1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
NARA [144]
3 years ago
9

Assume the M&M with corporate taxes. The corporate tax rate is 40%. Your firm is currently unlevered with 100% equity. As of

now, the value of the firm’s equity is $400K, and the firm’s cost of capital is 10%. Assume that your firm can borrow at 4% from a bank. Suppose that you decided to lever up by reducing equity and increasing debt. As the result, your firm now has $250K in debt. Your firm plans to maintain this debt amount forever. What is the present value of the interest tax shield?
Business
1 answer:
Fynjy0 [20]3 years ago
7 0

Answer:

The present value of the interest tax shield is $100.

Explanation:

Present Value of interest tax Shield= Debt* Tax Rate

=$250*40%

=$100

You might be interested in
In the short run, output: Group of answer choices May be altered by varying the size of plant and equipment which now exist in t
Daniel [21]

Answer: The correct answer is "Can vary as the result of using a fixed amount of plant and equipment more or less intensively".

Explanation: In the short run, output: Can vary as the result of using a fixed amount of plant and equipment more or less intensively.

In a short-term context, production can only vary as a result of more intensive use of the plant producing more or less intensive use of the plant producing less.

5 0
3 years ago
Alex is a brand manager at a large corporation. For the last 14 months he has been reading and re-reading all the research data
Simora [160]

Alex is attempting to overcome Paralysis by Analysis.

<h3>What does "paralysis by analysis" mean?</h3>

According to Botnick, ruminating is the act of repeatedly spinning the same thoughts. But usually this overthinking doesn't produce any fresh insight. What ultimately causes the "paralysis," or inability to decide, is continuing to consider options when you already feel worn out and overwhelmed.

Overanalyzing or overthinking a situation can make forward motion or decision-making "paralyzed," which means that no solution or plan of action is agreed upon within a reasonable amount of time. Analysis paralysis describes an individual or group process where this might happen.

To know more about Paralysis by Analysis, refer:

brainly.com/question/14897425

#SPJ4

8 0
1 year ago
In its first month of operations, Culver Company made three purchases of merchandise in the following sequence: (1) 205 units at
Oksi-84 [34.3K]

Answer:

$2,450 ; $1,430

Explanation:

The computation of the ending inventory using the periodic inventory system is shown below:

Under FIFO method

= 245 units × $10

= $2,450

We take the last units in this FIFO method

Under the LIFO method

= 205 units × $6 + 40 units × $5

= $1,230 + $200

= $1,430

We take the first units in this LIFO method

Hence, the closing inventory is come

3 0
3 years ago
For investors, the ______ provide independent, easy-to-use measurements of relative credit risk.
sattari [20]

For investors, <u>credit rating agencies </u>provide independent, easy-to-use measurements of relative credit risk.

A credit rating agency refers to a company that assigns credit ratings. A <em>credit rating agency</em> also serves as a basis for proper risk and return.

A credit rating agency is important as it helps in rating the ability of a debtor to pay back its credit. Therefore, for investors, credit rating agencies provide independent, easy-to-use measurements of relative credit risk.

In conclusion, credit rating agencies also rate the creditworthiness of issuers of debt instruments.

Read related link on:

brainly.com/question/25393732

3 0
2 years ago
Assume an exchange rate of $1 = .60 british pounds. a u.s. product sells in britain for 18 pounds. by what percentage will dolla
Arisa [49]
<span>18 x .6 = $10.80 US 18 x .5 = $9.00 US 9/10.80 = .83 1 - .83 = 17% change You first multiply the price in pounds by the exchange rate to find out how much the product would cost in US dollars. Then the same calculation is done with the lower exchange rate. You create an equation with the 2 US dollar amounts. Then to get the percent change, you subtract that answer from 1.</span>
7 0
3 years ago
Other questions:
  • Data concerning Follick Corporation's single product appear below: Selling price per unit $ 300.00 Variable expense per unit $ 7
    6·1 answer
  • 1.What similarities do you see in current-day medicine and medicine in ancient 2.times? What differences do you see in current-d
    12·1 answer
  • Pineapple International uses a job order costing system. Pineapple's accounting manager estimated that direct labor would be $2,
    6·1 answer
  • Which statement is FALSE regarding OSHA inspections?
    11·2 answers
  • On August 20th, one of your employees comes to you with a vacation request. The employee’s available vacation time expires on Se
    12·1 answer
  • Hau Lee​ Furniture, Inc., spends 45​% of its sales dollars in the supply chain and finds its current profit of ​$35,000 inadequa
    10·1 answer
  • A company has a factory that is designed so that it is most efficient (average unit cost is minimized) when producing 27,100 uni
    15·1 answer
  • Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. Company management
    6·1 answer
  • Nancy and Joan bought a small farm for $300,000 under an installment land contract with a $50,000 down payment. They will pay in
    12·1 answer
  • One of the limitations for an entrepreneur of setting up a new business as a franchise is:
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!