Increasing the reserve requirement is a powerful ANTI INFLATION weapon that reduces the overall supply of money.
In order to reduce the amount of money in an economy, the federal reserve can increase the reserve requirements of the commercial banks in the economy. This will reduce the amount of money that the banks can give out as loan and this will work to prevent inflation.
Answer:
WACC = 0.16637 OR 16.637%
Explanation:
WACC or weighted average cost of capital is the cost of a firm's capital structure which can comprise of debt, preferred stock and common equity. The WACC for a firm with only debt and common equity can be calculated as follows,
WACC = wD * rD * (1-tax rate) + wE * rE
Where,
- w represents the weight of each component based on market value in the capital structure
- r represents the cost of each component
- D and E represents debt and equity respectively
To calculate WACC, we first need to calculate the Market value an cost of equity.
The market value of equity = 30 million shares * $40 per share
MV of equity = $1200 million
The cost of equity can be found using the formula for Price today (P0) under constant growth model of DDM.
P0 = D1 / (r - g)
40 = 4 / (r - 0.07)
40 * (r - 0.07) = 4
40r - 2.8 = 4
40r = 4+2.8
r = 6.8 / 40
r = 0.17 or 17%
MV of debt = 40 million * 96.5% => $38.6 million
Total MV of capital structure = 38.6 + 1200 = 1238.6 million
WACC = 38.6/1238.6 * 0.08 * (1-0.33) + 1200/1238.6 * 0.17
WACC = 0.16637 OR 16.637%
Answer:
Advantages of buying business premises
There are considerable advantages to securing a mortgage to buy business premises, including:
- your mortgage repayment is likely to be similar to or less than a rental payment on the same property
- with a fixed rate mortgage, your monthly repayments will be predictable
- you aren't exposed to any sudden, large rent increases
- you may be able to sublet any free space, reducing your monthly repayments (you may require permission from your lender to do so) and allowing you to generate extra income
- interest payments on a commercial mortgage are tax-deductible
- any gain in value of the property will increase your capital
- as your business grows, you may be able to extend your existing premises, avoiding relocation costs
- you have control over what alterations you want to make to your office space
Disadvantages of buying business premises
The disadvantages of buying business premises include the following:
- Unlike renting, you'll need to come up with a substantial mortgage deposit - this is money that might be used for more important business purposes.
- If you own premises, you may find it harder to relocate your business, because selling business premises is a complex and sometimes lengthy process. If you rent, you may be able to negotiate to end your rental agreement, or to find another organisation to take over your tenancy at short-notice.
- If you have a variable rate mortgage, you are exposed to increases in interest rates.
- Owning a property means you'll be responsible for factors such as maintenance, fixtures and fittings, insurance, decoration and security, which can prove expensive.
- Repaying a commercial mortgage
- Commercial mortgage fees and costs
- Book traversal links for Advantages and disadvantages of buying business premises
Explanation:
Answer:
E. as current assets
Explanation:
As we know that the
Balance sheet records the total assets, total liabilities and the stockholder equity
Where
The total assets comprises of current assets, tangible assets, and the intangible assets
And, the total liabilities comprises of current liabilities and the long term liabilities
In the given scenario, the purchase of the newest Dorothy Cannell book be listed on the store's balance sheet. So here, the newest Dorothy Cannel book represent the current asset side of the balance sheet
