Homework Answers
1.5 is most likely Initech's equity multiplier.
If the company uses only equity finance option, then equity multiplier will be 1, but in the given case, Initech finance both equity and liabilities. Therefore equity multiplier will be 1.5.
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equity multiplier
Initech finances their business using a combination of equity and liabilities. Which of the...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for cash. After the combination Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: Book Values Fair Values Current assets $ 81,800 $ 81,800 Equipment 131,000 198,000 Trademark (0) 352,000 Liabilities (67,800 ) (67,800 ) Common stock (100,000 ) (0) Retained earnings (45,000 ) (0) In addition, Acme paid an investment bank $31,200...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for cash. After the combination Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: Book Values Fair Values Current assets $ 63,200 $ 63,200 Equipment 150,000 216,000 Trademark 0 324,000 Liabilities (68,200 ) (68,200 ) Common stock (100,000 ) Retained earnings (45,000 ) In addition, Acme paid an investment bank $32,100 cash for...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for cash. After the combination Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: Book Values Fair Values Current assets $ 56,800 $ 56,800 Equipment 157,000 220,000 Trademark 0 330,000 Liabilities (68,800 ) (68,800 ) Common stock (100,000 ) Retained earnings (45,000 ) In addition, Acme paid an investment bank $28,100 cash for...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for cash. After the combination Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: Book Values Fair Values Current assets $ 81,800 $ 81,800 Equipment 131,000 198,000 Trademark 0 352,000 Liabilities (67,800 ) (67,800 ) Common stock (100,000 ) Retained earnings (45,000 ) In addition, Acme paid an investment bank $31,200 cash for...
The XYZ, Inc finances its operations by using 75% equity and the rest using debt. The...
The XYZ, Inc finances its operations by using 75% equity and the rest using debt. The cost of equity is 13% and the cost of debt is 5%. The corporate tax rate is 30%. What is the WACC of the CI Corp? Answer should be: 10.625%
a company's return on equity is greater than its required return on equity. the earnings multiplier...
a company's return on equity is greater than its required return on equity. the earnings multiplier (p/e) for that company's stock is most likely to be positively related to the a. risk free rate b. market risk premium c. earnings retention ratio d. stocks capital asset pricing model beta
What is the accounting valuarion basis for consolidating assets and liabilities in a business combination? please...
What is the accounting valuarion basis for consolidating assets and liabilities in a business combination? please explain in detail
29 Suppose we have the following information conceming the federal government's finances Multiplier: 1.5 Tax Rate:...
29 Suppose we have the following information conceming the federal government's finances Multiplier: 1.5 Tax Rate: 15 % Increase in spending: $200 Billion Total Deficit in the previous year: $1 Trillion Why is the current deficit brought on by the increase in government spending less than the increase in spending by the government? The fiscal stimulus decreased the overall income in the economy causing tax revenues to increase O The Ricardian Equivalence theorem caused individuals to increase their spending, which...
What steps would you take to analyze the assets and liabilities of a business combination? What...
What steps would you take to analyze the assets and liabilities of a business combination? What are the U.S. GAAP and IFRS accounting rules regarding consolidations?
Transaction Assets = Liabilities + Equity Beginning $0 = $0 + $0 Investment in the Business...
Transaction Assets = Liabilities + Equity Beginning $0 = $0 + $0 Investment in the Business The company issue stock in exchange for $25,000 cash. This increases the assets of the business from its zero balance. The owners (stockholders) have a claim on the assets, so equity also increases from its zero balance. Make sure the equation stays in balance. $ = $ + $ Borrow Cash The company borrows $12,500 cash from the local bank. This increases the assets...
29 Suppose we have the following information conceming the federal government's finances Multiplier: 1.5 Tax Rate: 15 % Increase in spending: $200 Billion Total Deficit in the previous year: $1 Trillion Why is the current deficit brought on by the increase in government spending less than the increase in spending by the government? The fiscal stimulus decreased the overall income in the economy causing tax revenues to increase O The Ricardian Equivalence theorem caused individuals to increase their spending, which...
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