1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Yuki888 [10]
2 years ago
9

In analyzing the value of the firm as a function of capital structure, the present value of the tax shield benefit is offset by

the present value of the expected ____, resulting in an interior optimal capital structure.
a. financial distress costsb. agency costsc. holding costsd. financial distress costs and agency costs
Business
1 answer:
Hoochie [10]2 years ago
5 0

Answer:

The correct answer to the following question will be Option D (Financial distress and agency costs).

Explanation:

  • A cost of an agency is a form of company's internal expense that comes from an employee working on behalf of action of the principle. Agency costs usually occur from core redundancies, confusion, and delays, such as shareholder and management conflicts of interest.
  • Distress expense applies to the expenses that a financially distressed company faces beyond the business cost, such as increased capital expenses. Troubled companies tend to have a tougher time fulfilling their financial responsibilities, which turns into a higher chance of default.
  • When evaluating the company's value as a feature of market structure, the present value of the tax shield gain is balanced by the current value of the anticipated financial distress and agency expenses, which results in an ideal internal market structure.

Therefore, Option C is the right answer.

You might be interested in
Is the South African post office a natural or artificial monopoly?motivate​
stepan [7]

Answer:

The public goods school in economics is getting disproved as we speak about natural monopolies.

Explanation:

3 0
3 years ago
Sheldon and Morton formed a partnership with capital contributions of $80,000 and $40,000, respectively. Their partnership agree
Anastaziya [24]

Answer:

The answer is:

Sheldon: $39, 500;     Morton: $50, 500

Explanation:

A partnership is a binding agreement between two or more parties to carry on a business. The sole purpose of this agreement is to share skills and expertise so as to generate a profit. In a partnership, the partners have unlimited liability meaning that if the business established by the partners in unable to repay creditors, the creditors are legally allowed to seize the personal assets of the partners to cover the debts owing. However, in accounting for financial performance, the business is considered to be a separate entity (exists independent of the partners). Sheldon and Morton have established a profit-sharing arrangement that compensates Sheldon for the capital contribution (larger interest share) and Morton for his contributions to the business operations (larger salary share). The profit after these deductions is shared equally between the 2 partners. Assuming the given net income is after operations but before partner deductions, the share of the partners is calculated as follows:

                               Sheldon                           Morton

Interest                   $8,000                              $4,000

Salaries                  $10,000                             $25,000

Profit share            <u>$21, 500 </u>                           <u>$21, 500</u>

Total share            <u>$39, 500</u>                            <u>$50, 500</u>

Interest        (10% * $80, 000)                           (10% * $40, 000)

Profit share (50% * $43,000)                           (50% * $43,000)

Net Profit Share: $90, 000 - $(8,000 + 10,000 + 4,000 + 25,000)= $43,000

                     

8 0
3 years ago
construct a quadriteral PQRS, given that QR=4.5cm PS=5.5cm,RScm5cm and diagonalPR=5.5cmand diagonal SQ=7cm​
Ipatiy [6.2K]

Answer:

The quadrilateral is drawn above

3 0
2 years ago
The three legal forms of business ownership are _____.
fredd [130]
The three legal forms of business ownership are partnership, sole proprietorship, and corporation. The correct option among all the options that are given in the question is the fourth option or the last option or option "d". I hope that this is the answer that has actually come to your desired help.
8 0
3 years ago
Read 2 more answers
Uppose a price floor on sparkling wine is proposed by the Health Minister of the country ofVinyardia. What will be the likely ef
Gekata [30.6K]

Answer:

C) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result

Explanation:

Price floor is the least amount a good or service can be sold. A price floor is usually set above equilibrium price.

When a price floor is enacted, it usually discourages demand because prices are usually set higher and encourages supply.

As a result, quantity demanded will decrease, quantity supplied will increase, and a surplus will result.

I hope my answer helps you.

6 0
3 years ago
Other questions:
  • Which four ethical norms are often used by companies to help individuals make ethical decisions?
    8·2 answers
  • Green Valley Company prepared the following trial balance at the end of its first year of operations ending December 31. To simp
    8·1 answer
  • Coca-Cola’s "Simply Orange" product division ships oranges from three different groves to five processing plants. Typically, how
    6·1 answer
  • Describe a real or made up but realistic example of earned income that you or someone you know has received. What type of work w
    15·1 answer
  • Gary wants to create a perceptual map for positioning using the attribute-based approach. He comes to you for advice as to how h
    5·1 answer
  • In an open economy the GDP is $12 trillion this year. Consumption is $8 trillion, and government spending is $2 trillion. Taxes
    8·1 answer
  • Scotch Inc. arranged a $7,000,000 revolving credit agreement with a group of banks. The firm paid an annual commitment fee of 0.
    11·1 answer
  • Suppose that the inverse demand equation is p​ = 100 minus 2Q and the supply equation is p​ = 2Q. If the price is controlled at
    5·1 answer
  • This type of organization allows for many people to make decisions about the same service or need within the company.
    11·1 answer
  • a manufacturer reports the following costs to produce 11,000 units in its first year of operations: direct materials, $11 per un
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!