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icang [17]
1 year ago
5

You find that a firm has a total debt ratio of 0. 63. what is the equity multiplier for this firm?

Business
1 answer:
Tamiku [17]1 year ago
8 0

A company's overall debt to equity ratio is 0.63. This company's equity multiplier is1.63.

The phrase "debt ratio" refers to a financial ratio that assesses how much leverage a business has. The ratio of total debt to total assets, represented as a decimal or percentage, is known as the debt ratio. The percentage of a company's assets that are financed by debt is one way to understand it. An asset-to-asset ratio greater than 1 indicates that a significant portion of a firm's assets are financed by debt, which indicates that the corporation has more liabilities than assets. If interest rates abruptly increase, a company with a high ratio may be at risk of loan default. A ratio less than 1 indicates.

Learn more about equity multiplier here.

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Acme Company has variable costs equal to 30% of sales. The company is considering a proposal that will increase sales by $12,000
mina [271]

Answer:

$0

Explanation:

The net income is the difference between the sales and total cost which comprises of the variable cost and fixed cost. The sales and variable cost are dependent on the number of units sold.

Let

u = number of units

s = selling price per unit

v = variable cost per unit

F = Fixed cost

I = Net income

I = su - F - vu

but vu = 0.3su

Hence

I = su - 0.3su - F = 0.7su - F

Given that the proposal will increase sales by $12,000,

New sales = su + 12000          ( in $)

and total fixed costs by $8,400

New fixed cost = F + 8400

New variable cost = 0.3( su + 12000) = 0.3su + 3600

New net income = su + 12000 - 0.3su - 3600 - F - 8400

= 0.7su - F

New net income is same as the old net income hence no increase.

4 0
3 years ago
Suppose the economy had been producing at potential output but is now experiencing a recession. Which of the following are discr
Novay_Z [31]

Answer: a) -A tax cut

-Additional spending on national park facilities

b) Expansionary fiscal policy

Explanation:

Fiscal Policy refers to how the government of a country is using it's spending and taxes to influence Economic conditions on a Macro level.

The keywords for this question are TAXES and SPENDING.

The means that a Discretionary FISCAL policy includes Taxes and Spending.

Now the way to close the Recessionary gap that is opening is to put more money into the Economy. The Government can do this by REDUCING TAXES which will means people have more money to spend and ADDITIONAL SPENDING on NATIONAL PARK FACILITIES as this means that the government is pumping more money into the Economy.

The discretionary fiscal policy needed to bring the economy closer to potential output is an example of an EXPANSIONARY FISCAL POLICY.

This is where the Government aims to put more money into the economy so that growth can be acheived and they do this by lowering taxes and increasing spending either singularly or simultaneously.

3 0
3 years ago
Consider the single factor APT. Portfolio A has a beta of 1.3 and an expected return of 21%. Portfolio B has a beta of .7 and an
svetoff [14.1K]

Answer:

Portfolio A and Portfolio B

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

The Market rate of return - Risk-free rate of return) = Market risk premium

Let us assume the market risk premium be X

For Portfolio A:

21% = 8% + 1.3 × X

13% = 1.3  × X

So, the X = 10%

For Portfolio B:

17% = 8% + 0.7 × X

9% = 0.7  × X

So, the X = 12.86%

Based on the market risk premium calculations, we can conclude that Portfolio A should be in short position while Portfolio B should be in long position as portfolio B has higher market risk premium than B

3 0
3 years ago
(Ignore income taxes in this problem.) Alesi Corporation is considering purchasing a machine that would cost $283,850 and have a
gavmur [86]

Answer:

(A) Payback period for the machine= 3.5 years

(B) Simple rate of return for the machine= 87.5%

Explanation:

Alesu corporation is considering purchasing a machine that would cost $283,850

The useful life is 5 years

The machine would reduce cash operating costs by $81,100 per year

The salvage value is $107,100

(A) The payback period for the machine can be calculated as follows

= cost/amount of cash flow

= 283,850/81,100

= 3.5 years

(B) The simple rate of return for the machine can be calculated as follows

First we calculate the depreciation expense

= 283,850-107,100/5

= 176,750/5

= 35,350

Annual incremental income= cost savings -depreciation expenses

= 283,850-35,350

= 248,500

Simple rate of return = annual incremental income/cost × 100

= 248,500/283,850 × 100

= 0.875 × 100

= 87.5%

3 0
3 years ago
In order for money to work properly, there can be only a certain amount of it in
tino4ka555 [31]
A.limited supply hope that helps
8 0
3 years ago
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