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ICE Princess25 [194]
3 years ago
8

What is your reaction to Harriet's suggestion of using the cost of debt only?

Business
1 answer:
Ahat [919]3 years ago
8 0

Answer:

No, it is a bad idea to use only the cost of debt

Explanation:

Only using the cost of debt, is not a good idea because too much amount of borrowing could lose the confidence of the investors and it could lead to the uncertainty in the future cash flows.

Suppliers might be worried regarding the financial situation and lead to the supply disruption. Though, the debt might save the tax expenses, which could lead to the negative cash flow.

When the company does not have adequate amount of cash at hand, it could cause many disruptions of financial. WACC (Weighted Average Cost of Capital) rates need to be used as the capital costs as it weigh the used capital cost and the used debt.

You might be interested in
Last year, Bad Tattoo Co. had additions to retained earnings of $4,865 on sales of $95,805. The company had costs of $75,885, di
Dahasolnce [82]

Answer:

The depreciation expense is $5638.46 and the Addition to retained earnings is 4865

Explanation:

Solution

Given that:

Sales  = $95805

Less: Costs = $75885

Less depreciation expense ($95805 - $75,885 - 14281.54) = $5638.46

EBIT (12161.54 + 2120) = 14281.54

Less: Interest expense =2120

EBT (100%)(7905/0.65) = 12161.54

Less: tax at 35%(12161.54*35%) =4256.54

The Net income(65%) = 7905

The Less:dividends = 3040

Addition to retained earnings =4865

6 0
3 years ago
Jeremy has been out of school for two years, has a good job, and recently got a raise. He is excited about investing and always
Tems11 [23]

Answer:

Jeremy has to continue to save.

Explanation:

  • Jeremy should keep saving his money.
  • In case a situation arises, he needs to keep saving his resources and he needs the money for something else than he has got into trouble.
  • Jeremy will adhere to his spending strategy to pay off his loan within 15 months.
  • by follow these process he will continue his saving as well as repay the loan also .

4 0
3 years ago
Keystone predators can maintain species diversity in a community if they
Vikki [24]

Answer:

The options are given below:

A) competitively exclude other predators.

B) prey on the community's dominant species.

C) allow immigration of other predators.

D) reduce the number of disruptions in the community.

E) prey only on the least abundant species in the community.

the correct option is B

Explanation:

Keystone species refers to a predator which prevents a particular herbivorous species from wiping out the dominant plant species. If the number of prey are low, the keystone predators can be less abundant and still be effective. Keystone species have a disproportionately large effect on its environment relative to its abundance.

Therefore, by preying on a community's dominant species, keystone predators help to maintain the species diversity in the community, because they ensure that the dominant predators do not totally wipe out the various organisms present in the ecosystem.

4 0
3 years ago
A firm that uses ___________ segmentation divides a market into groups based on life stage, race, or profession.
Triss [41]

Answer:

Demographic

Explanation:

Demographic segmentation is often used in marketing to group customers according to demographic factors. The demographic factors include- age, gender, occupation, race, religion and income.

Other forms of segmentation includes :

1. Behavioural segmentation

2. Geographic segmentation

3. Psychographic segmentation

I hope my answer helps you

7 0
3 years ago
Many economists propose finding ways to include the harmful environmental and health costs of producing and using goods and serv
Stella [2.4K]

Answer:

correct answer is full cost pricing

Explanation:

this practice called as full cost pricing

because full cost pricing is that when the price of any product is calculate by an organization on the base of per unit direct cost of output and we add there markup for cover the overhead cost and profit

so here Full cost pricing also including harmful environmental effect and the health cost of the goods and services in  market price

so correct answer is full cost pricing

8 0
3 years ago
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