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3 years ago

What is the after-tax cost of debt for a firm if it pays at 21% of tax rate, and pays 15% on its debt

Business

1 answer:

FinnZ [79.3K]3 years ago

5 0

Answer:

= 11.85%

Explanation:

After tax cost of debt = (1 - tax rate) x debt

(1 - 0.21) x 15%

0.79 x 15% = 11.85%

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7. XYZ stock price and dividend history are as follows: An investor buys three shares of XYZ at the beginning of 2010, buys anot

Ainat [17]

Answer:

Arithmetic average is 3.15% and Geometric average is 2.33%.

Explanation:

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3 years ago

A seller sold a house to a buyer allowing the buyer to take over the loan on a "subject to" basis. After 2 years, the buyer defa

lubasha [3.4K]

Answer:

A. The seller would be primarily liable.

Explanation:

Subject to basis is a form of home buying options in real estate. It is a situation where the buyer takes over existing loan of a seller and make commitment to seller to continue repaying the loan to the lender.

Though the buyer will taken over the loan from the seller and make repayment to the lender, there is no legal obligation on buyer`s part that makes him/her liable to the lender. The seller still remain liable despite the the taking over. So option A is right while B to D is wrong because it`s only the seller that is primarily liable to the lender.

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3 years ago

You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, w

Rom4ik [11]

Answer:

First deposit will be $11,213.87

Explanation:

To derive how much the first deposit must be, the deposit can be derived by using payment formula for growing annuity

P = FV x (r - g) / [(1 + r)^n - (1 + g)^n]

When FV = $1,000,000

r = 7%

g = 3%

n = 25

Hence, First payment will be:

P = 1,000,000 * (7% - 3%) / (1.07^25 - 1.03^25)

P = 1,000,000 * 4% / 5.427433 - 2.093778

P = 40,000 / 3.333655

P = 11998.842

P = $11,998.84

However, this formula is applicable when the payments are made at the end of the year. In this case the payments are upfront, occurring today. We need to adjust this first payment to reflect the early payment.

Hence, first payment = $11,998.84 / (1 + 7%)

First payment = $11,998.84 / (1 + 0.07)

First payment = $11,998.84 / 1.07

First payment = 11213.8691588785

First payment = $11,213.87

7 0

3 years ago

What type of activity is the purchase of equipment for cash?

RSB [31]

<span>Acquisition or Procurement is the means on how equipment is bought for businesses and the military. However for peoples own personal use, shopping is the more common everyday word.</span>

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3 years ago

The chapter opener noted that in mid-2016 you could earn an interest rate of 0.25% by buying a 3-month Treasury bill or an in

ruslelena [56]

Answer:

The correct option is D,the markets for bonds of different maturities are separate or segmented

Explanation:

Market segmentation theory is of the view that market for short-term and long-term bonds are segmented from each other,wherein investors with different preferences investing in different markets.

Banks for instance are short-term position takers due to their preference for liquidity and would favor investing short-term instruments like the 3-month Treasury bill such that at every point in time, there is enough cash liquidity to meet customers' request for withdrawal of funds.

On the flip side, pension fund administrators take a long-term position on investment, hence would prefer the 30-year Treasury bill since their payment of retirement benefits is usually a low portion of their total contributions received from contributors to their pension funds.

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3 years ago