Answer:
$34,100
Explanation:
The interest on the installment note for the first year is a function of both the face value of the note and interest rate of 11%
Interest expense on the first annual payment=$310,000*11%
Interest expense on the first annual payment=$34,100
The amount principal repayment in respect of the first annual payment is the amount of payment which is $52,639 minus the interest portion of the payment.
The Principal portion of the first payment=$52,639-$34,100=$18,539
Answer:
a) H0: u = presence of a unit root
HA: u ≠ presence of a unit root ( i.e. stationary series )
b) t stat = -0.064
c) We will reject the Null hypothesis and the next step will be to accept the alternative hypothesis
d) It is not valid to compare the estimated t stat with the corresponding critical value because a random walk is non-stationary while the difference is stationary because it is white noise
Explanation:
<u>a) stating the null and alternative hypothesis</u>
H0: u = presence of a unit root
HA: u ≠ presence of a unit root ( i.e. stationary series )
<u>b) performing the test </u>
critical value = -2.88
T stat = coefficient / std error
= -0.02 / 0.31 = -0.064
c) From the test, the value of T stat > critical value we will reject the Null hypothesis hence the next step will be to accept the alternative hypothesis
d) It is not valid to compare the estimated t stat with the corresponding critical value because a random walk is non-stationary while the difference is stationary because it is white noise
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.
Answer:
$20
Explanation:
Price / earnings per share = 10
earnings per share = $2
price / $2 = 10
Price = $20
That statement is false.
In order to catch up with rich countries, a country with low income probably need to maintain more than 100% growth rate in about 10 years.
Because if the country only increases its growth rates slightly, the rich countries may grow even further during that period.
