1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
konstantin123 [22]
3 years ago
6

Ink Inc. has a capital structure consisting of 25 percent debt and 75 percent common equity financing. The company has $800 mill

ion in net income and plans to pay out 40 percent of their earnings as dividends. What is the maximum amount of new financing that the company can raise without selling new common stock?
Business
1 answer:
Margarita [4]3 years ago
5 0

Answer:

$640 million

Explanation:

The computation of maximum amount of new financing is shown below:-

New financing from equity = $800 million × (1 - 40%)

= $480 million

New financing from debt = $480 million ÷ 75% × 25%

= $160 million

Now the maximum amount of new financing is

= $480 million + $160 million

= $640 million

Hence, the maximum amount of new financing is $640 million

You might be interested in
Brian lives in Chicago and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of t
umka21 [38]

Answer:

Brian

1. Implicit and Explicit Costs:

Implicit costs:

The rental income Brian could receive if he chose to rent out his showroom

The salary Brian could earn if he worked as a financial advisor

Explicit costs:

The wages and utility bills that Brian pays

The wholesale cost for the pianos that Brian pays the manufacturer

2. Brian's accounting and economic profit of his piano business:

Accounting profit = $62,000

Economic profit (loss) = ($3,000)

Explanation:

a) Data and Calculations:

                               Accounting Profit     Economic Profit

Sales Revenue            $793,000                $793,000

Cost of pianos              430,000                   430,000

Wages and utility bills   301,000                    301,000

Implicit (Opportunity) Costs:

Rent                                                                   15,000

Salary as an accountant                                  50,000

Total costs                    731,000                    796,000

Profit (loss)                  $62,000                     ($3,000)

b) Implicit costs are opportunity costs.  They include the costs that arise from forgone benefits when another opportunity is taken instead of the other.  Explicit costs are costs that are actually incurred by taking an opportunity.

8 0
2 years ago
You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to in
trasher [3.6K]

Answer:

You will receive $201.38 more interest if the investment is made with a compound interest rate rather than a simple interest rate.

Explanation:

<u>Simple interest rate</u>

We can calculate how much interests you'd obtain if you deposited the $2,600 in a simple interest rate account.

We start using the following formula for calculating the simple interests:

I=P * r

Where:

<em>I</em> are the interests per year,

<em>P</em> is the amount being invested,

<em>r</em> is the interest rate.

Replacing in the formula with the given values we have:

I=2600*0.05=130

We then proceed to multiply this result by the <em>given number of years</em>, which is 8. We get 130*8=1040.

Finishing with the <em>simple interest rate</em>, if we wanted to know how much is the investment worth at the end of a 8 year period, we must merely add <em>the principal</em> (the $2,600) to the total interests after the end of the period ($1040). So 2600+1040= 3640.

We'll use these results later.

<u>Compound interest rate</u>

The formula for compound interests is the following:

I=P(1+r)^n

Where:

<em>I</em> is the value of the investment after <em>n</em> years,

<em>P</em> is the principal amount being invested,

<em>r</em> is the interest rate,

<em>n</em> are the number of years the investment is compounded.

Replacing in the formula with the given values we have:

I=2600*(1+0.05)^8=3841.38

After the 8 year period, the investor will have $3841.38 in it's compounded interest account.

<u>Comparing these results</u>

<u></u>

We can simply substract the value of both investments at the end of a 8 year period, to determine how much more interest does the compound interest rate account give in relation to a simple interest rate account.

The values we've gotten were:

$3,640 for the simple interest rate account, and

$3,841.38 for the compounded interest rate account.

3841.38-3640=201.38. Therefore the answer is: the account that pays compounded interests will pay $201.38 more to this invididual, compared to an account that pays simple interest.

8 0
3 years ago
A firm will experience a loss when its revenue is less than its expenses
tatiyna
The answer for this question is True
5 0
3 years ago
When Yolanda asked her firm's advertising agency to estimate how often consumers saw her firm's IMC message and what percentage
Tcecarenko [31]

Answer:

A. 160

Explanation:

8 0
3 years ago
The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates a wholesale
Triss [41]

Answer:

1. Financing Activity : $300,000

2.Investing Activity : $10,000 and Non-cash Financing and Investing Activity : $30,000

3.Operating Activity : - $90,000

4.Operating Activity :   $50,000

5.Operating Activity :  -$5,000

6.Operating Activity :  -$6,000

7.Operating Activity :  -$70,000

8.Operating Activity :   $55,000

9.Operating Activity :   $1,000

Explanation:

Operating Activities involves the entity`s trading operation in ordinary course of business.

Investing Activities involves the entity`s sale or purchase of Investments.

Financing Activities involves the entity`s acquisition and sale of funds.  

6 0
3 years ago
Other questions:
  • At $5 a bushel, there is an excess supply of wheat. Is this price above or below the equilibrium price?
    10·1 answer
  • Union Local School District has a bond outstanding with a coupon rate of 2.8 percent paid semiannually and 16 years to maturity.
    12·1 answer
  • How does capitalism differ from socialism when it comes to the ownership of property?
    15·2 answers
  • A company manufactures mountain bikes. The research department produced the marginal cost function C'(x)=700-(x/3) where 0 is le
    13·1 answer
  • Sunshine Smoothies Company (SSC) manufactures and distributes smoothies. SSC is considering the development of a new line of hig
    9·1 answer
  • The table below contains data on Fincorp Inc. The balance sheet items correspond to values at year-end 2015 and 2016, while the
    9·1 answer
  • Given the pay rate, hours worked, tax deductions, and social security deduction, determine the gross earnings, group health insu
    10·1 answer
  • Suppose the economy is at a point below its physical production possibilities frontier but above its institutional production po
    12·1 answer
  • Impact of population growth on environmental degradation​
    13·1 answer
  • what document explains your rights and responsibilities as a federal student loan borrower? your master promissory note your bil
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!