Answer:
The correct answer is D. The Tradeoff Theory suggests that a firm should choose a debt level where the tax savings from increasing leverage are just offset by the increased probability of incurring the costs of financial distress.
Explanation:
The trade-off theory of capital structure states that companies choose their leverage ratio to maximize benefits and minimize costs. The classic version of the hypothesis goes back to Kraus and Litzenberg, who observed a balance between the risk of loss of welfare from impending bankruptcy and the tax benefits of outside capital. In the trade-off theory, debt and equity financing are calculated in such a way that the present value of the tax shield is as large as possible and the present value of the costs of “financial distress” is possibly small.
Answer:
(d) $1.55≤VP(0)<$1.76
Explanation:
VP(0) =VC(0) +Ke-rT-FP0
T(S) =VC(0) +Ke-rT-S(0) +De-rt1+De-rt2
Using the formulae
= 3.20 + 35e-0.06/2-36.50 + 0.50e-0.06/4+ 0.50e-0.06/2
=1.64.
The priceVP(0) of a 6-month, $35.00 strike put option is 1.64
I think C) tells the major goals of a business
Hope it helped
Answer:
B)many people become entrepreneurs because they do not enjoy working for someone else.
Explanation:
The examination of the reasons provided by the people who wants to accept the entrepreneurship risk as here most of the people become entrepreneurs but at the same time they dont enjoy working for someone else as they wabt to work for themselves not for someone else
Therefore as per the given situation, the option b is correct
Answer:
Total cost= $350,400
Explanation:
Giving the following information:
For Gundy Company, units to be produced are 5,280 in quarter 1 and 6,400 in quarter 2. It takes 2.0 hours to make a finished unit, and the expected hourly wage rate is $15 per hour.
Quarter 1:
Direct labor cost= 5,280*2= 10,560 hours
Quarter 2:
Direct labor cost= 6,400*2= 12,800 hours
Total cost= (10,560 + 12,800)*15= $350,400
