How can an organization develop strategic flexibility?

1. The interest tax shield (tax deductibility of interest) is a key reason why: the required rate of return on assets rises when

Ivanshal [37]

Answer:

the net cost of debt to a firm is generally less than the cost of equity.

Explanation:

If we assume both, investor in firms and lender to firms want's a certain return x

because the lender return (the interest) are tax deductible the net cost of debt will be: x ( 1 - t)

where t is the tax rate being rate beteen 0 and 1

as 1 less a fraction will be less than 1 we can stablish that:

x > x(1 - t)

x is the cost of equity

while x(1-t) is the net cost of debt

therefore, the cost of debt is lower than cost of equity.

7 0

3 years ago

Carlos has applied for a project manager position, but he is sight impaired to a serious degree from a childhood illness. He mus

soldier1979 [14.2K]

a. Yes, but only if the service dog is an undue hardship for AMPCO

b. Yes, the ADA applies only once someone is an employee (not in the hiring stage)

c. Yes, because Carlos cannot perform the essential functions of his position

d. No, the ADA requires AMPCO to allow the service dog regardless of the particular circumstances

e. No, because that would be a violation of Title VII

No, the ADA requires AMPCO to allow the service dog regardless of the particular circumstances

Answer: Option D.

<u>Explanation:</u>

According to the ADA act which stands for American disability act, it is illegal to refuse a well qualified person for a particular post just because on the basis of his disability.

The ADA act the american disability act prohibits any public or any private company or businesses from discriminating against people just because of their disability. Employees do not require any kind of documentation for their service dog.

7 0

3 years ago

Describe some bad news anne is concerned about at the end of the scene

QveST [7]

There needs to be more information in this question because it is impossible for anyone to correctly answer it. Try telling us which story its from and the answer choices if there are any.

7 0

3 years ago

Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has

Luba_88 [7]

Answer:

a) Total market value of the firm = $2,394,000

b) The capital structure of the firm:

Weight of ordinary shares = 69%

Weight of preference shares = 12%

Weight of bond = 19%

c) The firm's weighted average cost of capital (WACC) = 11.28%

Explanation:

a) Calculate the total market value of the firm.

Total market value of the firm is the addition market values of ordinary shares, preference shares and bond. This can be calculated as follows:

Market value of ordinary shares = $47 * 35,000 = $1,645,000

Market value of preference shares = $58 * 5,000 = $290,000

Market value of bond = $450,000 * 102% = $459,000

Therefore, we have:

Total market value of the firm = $1,645,000 + $290,000 + $459,000 = $2,394,000

b) Calculate the capital structure of the firm

Capital structure of the firm is the weight of the market value of each of capital or finance sources in the total market value. This can be calculated as follows:

Wo = Weight of ordinary shares = $1,645,000 / $2,394,000 = 0.69, or 69%

Wp = Weight of preference shares = $290,000 / $2,394,000 = 0.12, or 12%

Wb = Weight of bond = $459,000 / $2,394,000 = 0.19, or 19%

c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system.

The weighted average cost of capital (WACC) which is also referred to as firm's cost of capital refers to the rate the firm is expected to pay on average to all holders of its security used in financing its assets. The WACC can be estimated as follows:

WACC = (Ro * Wo) + (Rp * Wp) + (Yb * Wb * (1 - T)) .................... (1)

Whrere,

Ro = Rate of return of ordinary shares = 13.5%

Rp = Rate of return on preference shares = 7%

Yb = Pre-tax yield-to-maturity on the bond = 8.49%

T = Tax rate = 30%

Substituting the values above and the relevant values from part (b) above into equation (1), we have:

WAAC = (13.5% * 69%) + (7% * 12%) + (8.49% * 19% * (1 - 30%)) = 11.28%

6 0

3 years ago

when a club store (like costco) charges an annual membership, but sells goods at extremely low prices, it is using what economis

Law Incorporation [45]

When a membership store (like Costco) costs an annual membership, however sells items at extraordinarily low expenses, it's miles the usage of what economists name a: Price discrimination.

The required details for Price discrimination in given paragraph

Price discrimination is a promoting approach that costs clients specific expenses for the identical service or product primarily based totally on what the vendor thinks they are able to get the consumer to agree to. In natural fee discrimination, the vendor costs every consumer the most fee they may pay. Companies exercise fee discrimination in an effort to maximize profits. Since a huge marketplace normally consists of many kinds of purchasers, fee discrimination lets in groups to provide a excessive fee to well-off purchasers and a low fee to the maximum fee-touchy purchasers.

Price discrimination is practiced primarily based totally on the vendor's notion that clients in sure businesses may be requested to pay greater or much less primarily based totally on sure demographics or on how they cost the service or product in question.

To know about Price discrimination in given link

brainly.com/question/25565797

#SPJ4

4 0

9 months ago

How can an organization develop strategic​ flexibility?

How can an organization develop strategic flexibility?