Quantum design, inc. is considering adding debt to their capital structure. currently, the value of quantum designs is $3,000,000 and they are all-equity financed. the cfo would like to issue debt; specifically, $1,000,000 worth of bonds. this debt would mature in ten years. the interest on the bonds would be set at 5%. the cfo estimated that this is the appropriate required rate of return demanded by bondholders of similar debt issues.
quantum designs pays taxes at a rate of 30%.a. what is the annual interest tax shield? b. what is the present value of the interest tax shield? c. given your answer in part 2, what is the value of the firm with the debt? (hint: vl = vu + pvits).d. considering that most small firms in this industry experience direct and indirect costs of financial distress at about 20% of firm value (firm value when the firm is all equity financed, i. e., $3,000,000 in this case), what would be your recommendation to the cfo of quantum designs regarding the proposed change to their capital structure?

Refer to the payoff matrix. suppose that speedy bike and power bike are the only two bicycle manufacturing firms serving the market. both can choose large or small advertising budgets. is there a nash equilibrium solution to this game?

Net income and owner's equity for four businesses four different proprietorships, jupiter, mars, saturn, and venus, show the same balance sheet data at the beginning and end of a year. these data, exclusive of the amount of owner's equity, are summarized as follows: total assets total liabilities beginning of the year $550,000 $215,000 end of the year 844,000 320,000 on the basis of the preceding data and the following additional information for the year, determine the net income (or loss) of each company for the year. (hint: first determine the amount of increase or decrease in owner's equity during the year.) jupiter: the owner had made no additional investments in the business and had made no withdrawals from the business. mars: the owner had made no additional investments in the business but had withdrawn $36,000. saturn: the owner had made an additional investment of $60,000 but had made no withdrawals. venus: the owner had made an additional investment of $60,000 and had withdrawn $36,000. jupiter net income $ mars net income $ saturn net income $ venus net income $

Your own record of all your transactions. a. check register b. account statement