The is the interest rate that a firm pays on any new debt financing. Andalusian Limited (AL) can borrow funds at an interest rat
1 answer:
You might be interested in
Answer:
Follows are the solution to this question:
Explanation:
In point A-1:
Calculating the value of Incremental sales after tax:
Further revenues= $414,000
Recognize(Less)=Costs
Debt worth =$33,120
Set Exp. = $17,400
Production and commercialization cost= $314,640
Pre-sales tax =$48,840.
Lower: 35% tax = $17,094
Incremental tax income =$31,746
In point A-2:
Determine profits for extra expenditure
Extra spending on debts
Return on the Expenditure
In point A-3:
Yeah, For the Fast Turnstiles company must provide certain consumers with loans.
In point B-1:
Incremental taxes after-tax calculation:
Further sales = $ 414,000
Return: Costs
gross debt= $45,540
Set Exp = $17,400
Cost for production and marketing = $314,640
Net profits=$ 36,420
Without tax 35% = $12,747
Incremental tax revenue= $23,673
In point B-2:
Determine profits for extra expenditure
Extra investment in debts
Incremental return on that investment
In point B-3:
Yeah, The Fast Turnstiles company must provide to certain consumers to credit.
In point C-1:
The incremental tax revenue estimate
$414,000 = excess revenue
Remember Costs
Debt worth= $ 33,120
set Exp = $17,400
Production and commercialization cost= $314,640
Pre- sales tax = $48,840.
Less: 35% Tax = $17,094
Incremental tax income= $31,746
Calculate profits for extra expenditure
Extra Accounting Investment
Incremental Return
In point C-2:
Yeah, its credit should be granted to all these consumers through Fast Turnstiles company limited.