Houston Investments (HI), an investment banking firm, has proposed two types of payment plans for the IPO being considered by Anderson Exploration
The first is a firm commitment of $10,000,000. The second is a best efforts arrangement in which HI will receive $3.00 for every share sold up to a maximum of $1,200,000 for the 400,000 shares being offered. How much money will HI earn under the best efforts method if it is able to sell only 90% of the offering at a price of $30.00 per share?
A) $800,000
B) $1,080,000
C) $1,200,000
D) $2,000,000
Answer: B
Explanation: B) Best efforts cash flow = # of shares offered × percent sold × commission per share sold
= 400,000 × 0.90 × $3.00 = $1,080,000.
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A. $15.00 B. $2.33 C. $2.00 D. $3.00 E. $10.28
The landlord ran the model in Excel and received the sensitivity report for the constraints as contained in the table. Which of the following statements is correct?
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High Roller Properties is considering building a new casino at a cost of $10.0 million at t = 0. The after-tax cash flows the casino generates will depend on whether the state imposes a new income tax, and there is a 50-50 chance the tax will pass. If it passes, after-tax cash flows will be $1.875 million per year for the next 5 years. If it doesn't pass, the after-tax cash flows will be $3.75 million per year for the next 5 years. The project's WACC is 11.0%. If the tax is passed, the firm will have the option to abandon the project 1 year from now, in which case the property could be sold to net $6.7 million after tax at t = 1. What is the value (in thousands) of this abandonment option? Do not round intermediate calculations. ?
A. $437 B. $457 C. $318 D. $418 E. $398
Channel conflict occurs when the addition of an online distribution channel causes problems with existing distribution channels
Indicate whether the statement is true or false