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Answer:
The correct answer is: Operating budget.
Explanation:
An operating budget is an estimate a business make of the expenses and revenue it plans to book in its ongoing operations. Operating budgets can also be used to forecast future operating corporate periods. This type of budget mainly includes the <em>number of sales expected in dollars</em>, <em>fixed and variable costs</em> as well as <em>operating expenses</em> such as loan payments or depreciation.
Answer:
8.60%
Explanation:
We use the MM proposition II with taxes
ra 0.125
D 5000
E 9600 (14,600 assets = 5,000 liab + equity)
rd ??
taxes 0.34
re 0.1384
We set p the formula and solve:
rd = 0.860181818 = 8.60%
If you look at the information in the question, you'll notice that the return is less than the cost of borrowing (loan interest rate) (ATIRR). This indicates that there is negative leverage and that the property cannot utilise it.
Positive leverage would be created in the first year if the property was purchased with expected returns equivalent to leverage.
Financial leverage is the process of using borrowed money (debt) to buy assets in the expectation that the income from the new asset or capital gain would outweigh the cost of borrowing. The leverage is summed up in this idea. By using debt (loan money), or leverage, we mean to increase the profits on an investment or project.
Leverage allows investors to increase their market buying power.
Leverage is a tool used by businesses to finance their assets. Rather than issuing stock to raise money, businesses can use debt to finance operations in an effort to boost shareholder value.
The most popular financial leverage ratios to determine how hazardous a company's position is are debt-to-assets and debt-to-equity.
To know more about Leverage visit:
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