Consider Two Firms, U and L, Both with $50,000 in Assets

question 35

Essay

Consider two firms, U and L, both with $50,000 in assets. Firm U is unlevered, and firm L has $20,000 of debt that pays 8% interest. Firm U has 1,000 shares outstanding, while firm L has 600 shares outstanding. Mike owns 20% of firm L and believes that leverage works in his favor. Steve tells Mike that this is an illusion, and that with the possibility of borrowing on his own account at 8% interest, he can replicate Mike's payout from firm L.
-After seeing Steve's analysis, Mike tells Steve that while his analysis looks good on paper, Steve will never be able to borrow at 8%, but would have to pay a more realistic rate of 12%.If Mike is right, what will Steve's payout be?

Outline the sequence and integrative nature of aerobic respiration processes including glycolysis, the citric acid cycle, and electron transfer phosphorylation.

Explain the function of hydrogen ions in the mitochondrial intermembrane space and their role in ATP synthesis.

Understand the conversion and final products of glucose metabolism during aerobic respiration.

Identify the adaptations and mechanisms that allowed early aerobic organisms to utilize oxygen.

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Definitions:

Negligence

A failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances, leading to unintended harm to others.

Proximate Cause

The primary reason something occurred in law, determining liability based on the directness of the relationship between an action and a harm.

Duty of Care

A legal obligation which is imposed on an individual requiring adherence to a standard of reasonable care while performing any acts that could foreseeably harm others.

Performance-based Regulation

Regulatory approach where entities are measured and rewarded based on their performance outcomes rather than adherence to prescriptive rules.