Currently, the firm is all equity funded with 1,000,000 shares valued at $9 per share and the required return on equity is 7.22%. Income tax rate is 35%. Your banker has indicated that the following leverage restructurings are possible: Number of shares 850,000 700,000 550,000
Debt Leverage 15.00% 30.00% 45.00%
Interest 7.50% 8.00% 8.50%
ROE 11.00% 12.00% 13.00%
1) Estimate the share prices for the following debt restructures 15%, 30%, and, 45%, respectively:
A $6.07; $6.25; $5.96
B $5.96; $6.25; $6.07
C $6.25; $6.07; $5.96
D $5.96; $6.07; $6.25
E $6.07; $5.96; $6.25
2) Estimate which two debt restructures maximize firm value.
A 30%; 45%
B 15%; 30%
C 0%; 15%
D 45%; 0%
E 0%; 30%

Paar corporation bought 100 percent of kimmel, inc., on january 1, 2012. on that date, paar’s equipment (10-year life) has a book value of $420,000 but a fair value of $520,000. kimmel has equipment (10-year life) with a book value of $272,000 but a fair value of $400,000. paar uses the equity method to record its investment in kimmel. on december 31, 2014, paar has equipment with a book value of $294,000 but a fair value of $445,200. kimmel has equipment with a book value of $190,400 but a fair value of $357,000. the consolidated balance for the equipment account as of december 31, 2014 is $574,000. what would be the impact on consolidated balance for the equipment account as of december 31, 2014 if the parent had applied the initial value method rather than the equity method? the balance in the consolidated equipment account cannot be determined for the initial value method using the information given. the consolidated equipment account would have a higher reported balance. the consolidated equipment account would have a lower reported balance. no effect: the method the parent uses is for internal reporting purposes only and has no impact on consolidated totals.

Jeanie had always been interested in how individuals and businesses effectively allocate their resources in order to accomplish personal and organizational goals. that’s why she majored in economics and took on an entry-level position at an accounting firm. she is very interested in further advancing her career by looking into a specialization that builds upon her academic background, and her interest in deepening her understanding of how companies adjust their operating results to incorporate the economic impacts of their practices on internal and external stakeholders. which specialization could jeanie follow to get the best of both worlds? jeanie should chose to get the best of both worlds.

John's pizzeria and equilibrium john is selling his pizza for $6 per slice in an area of high demand. however, customers are not buying his pizza. using what you learned about the principles of equilibrium, write three to four sentences about how john could solve his problem.