Answer:
The income effect and substitution effect work in opposite directions and income effect is dominant.
Explanation:
In case of a normal good, both the income effect as well as substitution effect work in the same direction. A fall in the price of a product will increase the purchasing power of the consumer so its quantity demanded will increase.
The consumers will also prefer the cheaper good so the substitution effect will cause the quantity demanded to increase.
In case of an inferior good, however, income elasticity is negative. The income effect and substitution effect work in opposite directions.
A price decrease in the case of an inferior good will increase the real income and purchasing power of the consumer. This will cause the quantity demanded of the inferior good to decline as the consumer will prefer a substitute normal good.
a.
WACC is calculated as –
WACC = (Weight of common stock X Cost of common stock) + (Weight of preferred stock X Cost of preferred stock) + (Weight of debt X After tax cost of debt)
WACC = (64% X 13.4%) + (9% X 6.4%) + (27% X ((1- 40%)*8.1%))
WACC = 10.46%
b. After tax cost of debt is calculated as –
After tax cost of debt = (1- tax rate) X cost of debt pre-tax
After tax cost of debt = ((1- 40%)*8.1%))
After tax cost of debt = 4.86%
A because a lot of times depending on your degree they will automatically give you loan forgiveness, espicially going into a high attending job such as teaching.
Limited Life Span
if the Sole Proprietor Dies so does the company.
Answer:
interest portion (17th payment) = $22.24 ≈ $22
premium amortization portion (17th payment) = $17.76 ≈ $18
Explanation:
the market price of the bond:
PV of face value = $1,000 / (1 + 2%)²² = $646.84
PV of coupon payments = $40 x 17.658 (PV annuity factor, 2%, 22 periods) = $706.32
market price = $1,353.16
the journal entry to record the investment in bonds:
Dr Bonds receivable 1,000
Dr Premium on bonds receivable 353.16
Cr Cash 1,353.16
I prepared an amortization schedule using excel to determine the interest portion of the 17th payment and the premium amortization portion.
interest portion (17th payment) = $22.24 ≈ $22
premium amortization portion (17th payment) = $17.76 ≈ $18
