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3 years ago

Which financing option has the highest overall costs?

Business

2 answers:

Anvisha [2.4K]3 years ago

7 0

Answer:

A. rent to own

Explanation:

katrin2010 [14]3 years ago

4 0

Equity financing has the highest overall cost.

Further Explanation:

The financing options that are available to the company are equity and debt. Equity Financing refers to the issue of equity shares to the public. Debt refers to the loan taken by the company from the public or any financial institutions. The equity shareholders have the right to vote in general meetings while the debt holder does not have any such rights.

The equity shareholders are also entitled to receive dividends while debt holders are entitled to receive the interest regardless of whether the company is having a profit or not. The interest paid to debt-holders is deducted from the net profit before any tax is charged. The interest reduces the taxable income while the dividend is calculated on net profit after tax. Thus, the cost of using debt finance is lower as the amount which is paid as the interest is charged against the tax.

Therefore, Equity financing involves a higher cost than Debt financing.

Learn more:

1. Learn more about raising the equity

brainly.com/question/7854996

2. Learn more about the problem related to equity theory

brainly.com/question/3771927

3. Learn more about the short-term financial goals

brainly.com/question/2451748

Answer details:

Grade: Senior School

Subject: Financial Management

Chapter: Cost of Capital

Keywords: Equity financing, the highest overall cost, debt financing, financing options, capital, business, shareholder’s fund, loan, financial management, raise, issue.

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Answer:

$205,200

Explanation:

Calculation of Pension Expense

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So therefore, the pension expense for the year is $205,200.

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2 years ago

Bramble Corp. purchased a machine for $65600 on July 1, 2020. The company intends to depreciate it over 8 years using the double

KonstantinChe [14]

Answer:

$16,400

Explanation:

Depreciation for 2020 is calculated as;

= (Cost - Nill value) × 50% × 6/12[July to December)

Given that ;

Cost = $65,600

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Depreciation = $16,400

Therefore, depreciation for 2020 is $16,400.

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3 years ago

Clem Oatley could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on

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Answer:

Clem should specialise in wheat production because he has higher profits there

Explanation:

Clem needs to make a decision on the product that will maximise his profits and not just the number of units of products he can manufacture.

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If he produces only barley his profit will be 125 bushels * $0.80 = $100

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3 years ago

Read 2 more answers

Suppose you found a CD that pays 4.9% interest compounded monthly for 4 years. If you deposit $10,000 now, how much will you hav

Katyanochek1 [597]

Answer:

=$11,580.00

Explanation:

The CD pays 4.9 percent compounded monthly for four years.

In one year, there will be 12 occasions of compounding; after four years, there would be 12 x 4 = 36 compounds.

The interest rate per year is 4.9 percent; monthly interest will be 4.9 /12, which is 0.4083 percent.

The amount in four years is the same as the future value after four years.

=FV = PV (1+r)n

Pv =$10,000

r=0.4083 %

N =36

Fv = 10,000(1+0.4083/100)36

=10,000(1+0.004083)36

=$10000 x 1.1579932

=$11,579. 932

=$11,580.00

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3 years ago

As winner of a breakfast cereal competition, you can choose one of the following prizes: a. $180,000 at the end of five years. b

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Answer:

i. Discounted cashflow equations.

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b. $11,400 a year forever

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$Formula = Annuity * [\frac{( 1 - (1 + i)^{-n} )}{i} ]$ where i is interest rate and n is number of periods

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d. $6,500 next year and increasing thereafter by 5% a year forever.

This is a growing perpetuity. The present value/ discounted cashflow formula is;

= Amount / ( discount rate - growth rate)

= 6,500 / ( 12% - 5%)

= $92,857.14

ii. Choose $19,000 for each of 10 years as it has the highest present value.

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