Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) Find out the main reasons why the multinational corporation might come to a decision to borrow in the country like Brazil, where interest rates are high, rather than in the country like Switzerland, where interest rates are low. Give support for your justification.

2) Market value of United Frypan Company is given below:

VDO = $40.00 (Value of Debt)
VEO = $120.00 (Value of Equity)

Tax rate is 40% and interest is tax deductible. Company is perpetual steady state company. At present the debt is yielding 8%.

a) How much of firm's value is accounted for by debt generated subsidy?

b) How much better off will UF's shareholders be if firm borrows $20 more and utilizes it to repurchase stock? Interest rate will be 10% with this higher debt level.

c) Now assume that government passes the law which will phase out deductibility of interest for tax purposes after a period of 5 years. What will the new value of the firm be, all other things remaining equal.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914382

Have any Question? 


Related Questions in Basic Finance

According to the economist which tracks the big mac index

According to the Economist, which tracks the Big Mac index: The yuan is unquestionably undervalued. Our Big Mac index, based on the theory of purchasing-power parity, in which exchange rates should equalise the price of ...

1 in addition to the key words you should also be able to

1. In addition to the key words, you should also be able to define the following terms: third-variable problem directionality problem confounding variable random process placebo mundane realism experimental realism 2. De ...

Does depreciation affect cash flow in a positive or

Does depreciation affect cash flow in a positive or negative manner? From a net present-value perspective, why is accelerated depreciation preferable? Is it acceptable to utilize one depreciation method for tax purposes ...

Create a chart to compare dataaccording to mars inc each

Create a chart to compare data. According to Mars, Inc., each bag of M&M's should contain the percentage of colors shown in Figure 27. Purchase five small bags of M&M's and separate the M&M's in each bag by color. Compar ...

Push for year end sales-ethicalthe boyer company

Push for Year End Sales-Ethical? The Boyer Company manufactures snow blowers. It has been a warm fall and sales have declined materially. This has resulted in a buildup of inventory. Required a. In early December the Boy ...

An article in the wall street journal noted that of the

An article in the Wall Street Journal noted that of the thousands of mutual funds investing in stocks or stocks and bonds, only 31 had managed to earn a higher rate of return than the S&P 500 in every year from 1999 thro ...

Please put the answer in a word document or excel

Please put the answer in a word document or excel spreadsheet. Thank you - see attached file first.  Calculate the expected return and standard deviation of for single stocks and portfolio You have estimated the followin ...

1 why do adjustable rate mortgages arms seem to be a more

1. Why do adjustable rate mortgages (ARMs) seem to be a more suitable alternative for mortgage lending than PLAMs? 2. List each of the main terms likely to be negotiated in an ARM. What does pricing an ARM using these te ...

1 what is the range and why is it not ideal as an index of

1. What is the range, and why is it not ideal as an index of variability? 2. Give a definition of variance, then explain how you would calculate it. 3. How does variance differ from the total sum of squares?

1 what is the difference between global remuneration and

1. What is the difference between global remuneration and international assignment compensation? 2. What are the major issues related to the effectiveness of global remuneration plans? 3. How are equity compensation plan ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen