Monsters Incorporated (MI) in ready to launch a new product. Depending upon the success of this product, MI will have a value of either $100 million, $150 million, or $191 million, with each outcome being equally likely. The cash flows are unrelated to the state of the economy (i.e. risk from the project is diversifiable) so that the project has a beta of 0 and a cost of capital equal to the risk-free rate, which is currently 5%. Assume that the capital markets are perfect. Assume that in the event of default, 20% of the value of MI's assets will be lost in bankruptcy costs and suppose that MI has zero-coupon debt with a $125 million face value due next year. The initial value of MI's debt is closest to:

Answers

Answer 1

The Initial value of debt is $111.11 million.

Value of unlevered equity = ($100 million+ $150 million + $191 million)/3 / 1.05

Value of unlevered equity = $147 miliion / 1.05

Value of unlevered equity = $140 million.

Since the corporation have has zero-coupon debt with a $125 million face value, this means If the firm has a value of $100 million, all of it is from the debt value,

Initial value of debt = ($100 million + $125 million + $125 million)/3 / 1.05

Initial value of debt = $111.11 million.

The Initial value of equity = Value of unlevered equity - Initial value of debt

The Initial value of equity = $140 million - $111.11 million

The Initial value of equity = $29 million

Hence, the Initial value of debt is $111.11 million.

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Related Questions

dentify the situation below that will result in a favorable variance. Multiple Choice Actual revenue is lower than budgeted revenue. Actual revenue is higher than budgeted revenue. Actual income is lower than expected income. Actual costs are higher than budgeted costs. Actual expenses are higher than budgeted expenses.

Answers

There are different ways firms generate revenues. The option that leads to favorable variance is when Actual revenue is higher than budgeted revenue.

Budget variance is known to be the difference between the budgeted amount of expense or revenue, and the actual amount.

The budget variance is said to becomes favorable when the actual revenue is higher than the budget or when the actual expense is less than the budget.

If revenue of a firm is higher than the budget or the actual expenses are less than the budget, this is known to be a favorable variance.

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Rachel borrows money from her bank to buy a car. What type of bank service
is Rachel using?
O A. Credit card
B. Checking account
C. Savings account
D. Loan

Answers

Answer:

D

Explanation:

A loan refers to money borrowed by people or organisations from the bank

The type of bank service which Rachel is using in order to buy a car is 'loan.'

What is a bank?

A bank, an financial institute that deals in money and its substitutes. A bank accepts deposits from the public and then creates a demand deposit while also simultaneously providing loans. Thus, banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

What services do banks provide?

Banks provide a lot of services to its customers. These services intends to attract customers. Such services provided by the banks are- giving loans, credit and debit cards, discounting on bills of exchange, cheque payments, digital financial services, and even personal services.

What do you mean by a loan?

A loan is a sum of money that one or more individuals or companies borrow from banks or other financial institutions so that they can manage planned or unplanned events financially.

When a loan is borrowed from a bank or other financial institution it has to be paid back, usually together with an extra amount of money called interest, that you have to pay as a charge for borrowing within a given period of time. Thus, loans provide liquidity to businesses and individuals, and so they are a necessary part of the financial system.

Hence, option D is correct.

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Suppose that on any given day the prevailing equilibrium federal funds rate is below the Federal Reserve's federal funds target rate. If the Federal Reserves wishes for the federal funds rate to be permanently at the target level, then the appropriate policy for the Federal Reserve is to take a defensive open market purchase, everything else held constant. True False

Answers

The statement which states that If the Federal Reserve's wishes for the federal funds rate to be permanently at the target level, then the appropriate policy for the Federal Reserve is to take a defensive open market purchase, is TRUE.

Based on the given question, we can see that an open market operation refers to the way the federal government makes the federal funds rate to change buy making the loans more easily obtainable.

With this in mind, if they wish for the federal funds rate to be permanently at the target level, then they would have to take a defensive position by increasing the reserves through buying of securities so that economic activity would be stabilised.

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The circular flow of income model shows

a. that consumers demand products and supply resources.

b. that producers supply products and demand resources.

c. that the two basic institutions of households (consumers and businesses (producers) are each demanders and suppliers.

d. that the real flow and the money flow are in opposite.

e. all of the above

Answer:
e. all of the above

Answers

the correct answer is letter C:)

Hope it's help!! :))

happy sunny or night

expalain fiveprinciples of insurance​

Answers

Answer:

insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution.

The subsequent price and quantity of Rift pen is 19 and 20 respectively, while its initial price and quantity demanded is 20 and 16 respectively. A.Calculate the Price Elasticity(Ep) of Demand B. Is it Elastic or inelastic?why?

Answers

From the information given, the price elasticity of demand is -5% and it can be sent that it's elastic.

The percentage change in the quantity demanded will be:

= (20 - 16) / 16 × 100

= 25%

The percentage change in price will be:

= (19 - 20) / 20 × 100

= -5%

Price elasticity of demand = 25/-5 = -5

Sincere it's greater than 1, it's elastic.

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William buys land for $40,000 cash. Ten years later, when the land has dropped in value to $30,000, William sells it to his wife Susan at its fair market value, $30,000. What are the income tax consequences to William of the sale to his wife

Answers

The income tax consequences to William on the sale is that he realizes loss in the amount of $10,000 but does not recognize that loss.

Realized loss = Purchase cost - Sales cost

Realized loss = $40,000 - $30,000

Realized loss = $10,000

Hence, the income tax consequences to William on the sale is that he realizes loss in the amount of $10,000 but does not recognize that loss.

Therefore, the Option A is correct.

Missing options includes "William realizes and recognizes loss in the amount of $10,000.  William realizes and recognizes zero gain or loss. William realizes loss in the amount of $10,000 but does not recognize that loss. None of the above."

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An app on a digital device that stores account numbers, passwords, and other
sensitive information is called a
A. digital wallet
B. mobile point of sale
C. QR code
D. blockchain

Answers

Answer:

A.digital wallet

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A key tool used for problem statement maturing (usually in conjunction with the customer is)

Answers

A design thinking is the key tool used for problem statement maturing, usually in conjunction with the customer.

Design thinking refers to a process which aims to solving problems by prioritizing the consumer's needs above all else.

The main benefit of the process is that its helps firm to identify, understand and address the need or problems of the businesses and their customer.

In conclusion, the design thinking is the key tool used for problem statement maturing, usually in conjunction with the customer.

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Help help help help help

Answers

D is the right answer

Parkinson Company (PC) had a beginning balance of $86,000 and an ending balance of $90,000 in itslong-term marketable securities account. During the period the Company paid $10,000 to purchase marketable securities. If the Company reported a gain on the sale of marketable securities of $1,000 the amount of the cash inflow from the sale of securities is

A. $7,000.
B. $6,000.
C. $5,000.
D. None of the answers is correct.

Answers

B I think sorry if wrong :/

Those little ______ will grow up to be ants someday.

Answers

Larvae ………………………………..

- Assume the company can experience the following return with the following probability
Scenario probability Expected return
A 0.2 +30%
B 0.3 +15%
C 0.1 -10%
D ? -20%


i- Compute the expected return.
ii- Compute the expected value of $2000 investment over a coming year.
iii- Compute the standard deviation of the percentage return over the coming year iv- If the risk-free return is 7 percent, what is the risk premium for a stock market investment

Answers

i. The expected return is 1.5%.

ii. The expected value of $2,000 is $30 ($2,000 x 1.5%).

iii. The standard deviation of the percentage return  = 0.085 ([tex]\sqrt{0.007175}[/tex]) or 8.5%.

iv. If the risk-free return is 7 percent, the risk premium for a stock market investment is 1.5% (8.5% - 7%).

Data and Calculations:

Scenario  Probability  Expected      Expected    Variance   Squared

                                      Return            Value                         Variance

A                     0.2            +30%            0.06         0.045       0.002025

B                     0.3            +15%             0.045       0.03         0.0009

C                     0.1             -10%             -0.01        -0.005       0.000025

D                    0.4             -20%            -0.08        -0.065      0.004225

                                                            0.015                          0.007175    

D's probability = 0.4 (1 - (0.2 + 0.3 + 0.1) or 40%

Expected return = (0.2 x 0.3 + 0.3 x 0.15 + 0.1 x -0.10 + 0.4 x -0.20)

= (0.06 + 0.045 - 0.01 - 0.08)

= 0.015

= 1.5%

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a. Jamie purchases a washer and dryer from McKinney Appliances. She applies for the instore credit card. The application contains a clause stating that the store will retain a security interest in the goods purchased with the card until the goods have been paid in full. Discuss if this is an enforceable security interest. b. In this scenario, Jamie purchases the washer and dryer from McKinney Appliances and she signs a purchase agreement to pay $1,000 down and $100 per month until the balance, plus interest is fully paid. Is this an enforceable security interest

Answers

a. The contract that Jamie entered into for the purchase a washer and dryer based on an in-store credit card with McKinney Appliances constitutes an enforceable security interest.

The enforceability of the contract stems from the fact that Jamie freely agreed to use the store's credit and the agreement was not a fraud.  With this security interest, McKinney Appliances officially establishes its security interest in the washer and dryer.  It can exercise the claim in the appliance when Jamie fails to honor the agreement.

b. Yes. It is an enforceable contract.  This contract involves the sale of goods with a down payment and credit.

Thus, McKinney Appliances can legally force Jamie to pay on his account, failing which, McKinney Appliances may recover Washer and Dryer.

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Option A is an enforceable security interest while option B is not.

The security interest must be linked to a real sale. This means that it can only be established if it is linked to a sale that brings new values ​​into the buyer's assets.

A security intererest agreement must be entered into in connection with the sale. This means that it must be entered into before the item for sale is handed over to the buyer.

Loans can only be given for what is covered by the sale: This means that you can not get a car loan for additional equipment / upgrades that are bought afterwards and / or by someone other than the seller.

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Jerome is assisting with strategic planning for his organization's information system. He knows that information system organizational strategy is influenced by four main drivers: _____. a. corporate strategy, business unit strategies, innovative thinking, and technology innovations b. technologies, competencies, people, and projects c. strategic planning focus, information system goals, business unit strategy, and typical projects d. decision-making frameworks, focus of resource use, business opportunities, and communication among management and other personnel

Answers

Jerome is assisting with strategic planning for his organization's information system. He knows that information system organizational strategy is influenced by four main drivers: d. decision-making frameworks, focus of resource use, business opportunities, and communication among management and other personnel.

The information system is introduced in companies that want to change their methods of operations, goals, products, and services to meet up to their competitions or supersede them.

To successfully achieve these objectives, the resources, business strategies, decision-making framework, and communication should be strengthened to implement the Information system

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Who should fill out a Free Application for Federal Student Aid (FAFSA)?
PERDELE
A. Only students who have been accepted to college should fill out a
FAFSA.
B. All students should fill out a FAFSA.
C. Only students who are unable to pay for college should fill out a
FAFSA.
D. Only students who have received good grades should fill out a
FAFSA.
EL
14
FREE

Answers

Based on the eligibility requirements stated, those that should fill out a Free Application for Federal Student Aid (FAFSA) are the "Only students who have been accepted to college should fill out a FAFSA."

Eligibility Criteria for FAFSA

According to the United States government website, to be eligible for the program requires one to have the following criteria:

Be a U A Citizen.Have a valid Social Security Number.Register with Selective Service.Have a high school diploma.Be accepted or already a regular student working toward a degree or just No drug record, etc.

Hence, in this case, it is concluded that the correct answer is option A. "Only students who have been accepted to college should fill out a

Only students who have been accepted to college should fill out aFAFSA."

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Like other limited liability companies, for federal jurisdictional purposes, Rodeo Productions LLC is most likely a citizen of

Answers

There are different kinds of company that exist.

This is most likely a citizen of every state of which its members are citizens.

Limited liability company is often set up as a form of legal protection for shareholders and owners that hinders people from being held personally responsible for their company's debts or financial losses.

In some business structures, such as corporations and limited companies, firms are registered as a seperate legal bodies. States were members are citizen connote that evey shareholders are from one locality.

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A professional mentor should be used for guidance on which of the following?

the development of a mentee’s resume
improving of a mentee’s presentation skills
the hair color of the mentee for a date
which car would be best to rent for a weekend ski tri

Answers

Answer:

Answer:

1. The development of a mentee's resume

2. Improving of a mentee's presentation skills

Explanation:

A professional mentor can be involved in the services like developing a mentee's resume; and improving his presentation skills.

What are the roles of a professional mentor?

A professional mentor is someone who offers his services to a mentee by training in the skills that would help him in achieving his organizational and career goals.

In the above example, a professional mentor has to work on development of his mentee's resume to help him attract more employers at an attractive pay.

Hence, options A and B as aforementioned are the areas of work in which in the guidance of a professional mentor is required.

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Helen Bedru is the assistant controller of Cotton Cravat Co., a subsidiary of HG automotive, which manufactures tailpipes, mufflers, and catalytic converters at several plants throughout Ethiopia . Because of pressure for lowerselling prices, Cotton Cravat Co. has had disappointing financial performance in recent years. Indeed, Helen is aware of rumblings from corporate headquarters threatening to close the plant. One of Helen's responsibilities is to present the plant's financial plans for the coming year to the corporate officers and board of directors. In preparing for the presentation, Helen was intrigued to note that the focal point of the budget presentation was a profit-volume graph projecting an increase in profits and a reduction in the break-even point. Curious as to how the improvement would be accomplished, Helen ultimately spoke with Kiruvel Mesfin, the plant manager. Kiruvel indicated that a planned increase in productivity would reduce variable costs and increase the contribution margin ratio. When asked how the productivity increase would be accomplished, Kiruvel made a vague reference to increasing the speed of the assembly line. Helen commented that speeding up the assembly line could lead to labor problems because the speed of the line was set by union contract. Kiruvel responded that he was afraid that if the speedup were opened to negotiation, the union would make a big "stink" that could result in the plant being closed. He indicated that the speedup was the "only way to save the plant, our jobs, and the jobs of all plant employees." Besides, he did not believe employees would notice a 2 or 3 percent increase in speed. Kiruvel concluded the meeting observing, "You need to emphasize the results we will accomplish next year, not the details of how we will accomplish those results. Top management does not want to be bored with details. If we accomplish what we propose in the budget, we will be in for a big bonus."

Required: What advice do you have for Helen Bedru?Support your response with sufficient and sound reasoning​

Answers

Helen Bedru can present the year's budget based on speeding up the assembly line if Kiruvel can further convince her of the possibility of achieving the plant's target. All stakeholders  should be interested in keeping the plant running.

It is the responsibility of Helen to get all the required data for the budget. The budget should be based on verifiable facts and figures without padding. If she is convinced that the plant manager's strategy is implementable, she should work out the budget based on this new strategy.

It makes business sense to allow the plant to lower its variable costs by speeding up the assembly line and eliminating inefficiencies.

Thus, Helen Bedru needs to work with Kiruvel on the details of his strategy to achieve the budget projections.

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This year Andrews achieved an ROE of 30.2%. Suppose next year the profit margin (Net Income/Sales) increases. Assuming sales, assets and financial leverage remain the same next year, what effect would you expect this action to have on Andrews's ROE

Answers

It Is expected that Andrew's ROE would increase.

ROE is a short form of return on equity. ROE is a profitability ratio.  It measures the ability of a firm to generate profits from its asset

Return on equity = net income / average total equity

ROE can be decomposed into:  

ROE = profit margin x asset turnover x financial leverage

ROE = (Net income / Sales) x (Sales/Total Assets) x (total asset / common equity)

If, profit margin increases, ROE would also increase.

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Help help buissness help help

Answers

Answer:

My best guess will have to be A

Explanation:

most research I did was talking about money stability

Answer:a control of money

Midyear on July 31st, the Digby Corporation's balance sheet reported: Total Liabilities of $128.297 million Total Common Stock of $6.350 million Cash of $10.050 million Retained Earnings of $45.255 million. What were the Digby Corporation's total assets

Answers

Based on the information given  Digby Corporation's total assets is:$179.902 million .

Using this formula

Total assets = Total liabilities + Shareholders’ equity

Total assets= Total liabilities + ( Total common stock + Retained earnings)

Where:

Total liabilities= $128.297 million

Total common stock= $6.350 million

Retained earnings= $45.255 million

Let plug in the formula

Total assets= $128.297 million  + ( $6.350 million  + $45.255 million)

Total assets= $128.297 million  +$51.605 million

Total assets= $179.902 million  

Inconclusion  Digby Corporation's total assets is:$179.902 million .

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In which 2 ways can you create a customized template for a project in qbo

Answers

The two ways you can create a customized template for a project in QuickBooks online are as follows:

1. Use an inbuilt project template and then customize it to your style. This method involves the use of a standard or custom template. Then, you can adjust the tasks, due dates, and assignees as required.

2. Create a new project template by customizing it to match your needs.

Thus, the two ways of creating a project template in QuickBooks online as stated above are not complicated.

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How much money should be deposited annually in a bank account for five years if you wish to withdraw ​$3 comma 000 each year for three​ years, beginning five years after the last​ deposit? The interest rate is 4​% per year.

Answers

The amount to be deposited in the bank for five years is $1729.

The first step is to determine the present value of $3000.

Cash flow in year 1 - 4 = 0

Cash flow in year 5 - 7 = $300

I = 4%

PV calculated using a financial calculator = $7,116.48

The second step is to determine the future value of the present value calculated above

$7,116.48 x (1.04)^7 = $9,364.80

The third step is to determine the amount to be deposited each year for 5 years:

Amount = future value /annuity factor

Annuity factor = {[(1+r)^n] - 1} / r

= [(1.04)^5 - 1] / 0.04 = 5.416323

Amount = $9,364.80/ 5.416323 = $1729

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Which part of the LRAS curve looks similar to a " Classical LRAS^ prime prime curve?

A. The Segment between A and B
B. The Segment between B and C
C. The Segment between C and D
D. The Segment between A and C

Answers

Answer:

C. The segment between C and D

Explanation:

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3. Aesop is not using traditional advertisements or discount sales to promote its products. Instead, Aesop gets its promotional communication mostly by word-of-mouth for the design of its products, stores, and events, which are a singular mix of indulgent product experiences, thoughtful language, and modern minimalist design. If you had to interact with Natura & Co SA, which customer engagement model--Natura's, The Body Shop's, or Aesop's-- would be the best for you and why?

Answers

Based on the information given, the model that will be appropriate for the company is the client commitment model.

The client commitment model is a model whereby a company provides and meet the needs of the customers. It is important as it assists the brand with comprehension.

Therefore, the interaction with interact with Natura & Co SA, will ensure that they use this model in order to get more customers, improve sales, and get more profit.

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In their ________ roles, managers interact with people inside their work units; while solving problems is part of their ________ roles. Multiple Choice decisional; technical interpersonal; technical decisional; conceptual interpersonal; decisional

Answers

It should be noted that in their interpersonal roles managers interact with people inside and outside their work units while solving problem is part of their decisional roles.

What is interpersonal role of a manager?

This the role that is been expected by the manager in carrying the work team so they can achieve the organizational goals.

Therefore, managers interact with people inside and outside their work units while solving problem.

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Which of the following is appropriate interview attire for women?

a
A bright pink, floral suit

b
A t-shirt with a skirt

c
Multiple large necklaces

d
Dark-colored, closed-toed shoes
Will Give Brainlest!! Quickly Please!!! <3

Answers

Answer:

I'm going to say the answer is B ! I could be wrong but this is what i think :)

Explanation:

Answer: The answer is (D) Dark-colored, closed-toed shoes. Although a skirt is a smart choice, a t-shirt is considered informal and you should not choose this answer.

Explanation: I hope this helps good luck! also I got a 100 on the test.

Baby Goods Inc. buys Child Shops Inc. in an attempt to gain monopoly power. Remedies that a court might impose in a suit against Baby Goods for a violation of the antitrust laws include Group of answer choices using its market power to encourage increased competition. funding new entries to the relevant market. divesting itself of the control or ownership of Child Shops. all of the choices.

Answers

Based on the information given regarding the monopoly power, the remedy by the court will be divesting itself of the control or ownership of Child Shops.

It should be noted that antitrust laws are put in place in order to protect consumers from business practices that are predatory and also ensure fair competition.

Since antitrust laws recommend the breaking of certain business conducts, there'll be the divesting of the company of the control or ownership of Child Shops.

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If only one airline serves a town, does a monopoly exist? What about competition from other services?

Answers

If only one airline serves a town, the question of whether a monopoly exists is:

Yes, a monopoly exists

Based on the given question, we are asked to state whether a monopoly exist in a situation where there is only one airline in a town, and the answer is, yes, that is a monopoly

It is important to note that a monopoly has to do with the domination of one company in a market system whereby there is little to no competition from other companies. In this situation, there is usually higher prices of products because there is a lack of competition for competitive prices.

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Based on this passage, what is the most likely reason the United Statesgovernment objects to the Chinese subsidies?O A. American manufacturers face competition from cheaper Chinese-made solar panels, because the subsidies lower Chineseproduction costs.O B. American builders face a shortage of solar panels, because thesubsidies reduce the number available for shipment to the UnitedStates.O c. American shipping companies lose business, because thesubsidies reduce international trade between China and theUnited States.O D. American consumers must pay more for solar panels, because thesubsidies make solar panels more expensive. During fertilization, each haploid ____________ contains the entire genetic contribution from one of the two parents. Can someone plz help me? :( Mitosis maintains chromosomes in each {blank} while meiosis maintains chromosome number in the {blank}. Kangaroo hops 2 kilometers in 3 minutes how long does it take the kangaroo to travel 5 kilometers the sum of two numbers is 68. the larger number is 14 more than the smaller number. what are the numbers? A horizontal force is applied to a box with a mass equal to 5.5 kg, The graph shows the net force acting on a box as a function of its horizontal position x.Part AFind the net work done on the box as it moves from x = 0 m to x = 8.0 m. . Part BApply concepts of work and energy to solve for the speed of the box when it reaches position x = 8.0 m. Assume the box started from rest. 5. My classmate will ask questions to our teacher nor what happens when carbon dioxide gas is cooled to -78 degree Celsius - ?, 12. The area of the flower garden is 9.7 square metersgreater than the herb garden. What is the area of theflower garden? How might population-based representation be a problem? Solve for x. Round to the nearest tenth, if necessary.1.8P1400o Which of the following expressions represents the expanded version of the expressionbelow?7x (8x2 - 4y2 + 3y - 5)O 15x3 - 11xy2 + 10xy - 12XO 56x2 - 28xy2 + 21xy - 35xO 56x3 - 4y2 + 3y - 5 56x3 - 28xy2 + 21xy - 35x What is the most effective way for a person to communicate that he or she wants to practice abstinence? Elias chose C as the correct answer. How might he have gotten that answer Ten year old Matt Zigbowski struggles at school. His teacher seats students alphabetically, so he is at the back of the classroom. He cannot see the words on the chalkboard from his desk. When he goes to the teacher's desk near the chalkboard, he can see the words. What is probably wrong with his eyes?a. hyperopiab. myopia c. astigmatism d. astigmatism and myopia e. astigmatism and hyperopia Could someone show me the streamline for this problem? The answer is 909, but I'd like to know how1000-100+10-1 what depth would a submarine have to submerge so that it would not be swayed by surface waves wwith a wavelength of 30 meters What is the reciprocal of 64?