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mina [271]
1 year ago
7

Determinants of how long a firm should borrow money include?

Business
1 answer:
mario62 [17]1 year ago
4 0

Determinants of long a firm should borrow money include are:

⇒the seasonal environment of the business

⇒the cost of inventory

⇒the cash flow forecast

The term "capital structure" describes how a company decides to finance its projects and assets through a combination of internal resources, debt, and equity.

To lower their risk of insolvency, remain effective, and ultimately maintain or become profitable, a company should determine the ideal debt to equity ratio.

The capital structure of a company is influenced by a wide range of variables, including leverage or trading on equity, company growth, the nature and scale of the business, the desire to maintain control, the flexibility of the capital structure, investor requirements, the price to float new securities, the timing of the issue, the corporate tax rate, and the legal requirements.

To learn more about Capital Structure here

brainly.com/question/15041466

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A corporation makes an investment of $20,000 that will provide the following cash flows after the corresponding amounts of time:
s344n2d4d5 [400]

A) The company should not invest in the provided project due to the negative NPV of the project.

B) The NPV of the project comes out to be (286).

<h3>What is NPV?</h3>

NPV is an abbreviated form of Net present value and computed by deducting the cash outflows from cash inflows at the present value.

Given values:

Cash flow of year 1: $10,000

Cash flow of year 2: $10,000

Cash flow of year 3: $2,000

Cash outflow (cost of investment) =$20,000

Step-1 Computation of PV of cash inflows of every year:

PV of year 1 = Cash inflow of year 1 / (1+ interest rate)^ 1

                    = $10,000 / (1+0.07) ^ 1

                    = $10,000 X 0.934579

                    = $9,346

PV of year 2 = Cash inflow of year 1 / (1+ interest rate)^ 2

                    = $10,000 / (1+0.07) ^ 2

                    = $10,000 X 0.873438

                    = $8,735

PV of year 3= Cash inflow of year 1 / (1+ interest rate)^ 3

                   = $2,000 / (1+0.07) ^ 2

                    = $2,000 X 0.816297

                    =$1,633

Step-2 Computation of total amount of PV of cash inflows:

\rm\ PV \rm\ of \rm\ cash \rm\ inflows = \rm\ PV \rm\  of \rm\  year \rm\  1 + \rm\  PV \rm\ of \rm\ year \rm\ 2 + \rm\ PV \rm\ of \rm\ year \rm\ 3\\\rm\ PV \rm\ of \rm\ cash \rm\ inflows =\$9,346 + \$8,735 + \$1,633\\\rm\ PV \rm\ of \rm\ cash \rm\ inflows =\$19,714

Step-3 Computation of NPV:

\rm\ NPV=\rm\ PV \rm\ of \rm\ cash \rm\ inflows- \rm\ Cost \rm\ of \rm\ investment\\\rm\ NPV=\$19,714-\$20,000\\\rm\ NPV=\$ (286)

Therefore, the NPV comes out to be a negative amount of 286, and hence, the company should not accept the project.

Learn more about the net present value in the related link:

brainly.com/question/14015430

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5 0
2 years ago
In addition to the following closing costs listed below, the buyer pays a realtor commission that is 3.5% of the loan amount. Cl
kobusy [5.1K]

Answer:

d.

$8,097

Explanation:

8 0
3 years ago
Miles uses the allowance method and wrote off the account of james. miles then received $559 as partial payment on the account o
Amanda [17]
<span>The journal entry to record the initial write-off includes is allowance for doubtful accounts. Allowance for doubtful accounts is a contra account to accounts receivable, and therefore has debit balance. It also needs to be diminished because you already used the bad debt when you make the allowance.</span>
6 0
3 years ago
Suppose some banks decide to increase their holdings of excess reserves relative to deposits. Ceteris paribus, this action will
slava [35]

The action of the bank will put decreased pressure on the money supply, and to reduce the impact of this action, the Fed could decrease the discount rate.

Basically, a decrease in discount rate will make it easy and cheaper for commercial banks to borrow money from Federal Reserve System and thus, results to increase in available credit and lending in the economy

Therefore, if the commercial banks decide to increase their holdings of excess reserves supposed to be remitted to Feds, then, this will put <u>decreased</u> pressure on the money supply, and the Fed would act by <u>decreasing</u> the discount rate.

Read more about this here

<em>brainly.com/question/20023706</em>

5 0
2 years ago
Listed below are the lengths (in inches) of each snake in the Clarmont Zoo’s reptile house
Elanso [62]
The mode is 50 the most frequent
6 0
2 years ago
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