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mylen [45]
3 years ago
5

Arnell Industries has $35 million in permanent debt outstanding. The firm will pay interest only on this debt. Arnell's marginal

tax rate is expected to be 30% for the foreseeable future. a. Suppose Arnell pays interest of 9% per year on its debt. What is its annual interest tax shield? b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? c. Suppose instead the interest rate on the debt were 7%. What is the present value of the interest tax shield in this case?
Business
1 answer:
gladu [14]3 years ago
7 0

Answer:

a. Annual Interest tax shield = Debt * Interest * Tax Rate

Annual Interest tax shield = $35 million *9% *30%

Annual Interest tax shield = $0.945 million

b. PV of tax shield = $35 million *9% *30% / 9%

PV of tax shield = $10.50  million

c. PV of tax shield at 7% = 35million *7% *30% / 7%

PV of tax shield at 7% = $10.50 million

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On February 22, Brett Corporation acquired 250 shares of its $3 par value common stock for $26 each. On March 15, the company re
Alex

Answer: Credit Additional Paid in Capital $198

Explanation:

Brett Corporation reissued the Treasury Stock at $29 which was $3 higher than the amount they had repurchased it for.

When stock is sold for a price higher or lower than they are worth, the balance goes to the Additional Paid-in Capital account. If it is sold higher, the balance is Credited to the Additional Paid-in Capital account and if it is sold for lower than it is worth, it is debited.

The Balance here is,

= $3 * 66 resold shares

= $198

This $198 will therefore be credited to the Additional Paid-in Capital account.

5 0
3 years ago
In the advertising industry, terms such as new advertising, orchestration, and seamless communication were used to describe the
kolezko [41]

Answer:

The correct answer is letter "B": integration.

Explanation:

Advertising integration refers to bundling all mediums of communication possible business can use to promote its goods or services. This strategy reinforces the firm market position by repeating its advertising message constantly creating consistency and reducing the stress of having to create a different marketing approach for each advertising channel.

4 0
3 years ago
An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The
lubasha [3.4K]

Answer:

Discounted payback period = 1.89 years

Explanation:

If Initial cost is $5,200

Year  Cash flow   Present value   Present value      Discounted

                                 at 11%                                       Cumulative cash flow

0          -5,200             1                      -5,200              -5,200

1            2,800           0.9009             2,523               -2,677

2           3,700           0.811                  3,003                326

3            5,100           0.73126              3,729                4,055

4            4,300          0.6587               2,833                6,887

Discounted payback period = 1 + (2,667/3003)

=1.89 years

Working

PV= (1+i)^-n

i= 11%, n= respective years 0,1,2,3,4

6 0
3 years ago
"Universal Containers wants to maintain Service Level Agreements on its customer cases. Customers are provided different service
vazorg [7]

Answer:

The answer is "Entitlements and Milestones ".

Explanation:

Entitlements are customer service systems inside SharePoint, like "contact help" or "web support." Usually, this is being used to reflect terms in service contracts. and Milestones are required time-dependent measures within that support process, including initial response times or event resolution times.  

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3 0
3 years ago
Brody owns all the stock in Mongoose Corporation. Brody has a basis of $200,000 in the Mongoose stock, which currently has a fai
oee [108]

Answer:

d. None of the above.

Explanation:

Option D is correct because Brody has a basis of $200000 Mongoose stock and its market value is $500000. After the merger, Brody receives $200000 preferred stock and $300000 common stock which is equal to its market value of a stock before the merger so there is no gain.

3 0
2 years ago
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