Answer:
C. the financial risk of the firm may increase and thus drive up the cost of all sources of financing.
Explanation:
As we know that debt financing is the cheapest source of capital but it could not be used in excess as it rises the financial risk in terms of high interest payments made to the debt holders
Also at the time of recession, the firm is not able to earn properly so it would be very difficult to make the fixed payments i.e. interest and principal payments
Also the weighted average cost of capital also rises in the case when there is an excess of debt financing
Hence, the option c is correct
Answer:
Travis has <u>$500</u> in deductible direct expenses and <u>$810</u> in deductible indirect expenses.
Explanation:
Deductible direct expenses include all the home office expenses and reparations that directly affect the part of the house used as home office = $500 (painted his office and replaced the door).
Deductible indirect expenses include the prorated costs that include the whole house. Since the office occupies 240/2,400 = 10% of the house, then 10% of the indirect costs can be deducted:
- utilities $3,000 x 10% = $300
- property taxes $1,500 x 10% = $150
- mortgage interest $3,600 x 10% = $360
- total = $810
Answer:
200
Explanation:
The labor force in an economy is composed of all adults able-bodied individuals who are employed or actively seeking employment. Employed people are those engaged in economic or income-generating activities. Unemployed are jobless individuals who are actively seeking work.
In Freelandia, labor force participation will be composed of the employed and the unemployed people. As per the definition of the labor force, children will not be included as they are not adults. Students and retired people are not seeking employment; hence should not be in the labor force. Therefore, the labor force will be 190 plus 10, which is 200.
If supply decreases and demand remains stable, the price mechanically moves up since richer people are ready to pay more to get gasoline.
Of course companies selling gasoline want to maximize their profit so they will increase the price.
Right answer is A.