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topjm [15]
3 years ago
8

Why should firms with promising investment opportunities strive to maintain a conservative capital structure, i.e., limited leve

rage? Why do you think many promising small businesses apparently do not follow this recommendation and are heavily indebted?
Business
1 answer:
Crazy boy [7]3 years ago
7 0

Answer:

The answer is to assure funding for future assets.

The answer is because of lack of sufficient operating cash flow.

Explanation:

Companies with promising investments opportunity typically have valuable intangible assets whose value would decline sharply if the company would go into financial difficulty, its important for such company to maintain a financial flexibility that comes with a conservative capital structure to assure funding for future assets.

   Poor cash flow is when the income cash flow is insufficient to meet the outgoing cash flow needs of a business and this can also lead to inability to raise additional equity force.

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Suppose Mary is in consumer equilibrium. The marginal utility of good A is 30, and the price of good A is $2.. . a. if the price
zimovet [89]
 Using formula: Marginal Utility=Change in Total Utility/Change in Quantity
<span>So, the marginal utility of each good will be 30/$2, or 15/$1.
Multiply this marginal utility by the price of each good/service to obtain the marginal utility per unit of good.</span>
<span>Since marginal utility of good A is given then by using this formula the the marginal utility of good B is 60 , MU of good C is 45 and MU of good D is 15</span>

7 0
3 years ago
Economists use real gdp per capita to measure economic growth: even though nominal gnp per capita is a far superior measure of e
denis23 [38]
1. Economists use real GDP as a measure of living standards as it eliminates the effects of inflation by using the price index of the base period over the current period, which is also called the GDP deflator.

2. Real GDP per capital. Reason explained above.

3. 5million dollars divided by 100, therefore it would be 5000.

4. False. With the advancement of technology, capital becomes more productive and efficient, meaning they produce more output using the same amount of input.
7 0
3 years ago
Alaska king crab fishing in the 1960s and '70s was a dangerous but rich fishery. Boats from as far away as California and Japan
Readme [11.4K]

Answer and Explanation:

a. The crabs are a Common Good. They means can run out of supply if their use gets too much by society. Therefore, the decline of the Alaska king crab fishery can be explained by stating that the plenty types of boats such as those from California and Japan, has caused people to overfish, excessive fishing has brought about a decline in the supply of crabs.

b. There are 2 ways to avoid this

1. fishing permits have to be sold to the fishermen coming to fish for the crabs. Then the persons with the highest willingness to pay will come and buy the permits to fish.

2. Issuing just a particular amount of permits this would cause the fishermen to trade these permits. These open-market strategies have proved to be effective in organizing economic activity and are good stimulators in an economy.

c. They have been successful because regulations have been placed on fishing by the government. Also, if there are restrictions on other countries using up their spots and Canadians are the only ones fishing salmon, then there will be reduction in the decay rate of the population of the salmon, the salmon can easily repopulate, then Canadians would be able to come back the next year to fish again..

7 0
3 years ago
If an investor purchases $1,000 face amount of an 8orporate bond at 93, and the bond is scheduled to mature in 2028, what will t
Nastasia [14]

The amount to be paid on maturity is $100,440

Given that;

Purchase value of 8% corporate bond at 93 = $1,000

Find:

The amount to be paid on maturity

Computation:

Interest amount = Face value of bond × Price × Interest

Interest amount = $1,000 × 93 × 8%

Interest amount = $7,440

The amount to be paid on maturity =  $7,440 + $93,000  

The amount to be paid on maturity = $100,440

In finance, maturity or maturity date is the final payment due date of a loan or other financial instrument such as a bond or term deposit upon which principal (and remaining interest) is paid.

Maturity is the date on which the life of a trade or financial instrument ends, after which it must be renewed or cease to exist. The life of a bond is the period during which its holder receives interest payments on their investment. When the bond matures, the holder will be refunded the face value. The maturity may change if the bond has a put or call option.

Learn more about Maturity here: brainly.com/question/9099365

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7 0
2 years ago
assume you take a first and second loan on a commercial property; both are interest-only loans with one financing 60% of the pur
Juliette [100K]

If you look at the information in the question, you'll notice that the return is less than the cost of borrowing (loan interest rate) (ATIRR). This indicates that there is negative leverage and that the property cannot utilise it.

Positive leverage would be created in the first year if the property was purchased with expected returns equivalent to leverage.

Financial leverage is the process of using borrowed money (debt) to buy assets in the expectation that the income from the new asset or capital gain would outweigh the cost of borrowing. The leverage is summed up in this idea. By using debt (loan money), or leverage, we mean to increase the profits on an investment or project.

Leverage allows investors to increase their market buying power.

Leverage is a tool used by businesses to finance their assets. Rather than issuing stock to raise money, businesses can use debt to finance operations in an effort to boost shareholder value.

The most popular financial leverage ratios to determine how hazardous a company's position is are debt-to-assets and debt-to-equity.

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6 0
1 year ago
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