taxable inco
Dafna11 [192]

Answer:

$420,000

Explanation:

Calculation for Orleans’s net U.S. tax liability

Using this formula

Tax liability=Taxable income×U.S tax rate

Let plug in the formula

Tax liability=$2,000,000×21%

Tax liability=$420,000

Therefore Orleans’s net U.S. tax will be $420,000. The withholding tax amount of $8,000 was not included because it was already imposed on the dividend.

8 0
2 years ago
Suppose Maria prefers to buy a bond with a​ 7% expected return and​ 2% standard deviation of its expected​ return, while Jennife
zepelin [54]

Answer: The correct answer is "A.Maria is less​ risk-averse than Jennifer because Maria is choosing a bond with higher standard deviation.".

Explanation: We can measure the risk according to the standard deviation of its expected return, therefore: Maria is less risk averse because she is willing to take more risk in order to obtain a higher return and Jennifer instead prefers to sacrifice performance in order to be less exposed to risk.

7 0
2 years ago
Crafty Cookbooks Inc. is a large publisher that focuses on developing cookbooks with recipes from around the world. Recently, si
Gekata [30.6K]

Answer:

Job enlargement strategies increase job satisfaction more than job rotation strategies

Explanation:

The job enlargement refer to do multiple task at the same time. It includes more responsibilities and duties at the same level in the organization so that the employee cant bore from their day to day work. It reduces the boredom of the employees at the time time it also focuses on the employee satisfaction level.

Whereas the job rotation means the switching of job from one job to another so that they grow in near by future.

In the given situation, the Crafty cookbooks change its working way due to which many employees are frustrated which results into the quitting of job, firing of employees, etc that represents the job enlargement with job satisfaction and more than job rotation  

8 0
2 years ago
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