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3 years ago

Firms, households, and governments use the credit market for borrowing. The credit demand curve shows the relationship

Business

1 answer:

Pavel [41]3 years ago

3 0

Answer:

C) a higher real interest rate reduces a borrowing firm's profit and hence its willingness to borrow.

Explanation:

Companies borrow money to leverage their projects, investments or regular business activities. When they borrow money, they do it to earn more money themselves, not just to make a bank or a bondholder earn money. Since the company must repay its loans, the profit it makes using the loans must offset the money it must pay back in interest.

E.g. I borrow $100 for my business and the bank charges me $7 in interest per year, so I must be able to use that money to increase my profit by more than $7 a year.

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The optimal capital structure is the one where the percentages of debt, preferred stock, and common equity minimize the firm's v

lord [1]

This is false that The optimal capital structure is the one where the percentages of debt, preferred stock, and common equity minimize the firm's value.

The best combination of debt and equity financing that increases market value while lowering a company's cost of capital is known as an optimal capital structure. One strategy for aiming for the lowest cost mix of financing is to minimize the weighted average cost of capital (WACC).

Financial management greatly benefits from having the ideal capital structure. It enables a business to efficiently raise the required capital from a variety of sources. The ratio of debt to equity in the ideal capital structure will maximize the firm's wealth. The market price per share is at its highest and the cost of capital is at its lowest with this capital structure.

To know more about optimal capital structure refer to: brainly.com/question/15041466

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7 0

2 years ago

A producer is someone who _____________. A. Makes a commodity available for sA producer is someone who _____________. A. Makes a

Mekhanik [1.2K]

A producer is someone who m<span>akes a commodity available for sale or exchange.</span>

5 0

3 years ago

Delaware Company incurred the following research and development costs during 2021: Salaries and wages for lab research $ 400,00

Temka [501]

Answer:

Total R&D Expense = 1040000 USD to be reported in 2021 income statement.

Explanation:

First of all, let me arrange this data in a quite presentable way to facilitate you.

1. Salaries and wages for lab research = 400,000 USD

2. Materials Used in R&D projects = 200,000 USD

3. Purchase of equipment = 900,000 USD

4. Fees paid to third parties for R&D projects = 320,000 USD

5. Patent filing and legal costs for a developed product = 65,000 USD

6. Salaries, wages, and supplies for R&D work performed for another company under a contract = 350,000 USD

Total Cost = 2,235,000 USD

Note: Depreciation for 2021 is 120,000 USD.

Now, we have to list out different costs included in Research and Development Expenses to be included in the income statement.

<em>For R&D expenses, we need to look for costs that are directly related to R&D and add up those costs to calculate the R&D Expense that Delaware should report in its 2021 income statement. </em>

Following cost components will be added together for the Research and Development Expenses:

1. Depreciation For 2021 = 120,000 USD

2. Materials Used in R&D projects = 200,000 USD

3. Fees paid to third parties for R&D projects = 320,000 USD

4. Salaries and wages for lab research = 400,000 USD

Total R&D Expense = 120,000 + 200,000 + 320,000 USD + 400,000 USD

Total R&D Expense = 1040000 USD to be reported in 2021 income statement.

7 0

3 years ago

What’s the purpose of balancing or monitoring your checking account everfi

alexgriva [62]

The purpose of balancing or monitoring your account is to make sure that your money stays safe and that your account is safe from any stolen information. If you were to find any signs of stolen identity or money from your account, you would be able to report the problem earlier instead of unknowingly have this happen and find out many weeks later what is happening to your account.

8 0

3 years ago

A new firm is developing its business plan. It will require $565,000 of assets, and it projects $452,800 of sales and $354,300 o

lbvjy [14]

Answer:

58.11%

Explanation:

Sales = $452,800

Operating costs= 354,300

Operating Income (EBIT) = $98,500

TIE= 4.00

Maximum interest expense= EBIT/TIE= $24,625

Interest rate= 7.50%

Max. debt =Max interest/Interest rate = $328,333

Maximum debt ratio=Debt/ Assets= 58.11%

6 0

3 years ago