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Rama09 [41]
3 years ago
9

Sienna has a car loan with an annual interest rate of 4.8%. She will make the same monthly payment for 48 months, after which th

e loan will be paid back. Diego says that Sienna’s loan is an example of closed-end credit while Sienna says it is an example of open-end credit. Which statement about the loan is true?
Business
2 answers:
butalik [34]3 years ago
9 0

Diego is correct because the loan has to be paid in full by a specific date.

vfiekz [6]3 years ago
3 0

Answer:

The answer is: Diego is correct, this is a closed-end loan.

Explanation:

A closed-end credit has to be repaid in full by a specific date, in this case 48 months.

An open-end credit is a loan that can be borrowed after it is repaid, they are also called revolving credits. If this was a revolving credit, after paying her car loan Sienna would be able to get the same loan again.

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Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow a
Tatiana [17]

Answer:

$60

Explanation:

r = return = Risk-free rate + [beta * (Portfolio expected return - Risk-free rate)] 0.04 + [0.60 * (0.19 − 0.04)] = 0.13

Intrinsic value = Next dividend / (r - Growth rate) = 3 / (0.13 - 0.08) = $60

Therefore, the intrinsic value of the stock of Todd Mountain Development Corporation is $60.

7 0
3 years ago
An increase in a firm's tax rate will__________ if the firm has debt capital in its capital structure:
Temka [501]

Answer:

d. decrease the firm's WACC.

Explanation:

As per WACC formula

WACC = ( Weight of Common Equity x Cost of Common Equity ) + ( Weight of Common Debt x Cost of Common Debt x ( 1 - Tax rate ) ) + ( Weight of Preferred Equity x Cost of Preferred Equity )

By assuming the values to prove the answer

Weights

Common equity = 55%

Preferred Equity = 15%

Debt = 30%

Costs

Common equity = 15%

Preferred Equity = 8%

Debt = 12%

Tax rate is 15%

Placing values in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 15% ) ) + ( 15% x 8% )

WACC = 8.25% + 3.06% + 1.2% = 12.51%

Keeping others values constant, Now increase the Tax rate to 25% and placing vlaues in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 25% ) ) + ( 15% x 8% )

WACC = 8.25% + 2.7 + 1.2% = 12.15%

Hence the WACC is decreased from 12.51% to 12.15% when the tax rate is increased from 15% to 25% keeping other values constant.

7 0
2 years ago
20. Frictional unemployment is inevitable because: A) different sectors do not shift. B) the economy needs to be lubricated. C)
Cerrena [4.2K]

Answer:

The answer is option B) Frictional unemployment is inevitable because the economy needs to be lubricated.

Explanation:

Frictional unemployment is different from others in happens as a result of employees seeking out better opportunities. They could leave voluntarily or be fired from their current jobs but its is for a greater good- which is a quest for better economic opportunity.

Frictional unemployment occurs when there is a mismatch between job seekers and available jobs in the market.

It also happens due to the natural career progression for an employed staff seeking to transition to a new job, industry, or role.

Frictional unemployment is like a lubricant in the economy because an increase in frictional unemployment means more workers are moving toward better positions.

4 0
3 years ago
A company has Net Income of $10, which included $2 of depreciation expense. There were no other noncash expenses in Net Income a
alexandr402 [8]

Answer:

2

Explanation:

The company's cash flow from operating activities can be calculated as follows:

                                                                                                $

Net Income                                                                            10

Add:depreciation expense                                                    2

Less:changes in accounts receivable                                  (5)

(20-25)

Less:changes in accounts payable                                      (10)

(5-15)

Add:changes in inventory                                                     5

(12-7)

Cash flow from operating activities                                       2        

3 0
3 years ago
Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as _____ ratio
katrin [286]

Answer:

Liquidity ratios

Explanation:

Liquidity ratios measure a company's ability to meet its short term obligations.

Examples of liquidity ratios are :

Current ratio

Quick ratio

Cash ratio

I hope my answer helps you

7 0
3 years ago
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