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Inga [223]
2 years ago
14

A hypothetical interest rate whose only function is to compensate lenders for the opportunities they forgo by not having access

to the loaned funds is called the ______.
Business
1 answer:
aev [14]2 years ago
6 0

An interest rate that is hypothetical and has the singular function of showing the returns that lenders forego when they don't have access to the loaned funds is pure rate of interest.

<h3>What is the pure rate of interest?</h3><h3 />

The pure interest rate is a rate that is found in perfectly competitive markets and relates to foregone profit.

This rate might be hypothetical but it functions to show how much returns those who loan money would gain if they had access to the money they loaned to a loanee.

This rate is impractical however because it assumes a world where there is no risk which is simply not possible.

In conclusion, this is the pure rate of interest.

Find out more on the pure rate of interest at brainly.com/question/20630240

#SPJ1

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Crystal Glass recently paid $3.60 as an annual dividend. Future dividends are projected at $3.80, $4.10, and $4.25 over the next
lora16 [44]

Answer:

$41.96

Explanation:

The first thing you need to do is to calculate terminal value at the end of time t = 3. Then the intrinsic value of the stock is sum of discounted cashflow from t =1 to t = 3 (cashflows at t = 3 includes dividend as well as terminal value).

Terminal value at t = 3 = Dividend in year 4/(Required rate of return - Dividend growth)

                                     = 4.25 x (1 + 3%)/(12.5% - 3%)

                                     = 46.08

Then value of the stock is calculated as below:

Stock intrinsic value = 3.8/(1 + 12.5%) + 4.1/(1 + 12.5%)^2 + (4.25 + 46.08)/(1 + 12.5%)^3

                                  = 41.96

6 0
3 years ago
Interest versus dividend expense Michaels Corporation expects earnings before in- terest and taxes to be $50,000 for the current
Ganezh [65]

Answer:

a. In case of interest paid = $24,700.

b. In Case Preferred Dividend is Paid = $20,500

Explanation:

Earnings before Interest And Taxes (EBIT) = $50,000

a. In case of interest paid

EBIT = $50,000

Less: Interest = $12,000

Earnings Before Taxes = $50,000 - $12,000 = $38,000

Less: Tax @35% = $38,000 X 0.35 = $13,300

Earnings After Tax =$38,000 - $13,300 = $24,700.

This is the value available for common stock.

b. In Case Preferred Dividend is Paid

EBIT = $50,000

Less: Taxes @ 35 % = $50,000 X 0.35 = $17,500

Earnings After Tax = $50,000 - $17,500 = $32,500

Less: Preference Dividend = $12,000

Earnings available for equity or common stock = $32,500 - $12,000 = $20,500

The difference is of tax benefit on payment of interest as that is taxable and preference dividend is not taxable.

a. In case of interest paid = $24,700.

b. In Case Preferred Dividend is Paid = $20,500

7 0
3 years ago
Adriana is not keen on collecting facts and information while solving problems. she is spontaneous in decision making and usuall
V125BC [204]
Her decision is known as a "satisfice" decision
4 0
3 years ago
Teams comprised of people from various disciplines are a primary component of ________, which involves product and process desig
nikitadnepr [17]

The answer in the space provided is concurrent engineering. It is because concurrent engineering is the one responsible of having to lead improvement in regards of the organization or company’s reduced cost or its productivity in which is helpful and could brought it for their own benefit.

8 0
3 years ago
XYZ Company makes one product and has calculated the following amounts for direct labor: AH x AR = $84,000; AH x SR = $83,000; S
Molodets [167]

Based on the various cost rates and hours for XYZ Company, the labor efficiency variance is $2,000 unfavorable

<h3>What is the labor efficiency variance?</h3>

This can be found as:

= (Actual hours x Standard rate) - (Standard hours x Standard rate)

Solving gives:

= 83,000 - 85,000

= $2,000 unfavorable

Find out more on the labor efficiency variance at brainly.com/question/27404735

#SPJ1

5 0
2 years ago
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