Answer:
B) $ 70,000.
Explanation:
Debt service expense
Debt service expense is the interest expense incurred to avail the debt services from another entity.
Debt service expense can be calculated using the following formula
Debt service expense = Face value of Bonds x Interest rate x Semiannual fraction
Where
Face value of bonds = $3,500,000
Interest rate = 4%
Semiannual fraction = 6 / 12 = 1/ 2
placing values in the formula
Debt service expense = $3,500,000 x 4% x 1/2
Debt service expense = $70,000
Answer:
increase by 400 billion dollars
Explanation:
marginal propensity to consume = mpc
tax multiplier = -mpc/1-mpc
from our question we were given mpc to be 0.8
-0.8/1-0.8
= -0.8/0.2
= -4
change in output = -4(-100)
= 400 billion dollars
for a $100 tax decrease, output will increase by $100 billion x 4
= $400 billion
Answer:
qualified available
Explanation:
Qualified available Market refers to the situation when only customers with specific criteria are able to make a purchase. In most cases, those criteria revolved around age, gender, or group membership.
Alcochol is an example of qualified available market because it created a situation which only allow consumers older than 21 to make a purchase.
Other example would be Waxing salon. Large portion of waxing salons only allow female customers to purchase their service (since the workers are also females and feel uncomfortable to give their service to male customers.)
Answer:
Part (a) The net income of carter is $115 million.
Part (b) The closing cash balance at the end of year is $360.
Explanation:
Part (a) Net Income Computation:
Sales $825
Cost of goods sold <u>(</u><u>$290</u><u>)</u>
Gross Profit $535
Other Expenses <u>(</u><u>$425</u><u>)</u>
Net income $115 Million
Part (b) The cash balance of Carter is not dependent on non cash flows. So the cash transactions would be considered here for cash balance computation.
Opening Cash position $290
Collection from Sales $710
Inventory Invoices paid ($350)
For Everything <u>($290)</u>
Closing Cash balance $360
Answer:
31.5%
Explanation:
Given from the question kd = 7.0 %
Tax rate = 35 %
P0 = $ 28.86
Growth g = 4.9 %
D1 = $ 0.94
First find the cost of common stock by
rS = D1/P0 + g
=0.94/$28.86 + 0.49
=0.523
= 52.3%
Finally, calculate the weighted average cost of capital WACC,
using rs= 0.523,
Tax rate =43% =0.43
Equity E 100% - 43% = 57% =0.57 and
kd=7.0 % = 0.07
so WACC = (D/A)(1 - Tax rate)kd+(E/A)rs
= 0.43(1 - 0.43)(0.07) + 0.57(0.523)
0.0172 + 0.298
= 0.315
= 31.5%