Acort Industries owns assets that will have an 80% probability of having a market value of $50 million in one year. There is a 20% chance that the assets will be worth only $20 million. The current risk-free rate is 5%, and Acort’s assets have a cost of capital of 10%. a. If Acort is unlevered, what is the current market value of its equity?
b. Suppose instead that Acort has debt with a face value of $20 million due in one year.. According to MM, what is the value of Acort’s equity in this case?
c. What is the expected return of Acort’s equity without leverage? What is the expected return of Acort’s equity with leverage?
d. What is the lowest possible realized return of Acort’s equity with and without leverage?

Which of the following has the largest impact on opportunity cost

What part of the rational model of decision-making does the former business executive “elliott” have a problem completing?

Activity-based costing (abc) is not truly a cost collection mechanism as much as it is an inventory valuation method. the main purpose for implementing an activity-based cost system is to try to overcome some of the cost distortions that occur in traditional costing from product differences when there are variations in size and complexity. however, one of the disadvantages of utilizing abc is that the additional information gathering necessary to implement costing with that level of detail might be beyond the reach of some companies with resource or financial constraints. with this in mind, what kinds of industries or companies do you think would benefit most from using activity-based costing and why? in designing or modifying an accounting system to capture appropriate costs for abc, what considerations do you think would need to be made?