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hichkok12 [17]
2 years ago
9

Based on its growth prospects, a private investor values a local bakery at $750,000. She believes that cost savings having a pre

sent value of $50,000 can be achieved by changing staffing levels and store hours. Based on recent empirical studies, she believes the appropriate liquidity discount is 20 percent. A recent transaction in the same city required the buyer to pay a 5 percent premium to the asking price to gain a controlling interest in a similar business. What is the most she should be willing to pay for a 50.1 percent stake in the bakery
Business
1 answer:
julia-pushkina [17]2 years ago
8 0

Answer:

the maximum that paid to acquire bakery is $336,672.

Explanation:

The computation is shown below;

= (Value of local bakery + Present value of cost savings) × (1 - discount) × ( 1 + premium) × willing stake of bakery

= ($750,000 + $50,000) × (1 - 0.20) ×  (1 + 0.05) × 0.501

= $336,672

Therefore, the maximum that paid to acquire bakery is $336,672.

We simply applied the above formula

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James overspent and will need to spend the next six months paying off his credit card bill. This money was supposed to have gone
PtichkaEL [24]

Answer: Sunk cost

Explanation:

Sunk cost is a cost that is incurred by an entity, which can not be recover. When making the decision on whether to continue investing in a project which is ongoing, the sunk costs should not be considered since these type of costs can't be recovered.

Sunk costs cannot be recovered or refunded. The 10 percent discussed in the question is a sunk cost as it can't be recovered.

4 0
2 years ago
Read 2 more answers
Jumbuck Exploration has a current stock price of $2.00 and is expected to sell for $2.10 in one year's time, immediately after i
fiasKO [112]

The equity cost of capital for the Jumbuck Exploration is 22%

Explanation:

Equity cost refers to the return offered to the customers in place of their investment in the organisation stocks. It is calculated by the formula

Rₐ = (D₁/P₀)+g

Where Rₐ= cost of equity

D₁= dividends announced

P₀=share price (current)

g= growth rate

Now given details-

Dividend announced (D₁)- $ 0.26

Current market price (P₀) - $ 2.00

Expected price= $ 2.10

growth rate= expected price- current price

growth rate (g) =$ 0.10

Putting the values to find Rₐ

Rₐ=(0.26/2.00)+0.10

Rₐ=0.23 or 23%

Nearest answer is 22%

Hence the equity cost of the capital is 22%

4 0
2 years ago
As a sysadmin, you will find yourself doing business with a variety of third-party vendors. Which of these are likely to be rent
n200080 [17]

Available Options are:

Fax machines

Printers

Smartphones

Video or audio conferencing machines

Answer:

All of the above except Printers

Explanation:

The reason is that printers are very important part of administration work so its more likely that we already have one. However it is possible that we don't have any fax machine, smartphones and video or audio conferencing machines as these are rarely used by the administration. So Printers will not be bought oor rented.

3 0
2 years ago
Johanna Reid, a campaign manager at a child rights organization, recently started working on an illiteracy project. During the p
gayaneshka [121]

Answer:

leading

Explanation:

Leading is one of the critical function of management that determine direction and motivation to the employee for achieve organizational goal. The leader is important in this function to keep employee engaging, motivated and participative in achieve organizational objective. Leaders should lead by example to influence others.

In the given case, Johannna Reid as a leader is trying to motivate and showing direction to achieve targets of project.

5 0
1 year ago
Mojo Mining has a bond outstanding that sells for $2,120 and matures in 18 years. The bond pays semiannual coupons and has a cou
Eddi Din [679]

Answer:

D. 3.66%

Explanation:

For computing the after tax cost of debt we need to apply the RATE formula i.e to be shown in the attachment

Given that,  

Present value = $2,120

Future value or Face value = $2,000

PMT = $2,000 × 6.6% ÷ 2 = $66.60

NPER = 18 years × 2 = 36 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this,  

1. The pretax cost of debt is 3.05% × 2 % = 6.10%

2. And, the after tax cost of debt would be

= Pretax cost of debt × ( 1 - tax rate)

= 6.10% × ( 1 - 0.40)

= 3.66%

4 0
2 years ago
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