If you need to indicate the missing ammount of each letter in the grahp then it will be like follows: For the first case: A = $9,600 + $5,000 + $8,000 = $22,600$22,600 + $1,000 – B = $17,000 B = $22,600 + $1,000 – $17,000 = $6,600$17,000 + C = $20,000 C = $20,000 – $17,000 = $3,000 D = $20,000 – $3,400 = $16,600 <span>E = ($24,500 – $2,500) – $16,600 = $5,400 </span><span>F = $5,400 – $2,500 = $2,900 </span>And now for the second case: G + $8,000 + $4,000 = $16,000 G = $16,000 – $8,000 – $4,000 = $4,000$16,000 + H – $3,000 = $22,000 H = $22,000 + $3,000 – $16,000 = $9,000(I – $1,400) – K = $7,000(I – $1,400) – $22,800 = $7,000 <span>I = $1,400 + $22,800 + $7,000 = $31,200 </span>J = $22,000 + $3,300 = $25,300 K = $25,300 – $2,500 = $22,800$7,000 – L = $5,000 <span>L = $2,000</span>
To determine the total assets, we only have to consider the following: </span>cash 7,530 accounts receivable 2,100 prepaid expenses 700 equipment 13,700 <span>accumulated depreciation <u> (1,100) </u> </span>Total assets: 22,930 CHOICE D.
If there is an increase in the corporate tax rate then this will induce the firms to increase the amount of their debt. This is due to the fact that the firms with more debt are going to pay less tax because of the large interest expense. Due to large interest expenses, their income before tax reduces.
Hence, large corporate taxes encourage firms to increase the amount of debt. Therefore, the firms with no debt pays higher taxes than the firms with higher amount of debt.
