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Considering the information in the table below, indicate which amount borrowed you believe to be the optimal level of debt and explain completely why.
Amount Borrowed
Value of Equity
Value of the Firm
Stock Price
WACC
EPS
0
18,460
18.46
13.0%
2.40
$ 2 Million
17,320
19,320
19.32
12.42
2.55
$ 4 Million
15,830
19,830
19.83
12.10
2.70
$ 6 Million
14,020
20,020
20.03
11.99
2.54
$ 8 Million
16,570
24,570
24.57
11.50
3.04
$10 Million
12,000
22,000
22.00
12.00
3.20
NOTE: Value of the Firm is equal to the Amount Borrowed plus the Value of Equity
if the annual inflation rate is 3.5 in the u.s. and 2 in the u.k and the dollar depreciated against the pound by 2.5
The Bruin's Den Outdoor Gear is considering a new 6-year project to produce a new tent line. The equipment necessary would cost $1.21 million
Calculate the value of the competitor you wish to purchase. Note: You will have to make assumptions; however, your assumptions need
1. What conflict(s) of interest can you imagine arising between members of the community in which a company operates and some other stakeholders? (Hint: Think about pollution.) 2. Is the agency problem an ethical issue or an economic issue?
Portfolio Diversification Stocks offer an expected rate of return of 10% with a standard deviation of 20%, whereas gold offers an expected return of 5% with a standard deviation of 25%.
Trew Company plans to issue bonds with a face value of $901,000 and a coupon rate of 6 percent. The bonds will mature in 10 years and pay interest semiannually.
discussion questionsdo you expect that ventures will be the major source of innovations in products and services in the
Explain why Southwest does not recognize revenue when it receives the payment from its customers.
why does cds bond rating and cost of debt depend on the amount of money
Evaluate What is the value of the firm's equity and find what is the value of the firm's debt?
How much difficulty did you have in getting the person to accept the delegation?
Violating an NDA may be a breach of contract, but doesn't this have the impact of getting important information into the system sooner?
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