Consider a firm that exists in a world with two periods (time 0 and time 1) and two equally likely states of the world at time 1. at time 0 the firm’s securities are traded. at time 1 the state is revealed. in the up-state the firm’s assets are worth $120 and in the down-state they are worth $40. the firm has debt outstanding with a face value of $60. assume that the required rate of return is zero and investors are risk neutral.

a) compute the market value of debt, equity and the total market value of the company at time 0.

b) suppose that the company issues some additional debt with a face value of $40. this debt is pari passu (equal priority) with respect to the existing debt and the proceeds are invested in a zero npv riskless project (i. e., the money is put in a safe box). how much money is the company able to raise with this debt issue?

c) how much did the value of the old debt change? why?

d) how much did the value of equity change? why?

e) instead, suppose that the company will invest in a zero npv but risky project. in particular assume that if the firm invests an additional $15 at time 0 it will receive $30 in the up-state but $0 in the down-state. suppose you want to raise the $15 to undertake this investment issuing pari passu debt. what will be the face value of the new debt?

f) how much did the value of the old debt change? why?

g) how much did the value of equity change? why?

h) suppose that you raise the $15 you need for the project with senior debt (i. e., debt senior with respect to the existing one). what should be the face value of the new debt?

i) how much did the value of the old debt change? why?

j) how much did the value of equity change? why?

On april 1, 2017, jiro nozomi created a new travel agency, adventure travel. the following transactions occurred during the company’s first month. april 1 nozomi invested $30,000 cash and computer equipment worth $20,000 in the company in exchange for common stock.2 the company rented furnished office space by paying $1,800 cash for the first month's (april) rent.3 the company purchased $1,000 of office supplies for cash.10 the company paid $2,400 cash for the premium on a 12-month insurance policy. coverage begins on april 11.14 the company paid $1,600 cash for two weeks' salaries earned by employees.24 the company collected $8,000 cash on commissions from airlines on tickets obtained for customers.28 the company paid $1,600 cash for two weeks' salaries earned by employees.29 the company paid $350 cash for minor repairs to the company's computer.30 the company paid $750 cash for this month's telephone bill.30 the company paid $1,500 cash in dividends. the company's chart of accounts follows: 101 cash 405 commissions earned106 accounts receivable 612 depreciation expense—computer equip.124 office supplies 622 salaries expense128 prepaid insurance 637 insurance expense167 computer equipment 640 rent expense168 accumulated depreciation—computer equip. 650 office supplies expense209 salaries payable 684 repairs expense307 common stock 688 telephone expense318 retained earnings 901 income summary319 dividends use the following information: two-thirds (or $133) of one month’s insurance coverage has expired.at the end of the month, $600 of office supplies are still available.this month’s depreciation on the computer equipment is $500.employees earned $420 of unpaid and unrecorded salaries as of month-end.the company earned $1,750 of commissions that are not yet billed at month-end. required: 1. & 2. prepare journal entries to record the transactions for april and post them to the ledger accounts in requirement 6b. the company records prepaid and unearned items in balance sheet accounts.3. using account balances from requirement 6b, prepare an unadjusted trial balance as of april 30.4. journalize and post the adjusting entries for the month and prepare the adjusted trial balance.5a. prepare the income statement for the month of april 30, 2017.5b. prepare the statement of retained earnings for the month of april 30, 2017.5c. prepare the balance sheet at april 30, 2017.6a. prepare journal entries to close the temporary accounts and then post to requirement 6b.6b. post the journal entries to the ledger.7. prepare a post-closing trial balance.

If a team of three workers, each making the u.s. federal minimum wage, produced these 12 rugs, what would the total labor cost be? don't forget that these workers would be working overtime.

Evan company reports net income of $232,000 each year and declares an annual cash dividend of $100,000. the company holds net assets of $2,130,000 on january 1, 2017. on that date, shalina purchases 40 percent of evan's outstanding common stock for $1,066,000, which gives it the ability to significantly influence evan. at the purchase date, the excess of shalina’s cost over its proportionate share of evan’s book value was assigned to goodwill. on december 31, 2019, what is the investment in evan company balance (equity method) in shalina’s financial records?