Answer:
D. international diversification
Explanation:
The Multinational corporations can reduce their risk by international diversification and reduced risk can increase debt capacity of MNC. The higher capacity to meet scheduled debt payment also reduces cost of capital.
The effect of international diversification on capital structure can be explained through
1. Co-insurance effect: Combining businesses with international firms provides reduction in operating risk and thereby increase debt capacity. This helps MNCs to include more debts in their capital structure.
2. Transaction cost theory. Internationalization is a way of internatilize intangible assets. Since intangible assets are not difficult to sale , international diversification helps MNCs to exploit their intangible assets. So MNCs with an eye of international diversification will try to develop these type of assets in their asset base.
3.Agency cost argument: MNCs will have high agency costs Diversification helps to reduce these agency costs International diversification creates larger markets and generates growth opportunities. Growth opportunities and debt ratios are inversely proportional .MNCs with higher growth opportunities will rely on equity rather than debt.
Remember that a perfectly elastic demand is a demand where any price increase would cause the quantity demanded to fall to zero, and reducing the price of a good or service will not increase sales.
Also, equilibrium price is the market price where the quantity of goods supplied is equal to the quantity of goods demanded. This is the point at which the demand and supply curves in the market intersect.
Finally, equilibrium quantity is when supply equals demand for a product.
Therefore, the answer to this question is:
Price is unchanged and quantity is unchanged
Answer:
Price:
b. unchanged
Quantity:
b. unchanged
Answer:
$889,000
Explanation:
Data provided as per the question below:
Purchases assets = $2,000,000
Depreciation Rate for Year 2 = 44.45%
The computation of amount of depreciation is shown below:-
Amount of depreciation in Year 2 = Purchases assets × Depreciation Rate for Year 2
=$2,000,000 × 44.45%
=$889,000
Therefore, for computing the amount of depreciation in Year 2 we simply multiply purchase assets with depreciation rate for year 2.