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balu736 [363]
3 years ago
14

Hugh has the choice between investing in a City of Heflin bond at 4.95 percent or investing in a Surething Inc. bond at 7.60 per

cent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does Surething Inc. need to offer to make Hugh indifferent between investing in the two bonds? (Round your answer to 2 decimal places.)
Business
1 answer:
Igoryamba3 years ago
5 0

Answer:

8.25%

Explanation:

Hugh will pay tax on its interest income and hence teh after tax rate of income shall be = Interest rate * (1- tax) . City of Heflin bond is offering a rate of 4.95% after tax rate of return, hence Surething should offer a interest rate that given Hugh after tax rate of 4.95%.

Tax rate is given 40% = 0.40

So , Interest rate * (1 - tax) = 4.95%

Interest rate * (1 - 0.40) = 0.0495

Interest rate * 0.60 = 0.0495

Interest rate = 0.0495 / 0.60

Interest rate = 0.0825

Interest rate = 8.25%

Hence Surething should offer 8.25% interest rate.

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Which of the following statements is (are) TRUE?
Setler [38]

Answer:

B. The long-run average total cost curve is derived by tracing out all of the firm's short-run average total cost curves.

6 0
4 years ago
Suppose that the total production of an economy consists of 4 oranges and 10 candy bars, each orange sells for $0.25, and each c
yulyashka [42]

Answer: $6

Explanation:

Total production of oranges= 4

Total production of candy bars=10

Each orange sells for=$0.25

Total market value of orange production=price × quantity

=$0.25×4

=$1

Each candy bar sells for= $0.50

Total market value of candy bar production=price of candy bar × quantity of candy bar

=$0.50 × 10

=$5

The economy produces oranges and candy bars.

The total market value of production in the economy= Total market value of Orange production + Total market value of candy bar production

=$1 + $5

=$6

5 0
3 years ago
What will be the nature of balance of trade if imports are of manufactured goods?
Radda [10]

Answer:

b). Positive

Explanation:

The nature of the balance of trade if imports are of manufactured goods is POSITIVE

Considering that Balance of trade is a term that is used to describe the difference between the imports and exports value of a country over a given period.

Hence, when a country manufactured goods instead of importing them, the balance of trade is believed to be Positive.

On the other hand, when a country imports goods instead of manufacturing them, the balance of trade is believed to be negative.

7 0
3 years ago
A loop invariant property is ________________. Group of answer choices A set of statements in the loop that are always executed
makkiz [27]

Answer:

The correct answer is: A set a variables that do not change throughout a loop.

Explanation:

In computer science, a loop invariant property refers to a statement that is true about a program variable before and after each iteration of a loop. The loop invariant has three (3) properties: initialization (<em>true before the first execution</em>), maintenance (<em>true after the iteration</em>), and termination (<em>the invariant loop must provide useful information after terminated</em>).

4 0
3 years ago
Boxer Company owned 16,000 shares of King Company that were purchased in 2016 for $440,000. On May 1, 2018, Boxer declared a pro
Serjik [45]

Answer:

By 110,000 the retained earnings reduced by the property dividend.

Explanation:

Retained Earnings: The retained earnings is that earnings which is left after all payments relating to the business expenses, shareholder dividend. The earnings which is to be retained so that it can come in use in near future.

For retained earning calculation, the stock market value is recorded when the date is declared not on distribution date.

So, the calculation is computed below:

As the 50,000 shares is given for every 10 shares. So, first we have to compute for 1 share which comes by dividing shares to number of shares i.e.  50,000 shares ÷ 10 shares = 5,000 for 1 share.

Now, multiply by market value which comes = 5,000 × $22 = $110,000.

So, by 110,000 the retained earnings reduced by the property dividend.

4 0
3 years ago
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