The correct question should be:
Which of the following best describes the goal of a firm?A) Maximizing the firm's profits.B) Maximizing the value of the firm's equity.C) Maximizing the value of the firm's debt.D)Minimizing the firm's risk.E) Maximizing the current dividend paid to shareholders.
Answer: Maximizing the firm's profits.
Explanation:
The Goal of a Firm is the objective that; that Firm seeks to achieve on a regular basis or after a specified period. In most cases the aim of opening a business is to make profit, therefore maximizing profit can be a goal of a business organization.
Answer:
e. In calculating the project's operating cash flows, the firm should not deduct financing costs such as interest expense, because financing costs are accounted for by discounting at the cost of capital. If interest were deducted when estimating cash flows, this would, in effect, "double count" it.
Explanation:
Weighted average cost of capital (WACC) is a calculation that takes into consideration all cost associated with capital obtained to finance a company.
This also includes cost such as interest expense.
In the given scenario when calculating the project's operating cash flow it is important to exclude such financing costs since they have been considered in the WACC calculation.
It will be a double deduction if it is considered again in operating cash flow calculation.
There are three tools to achieve its monetary policy goals: the discount rate, reserve requirements, and open market operations
<h2>Let us understand the definition to shoot the question for better understanding.</h2>
Explanation:
Sole Proprietorship:
- Owned by single person
- One person responsible for liable and business
- Simple to form
- Nominal cost
Corporations:
- Legal entities
- Shared by shareholders
- More complex type
- Used for large business
Partnership:
- Shared by two or more people
- Types :general partnerships, limited partnerships, joint ventures
Questions: (reason not required as you can self-understand)
- Are you going to own by oneself or shared?
- Can you manage if you own with oneself?
- What is your budget?
- Do you want to make simple legal procedures?
- Which type of partnership you prefer?
- Do you now the "pros and cons" of each one?
Answer:
7%
Explanation:
Interest income if Curtis invested
250,000 x 9% = 22,500
After tax interest income = 22,500 - (22,500 x 24%)
= 17,100
After tax rate of return = 17,100/250000
0.068
Approximately 7%
