What is the total value of the enterprise

Assignment Help Financial Management

Reference no: EM131920055

1. Assuming that the average duration of the bank's assets is four years, while the average duration of its liabilities is three years, a rise in interest rates from 5 percent to 10 percent will cause the net worth of First National to _______ by _________ of the total original asset value.

Asset Liabilities

Rate sensitive $40M $50M

Fixed Rate $60M $40M

How do you solve for this problem?

2. Energy Efficiency Consulting (EEC) has three offices. The corporation has a debt-equity ratio 40 percent and makes interest payments $123,000 at the end of each year. The firm’s current equity cost of capital is 19 percent. Each of EEC’s offices estimates annual sales of $1.3 million, annual cost of goods sold of $670,000, and annual total general and administrative costs $405,000. The corporate tax rate is 40%.

If you assume these business conditions will remain the same forever and you have determined that the value of the company's equity $1,947,326, what is the total value of the enterprise?

A. $3,245,543

B. $4,868,315

C. None of these

D. $3,115,722

Reference no: EM131920055

Questions Cloud

What are some of the main differences between theories : What are the main components of each of the psychoanalytic-social personality theories? What are some of the main differences between theories?

What is the best way for the ceo to deal with managers : What is the best way for the ceo to deal with managers in key positions who continue to resist a major change? What type of source credibility issue is this?

Create challenges in the workplace : Generational Cohort differences continue to create challenges in the workplace. Looking at these differences from the scientist-practitioner model.

Prepare a flexible budget performance report for the school : Should the owner feel frustrated with the variance reports? Explain and Prepare a flexible budget performance report for the school for July

What is the total value of the enterprise : Energy Efficiency Consulting (EEC) has three offices. What is the total value of the enterprise?

Why are reliability and validity important for assessment : Why are reliability and validity important for assessment? How are content validity and criterion-related validity used to establish construct validity?

Lost income can be considered charitable deduction : Given you are forgoing the $2500 income for charity; you want to determine if that lost income can be considered a charitable deduction.

Explain the relationship between racism and privilege : Post an explanation of the relationship between racism and privilege. Furthermore, explain how the concepts of racism and privilege relate.

Find equivalent annual end-of-year dividend for each year : Most corporations pay quarterly dividends on their common stock rather than annual dividends. Find the equivalent annual end-of-year dividend for each year

User Account

All Pages