Answer:
A lower real interest rate makes saving less appealing.
Explanation:
The lower the interest rate, the lower the amount saved and the higher the interest rate, the higher the amount of money saved. There is a positive relationship between interest rate and the supply of loanable funds. This is why the supply curve for loanable funds is upward sloping
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Answer:
WACC = Ke(E/V) + Kd(D/V)(1-T) + Kp(P/V)
WACC = 15(60/100) + 5(30/100)(1-0.3) + 10(10/100)
WACC = 9 + 1.05 + 1
WACC = 11.05%
Explanation:
Weighted average cost of capital is a function of cost of common stock and the proportion of common stock in the capital structure plus after-tax cost of debt and proportion of debt in the capital structure plus cost of preferred stock and the proportion of preferred stock in the capital structure. Ke = Cost of equity or common stock, kd = cost of debt and kp = cost of preferred stock.
Answer:
Explanation:
Step 1. Given information.
- City of 200 people
- 100 rich, 100 poor.
Step 2. Formulas needed to solve the exercise.
- P(poor) = 0.9x^2
- P(rich)= 35x-0.1x^2
Step 3. Calculation and step 4. Solution.
P(poor) = p (rich)
0.9x2 = 35x - 0.1x2
1x2 = 35x
x = 35
x is the percentage of rich above 50%, thus there are 35% rich people above 50%.
P (poor) = 1102.5
P (rich) = 1102.5
The equilibrium premium is $1,102.5
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