Answer:
Using the discount cash flow model to value the company, we can say that the company is worth $85 million / 12% = $708.33 million
Each stock should be worth approximately $708.33 million / 100 million = $7.0833 per stock
If the company uses the cash to finance new projects, then future cash flows should be approximately $97.75 million, and the company's value = $97.75 million / 12% = $814.583 million. This represents a 15% increase in value. The stock price should also increase by 15% to $8.1458 per stock.
If the company instead decides to repurchase stocks using all the cash, then it could repurchase 35.29 million stocks. Since we are assuming that the company's future cash flows wouldn't be affected by this decision, then the company's total value will still be $708.33 million, but each stock would be worth much more = $708.33 / 64.71 million stocks = $10.95. This represents a 34.36% increase with respect to the other alternative of investing the cash.
The issue here, is that this situation is not very realistic. It is not normal for a company to use all of its cash to repurchase stocks since it would result in a huge increase in stock prices (stock prices are set by supply and demand). Also, this would also result in a sharp increase in the cost of equity due to higher risks.
Answer:
In my opinion they can be a big problem because if you can not use the uber in some community it's useless but they are banning ubers because the taxis business are loosing money and the uber is replacing the taxi business.
There is an own opinion question, so try to answer by yourself
Answer:
c) $222,500 $313,500
Explanation:
Calculation for cost-to-retail ratio
COST
Beginning inventory $ 30,000
Add: Purchases $190,000
Add: Freight-in $2,500
Cost=$222,500
RETAIL
Beginning inventory $ 45,000
Add: Purchases $260,000
Add: Net markups $8,500
Retail = $313,500
Therefore the cost-to-retail ratio will be $222,500 $313,500
Answer:
$2,065,000
Explanation:
Based on the information given the maximum amount of cost that can be deducted in the year 2020 will be depreciable basis of the amount of $2,065,000 reason been that 100% is the bonus depreciation that is allowed under bonus election.
Therefore maximum amount of cost that can be deducted in the year 2020 will be the same amount of $2,065,000.
Answer:
Year Amount ($) (Disclosure amount for long term debt)
2021 0
2022 2,500,000
2023 4,500,000
2024 8,500,000
2025 2,500,000
Explanation:
The question is to show the required note disclosure of Redmon Company's Long term Debt at December 31, 2020
In order to do this, the note disclosure will take into cognisance the
Year Amount ($) (Disclosure amount for long term debt)
2021 0
2022 2,500,000
2023 4,500,000
2024 8,500,000
2025 2,500,000
Workings:
Disclosure for 2023 = Annual sinking fund payment + the notes payable maturity = (2,000,000 + 2,500,000)
Disclosure for 2024 = Annual sinking fund payment + the notes payable maturity = (6,000,000 + 2,500,000)
