Answer:
10%
Explanation:
Given that,
Interest at last year debt = 8%
Current year cost of debt = 25% higher
Firms paid for debt last year = 10%
Firms paid for debt in current year = 12.50%
Kd - cost of debt
Yield = Interest at last year debt × (1 + increase in cost of debt)
= 8% × (1 + 0.25)
= 8% × 1.25
= 10%
Kd = Yield (1 – T)
Kd = 10% (1 – 0)
= 10% (1)
= 10%
Therefore, after tax cost of debt would be 10%.
Answer:
The correct answer is letter "C": "To our valued consumers:".
Explanation:
Conveying goodwill in writing messages imply stating the reasons why a given party conducted businesses that ended up being harmful. The firm at fault should explain what it was pursuing and why it was not able to expect such an adverse situation. At all moment the message must be formal and highlight the importance of continue doing business with consumers.
Under that scenario, "<em>To our valued consumers:</em>" is the most suitable greeting to use before starting to explain the facts that took place and the course of action the firm will follow.
Answer:
The correct answer is unwillingness of borrowers to obtain loans from banks to invest in factories or expansion of the firm.
Explanation:
Solution
<em>Given that:</em>
Leakage problem occurs or happens within an economy when the money goes out of the economy, which leads to a loss in the economic value of goods and services, and also leads to loss in profits making.
This would lead to an unwillingness of borrower's to obtain loans from banks in the expansion of the firm or to invest in factories.
Answer:
See below for details.
Explanation:
To contract the money supply the the Fed can increase the discount rate. This shall increase the cost of borrowing and thus the demand for money should go down. Furthermore, people have more incentive to save as they are getting an increased return thus the overall money supply contracts.
The Fed can also sell short term US securities, this reduces the amount of excess reserves available to banks and restricts their ability to make loans thus contracting the money supply.
The Fed can also raise the reserve requirement which reduces the banks ability to lend loans and create money thus contracting the supply again.
To expand the money supply, The Fed can lower the reserve requirements, creating excess reserves for banks that can be loaned out and thus expand money supply.
The Fed can also buy short term securities for money thus increasing the supply of money in the economy.
Quantitative easing simply increases the money supply with additional currency issuing so this expands the supply.
Decreasing the discount ratios discourage people from saving and encourages borrowing thus creating an expanded supply for money via credit creation.
Hope that helps.
