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3 years ago

The primary weakness of EBITminus EPS analysis is that

Business

1 answer:

Murljashka [212]3 years ago

3 0

Answer:

D. it ignores the implicit cost of debt financing.

Explanation:

The EBIT-EPS is commonly applied and used to determine the best relation between debt and equity. The good performance of this ratio permits to finance the business' assets and operations.

The EBIT-EPS calculation is a mathematical projection of the balance sheet's structure and how it will impact a company's earnings.

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Ace Leasing acquires equipment and leases it to customers under long-term sales-type leases. Ace earns interest under these arra

sladkih [1.3K]

Answer:

$143,750

Explanation:

We have to first calculate the present value of the bargain purchase option:

PV = $200,000 / (1 + 6%)⁵ = $149,451.63

net lease amount = $790,000 - $149,452 = $640,548

PVIF Annuity due, 6%, 5 payments = 4.546

Annual payment = $640,548 / 4.456 = $143,750

3 0

3 years ago

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May JuneManuf

Juli2301 [7.4K]

Answer:

Total cash expense= $181,675

Explanation:

Giving the following information:

Manufacturing cost:

April= $155,800

May= $190,300

Insurance is not paid in May.

Property tax is paid in November.

Depreciation is not a cash expense.

<u>Total cash payment May:</u>

Manufacturing cost May= 190,300*0.75= 142,725

Manufacturing cost April= 155,800*0.25= 38,950

Total cash expense= $181,675

4 0

3 years ago

Suppose that, at a given level of disposable income, consumers decide to save more. Explain what effect this decision will have

-Dominant- [34]

Answer: decrease ; less saving

Explanation:As people attempt to save more, the result is both a decline in output and unchanged saving. Although people want to save more at a given level of income, their income decreases by an amount such that their saving is unchanged. As people save more at their initial level of income, they decrease their consumption. But this decreased consumption decreases demand, which decreases production. A change in autonomous spending has a different effect on output than the actual change in autonomous spending.

7 0

3 years ago

Read 2 more answers

Suppose the economy is in a recession. The economy needs to expand by at least $350 billion, and the marginal propensity to cons

MissTica

Answer:

$140

Explanation:

Calculation for What is the least amount the government can spend to overcome the $350 billion gap

First step is to find the Multiplier using this formula

Multiplier=1(1-Marginal propensity)

Let plug in the formula

Multiplier=1/(1-0.6)

Multiplier=1/0.4

Multiplier=2.5

Now let calculate the least amount the government can spend using this formula

Least amount=Gap/Multiplier

Let plug in the formula

Least amount=$350 billion /2.5

Least amount=$140

Therefore the least amount the government can spend to overcome the $350 billion gap is $140

4 0

3 years ago

Suppose that a borrower and a lender agree on the nominal interest rate to be paid on a loan. Then inflation turns out to be low

Alla [95]

Answer:

1) False

when the inflation is lower than expected, the real interest rate will be higher, since

real interest rate = Nominal interest rate - inflation.

2) Gains

In case of unexpected lower inflation the lender gains and the borrower loses.This is because real value of the loan increases due to lower inflation.

3) Loses

In case of unexpected lower inflation the lender gains and the borrower loses.This is because real value of the loan increases due to lower inflation.

6 0

3 years ago

Read 2 more answers