Primavera Holding has a profit margin of 25%, an asset turnover of 0.5 and financial leverage (assets to equity) of 1.5. Primavera has $20 billion in assets, of which half is in cash and marketable securities. Assume that primavera earns a 3 percent after-tax return on cash and marketable securities as a dividend to shareholders?
Negative
Between 0% and 20%
Between 20% and 40%
between 40% and 60%
Greater than 60%

Between 40% and 60%.

Explanation:

The equity of Primavera Holding will be determined by using financial leverage formula;

Financial Leverage = Asset / Equity

1.5 = $20 billion / Equity

Equity = $20/1.5 = $13.33 billion.

To find out  net Income we need to determine sales of the company, for this we will use asset turnover ratio;

Asset turnover = Sales / Assets

0.5 = Sales / $20 billion

Sales = $10 billion.

Profit margin of Primavera Holdings is 25% so net income will be 25% of Sales which is $2.5 billion.

If the company has 90% payout ratio then $9 billion will be given to shareholders as dividend, its assets will reduce to ($20 - $9) $11 billion and equity will be ($13.33 - $9) $4.33 billion and net income will fall by 3% of $9 billion which is $0.27 billion.

The net income after the dividend will become ($2.5 - $0.27) $2.23 billion

The Return On Equity of the company will be = (Net Income / Equity) * 100

ROE = ( $2.23 / $4.33 ) * 100

ROE = 51.50%

The ROE is between 40% and 60% so this is correct answer.

the first successful, urban blues recording, selling more than 75,000 copies, was made in year 1920.

mamie smith recorded the first commercially successful example of the urban blues,   with the recording of “crazy blues”."crazy blues" was recorded on august 10, 1920, in new york city. within a month of the release of “crazy blues” it had sold 75,000 copies.

answer; /// blank(1); increases; blank(2); decreases;