Santa claus enterprises has 87,000 shares of common stock outstanding at a current price of $39 a share. the firm also has two b
ond issues outstanding. the first bond issue has a total face value of $230,000, pays 7.1 percent interest annually, and currently sells for 103.1 percent of face value. the second bond issue consists of 5,000 bonds that are selling for $887 each. these bonds pay 6.5 percent interest annually and mature in eight years. the tax rate is 35 percent. what is the capital structure weight of the firms debt?
Answer: A. decreases as the required rate of return increases
Explanation: The net present value decreases as the required rate of return increases. The net present value is often employed by Chief Financial Officers (CFOs) as a method of investment analysis and as an evaluation method for capital expenditures to analyze the profitability of a projected investment or project. It is defined as the difference between the present values of cash inflows and cash outflows both positive and negative, over a period of time (or over the entire life of an investment discounted to the present.
The net method is a way a company or firm records its customer's invoice. Under the net method of Accounting for purchases, The record of purchases are recorded considering the cash discount.
Therefore
Purchase price = $45000
Cash Discount at terms 2/10 n/30
$45000 x 2% = $45,000 x 0.02 =$900
Net purchase price = $45000 - $900 = $44,100.
The journal to record the inventory purchased on account using the net method will be
Explanation: The attitude of optimism towards future sales and profits will increase spending on plants and equipments but in turn, there is increase in employment and income and, hence, their expectations are fulfilled.
Returns on scale - when an increase in inputs (capital and labour) cause the same proportional increase in output.
Both the factor nullifies the effects of each other as managerial inefficiency will decrease the effect of external economies of scale in form of bargaining power so constant return to scale is expected.
