Answer:
Spanolia LLC
The after-tax cost of debt is:
= 7.20%.
Explanation:
a) Data and Calculations:
Coupon interest rate of bonds = 12%
Maturity period = 20 years
Selling price = $1,000
Firm's marginal tax rate = 40%
After-tax cost of debt = Coupon interest rate * (1 - tax rate)
= 12% * (1 - 0.4)
= 12% * 0.6
= 7.20%
b) Spanolia's after-tax cost of debt is derived by multiplying the cost of debt by the after-tax rate. The after-tax cost of debt represents the interest that Spanolia LLC pays on the bonds less the income tax savings that it gains because interest expenses are tax-deductible.
Answer:
See below for details.
Explanation:
To contract the money supply the the Fed can increase the discount rate. This shall increase the cost of borrowing and thus the demand for money should go down. Furthermore, people have more incentive to save as they are getting an increased return thus the overall money supply contracts.
The Fed can also sell short term US securities, this reduces the amount of excess reserves available to banks and restricts their ability to make loans thus contracting the money supply.
The Fed can also raise the reserve requirement which reduces the banks ability to lend loans and create money thus contracting the supply again.
To expand the money supply, The Fed can lower the reserve requirements, creating excess reserves for banks that can be loaned out and thus expand money supply.
The Fed can also buy short term securities for money thus increasing the supply of money in the economy.
Quantitative easing simply increases the money supply with additional currency issuing so this expands the supply.
Decreasing the discount ratios discourage people from saving and encourages borrowing thus creating an expanded supply for money via credit creation.
Hope that helps.
Answer:
The home repair companies and building supplies companies wanted to maintain their long term relationship.
Explanation:
Because the companies were considerate on their pricing after the clients lost their homes, a bond will be formed that has long term value and loyalty to the company.
This is a great strategy to get clients that will stick with the companies for a long time to come.
Answer:
Karo Syrup
Explanation:
Karo Syrup is delicious on Pecan Pie
Answer:
Instructions are listed below
Explanation:
Giving the following information:
The company sells a product for $ 45 per unit.
Variable costs are $ 35 per unit.
Fixed costs are $ 2300 per month.
The company expects to sell 560 units in September.
A) contribution margin per unit= selling price - variable costs
contribution margin per unit= 45 - 35= $10
B) Total contribution margin= contribution margin*units sold= 10*560= $5600
C) contribution margin ratio= contribution margin/ selling price= 10/45= 0.2222
