Novell, which had a market value of equity of - id215011787895 от hjlhdjfhjh 30.04.2020 13:33

Question

Business: Novell, which had a market value of equity of $2 billion and a beta of 1.50, announced that it was acquiring Word- Perfect, which had a market value of equity of $1 billion and a beta of 1.30. Neither firm had any debt in its fi- nancial structure at the time of the acquisition, and the corporate tax rate was 40%. a. Estimate the beta for Novell after the acquisition, assuming that the entire acquisition was financed with equity. b. Assume that Novell had to borrow the $1 billion to acquire WordPerfect.

hjlhdjfhjh · Accepted Answer

The correct answer is option B.

Explanation:

Because of drought, the supply of wheat will decline. This will cause the supply curve to move to the left. As a result, the price of wheat will increase.

Wheat is used as an input in the production of bread. The rise in the price of wheat will lead to an increase in the cost of producing bread. This increase in the cost of production will lead to a decline in supply.

The reduction in the supply of bread will move the supply curve to the left. This will further cause an increase in the price of bread. As potato is a substitute good for bread, an increase in the price of bread will cause the demand for potatoes to rise.

Novell, which had a market value of equity of $2 billion and a beta of 1.50, announced

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