Answer:
D. Cost of debt (rd)
Since more debt is taken, the interests payments or cost of debt should increase.
E. Cost of equity (rs)
More leverage = higher risk, and higher risk = higher cost of equity.
Explanation:
Return on assets will probably decrease, because the assets should remain the same but net income should decrease.
Net income will probably decrease because the company will now pay more interests due to higher debt.
Basic earning power should remain unaffected, because EBIT and assets should not change.
The best option for her to choose is the one called Anual Compounding. With the rest of the compoundings she will have to pay more money. With a semi-annual rate she wil have to pay almost 1000 dollars more than in an anual compounding. With a quarterly period she will have to pay almost the same amount as a semi-annual period. Now with a monthly period she would have to pay almost 2000 dollars of interest.
Answer:
b. oil prices increased faster than real GDP, but real GDP still grew at a healthy pace.
Explanation:
In this example, we compare the annual price of oil and the annual increase in GDP. When we look at the two, we can see that oil prices increased faster than real GDP. Nevertheless, we can also see that GDP still grew at a healthy pace.
GDP refers to Gross Domestic Product. This concept describes the monetary value of all good and services produced within a country's borders in a certain time period. GDP does not describe all the specific economic conditions of a country. However, it is still a useful measure for politicians and researchers in order to estimate the relative health of a country's economy.
Answer:
False
Explanation:
The reason is that the betas are calculated using the past data which means that the Capital asset pricing model solely rely on the past data which is not the strength of the CAPM. It is basically a weakness of the model so the statement is incorrect.
Answer:
Total debt = $3,900,000
Explanation:
Total Assets = $5,200,000
Debt Ratio = 75%
Debt = 75% x $5,200,000
=$3,900,000
Hence, the 25% account for equity finance $1,300,000
