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Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A bookstore is incorporated at the beginning of the year, so all entries of balance sheet are zero at the beginning of the year (Jan. 1). David invests $5,000 at the beginning of the year and withdraws $5,000 at the end of the year. The bookstore buys books worth $5,000. The bookstore sells all of the books for $15,000 (cash) during the year. The bookstore incurs operating expense of $3,000 to pay utilities. At the beginning of the year, the bookstore borrows $5,000 whose interest rate is 40% at the beginning of the year. The bookstore pays interest and principal at the end of the year. The tax rate is 20% . What is the firm value at the end of the year? Question 5 options: $ 1,000 $2,000 $3, 000 $4,000 Can not be determined 

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