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Case: You are an entrepreneur starting a biotechnology firm. If your research is successful, the technology can be sold for $30 million. If your research is unsuccessful, it will be worth nothing. To fund your research, you need to raise $2 million. Investors are willing to provide you with $2 million in initial capital in exchange for 50% of the unlevered equity in the firm.
a. What is the total market value of the firm without leverage?
b. Suppose you borrow $1 million. According to MM, what fraction of the firm's equity must you sell to raise the additional $1 million you need?
c. What is the value of your share of the firm's equity in cases (a) and (b)?
In the following question can you please explain what the 41 and 31 are in the solution (the t)
What do the r and p values indicate and what is their clinical importance for Quadricept strength index 120/s and Hop index.
In a monopolistically competitive industry, total profits are a function of the number of firms n as follows: ( ) = 10 - 0.1 ^(2)
However, the institutions would like to see the firm raise the capital through debt. Explain how part of this disagreement might be related to taxes.
Steady Company's stock has a beta of 0.24. If the risk-free rate is 5.8% and the market risk premium is 7.1%, what is an estimate of Steady Company's cost of equity?
If this policy is adopted, the company's average sales will fall by 25%. What will be the level of accounts receivable following the change? Assume a 365-day year. Round your answer to the nearest cent.
You have decided that you would like to own some shares of GH Corp. but need an expected 12.5% rate of return to compensate for the perceived risk.
Student loan balance: $10,800 (Jamie is still a full-time student, so no payments are required on the loan until after graduation)
Your father invested a lump sum 30 years ago at 3.75 percent interest. Today, he gave you the proceeds of that investment which totaled $45,000.
A) What is the mean and stdev of a fully invested yet unleveraged portfolio in stock and bond, that assign weights based on inverse of VARIANCE risk?
A 3/1 ARM is made for $150,000 at 7 percent with a 30-year maturity.
The appropriate discount rate for the incremental cash flows is 11 percent. What is the cost of each alternative? Which alternative should Penn choose
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