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kolezko [41]
3 years ago
8

A municipal bond is paying a 6 percent annual yield. An equivalent risk corporate bond is paying 7 percent. Investors with a tax

rate of ________ or higher would prefer the municipal bond.
Business
1 answer:
masha68 [24]3 years ago
7 0

Answer:

14.29% or higher

Explanation:

Municipal bonds interest rates are tax free. Corporate bond rates however are have tac benefits through tax shield.

The formula for aftertax corporate bond rate = pretax rate(1-tax)

pretax rate = 7% or 0.07 as a decimal

aftertax rate(to be indifferent between the two) = 6% or 0.6

In order to be indifferent, the tax rate would be;

0.07 ( 1- tax ) = 0.06

0.07 - 0.07tax = 0.06

0.07 - 0.06 = 0.07tax

0.01 / 0.07 = tax

tax = 0.1429 or 14.29%

Therefore, Investors with a tax rate of 14.29% or higher would prefer the municipal bond.

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2345678

Explanation:

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3 years ago
Lester lent money to The Corner Store by purchasing bonds issued by the store. The rate of return that he and the other lenders
Alexxx [7]

Answer:

The correct answer is letter "E": cost of debt.

Explanation:

The cost of debt is the interest a company pays on its borrowings. It is expressed as a percentage rate. Also, the cost of debt can be calculated as a before-tax rate or an after-tax rate. Before interest is deductible for income taxes, the cost of debt is usually expressed as an after-tax rate.

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3 years ago
A credit to a liability account would happen upon the sale of a product because?
erastova [34]

A credit to a liability account would happen upon the sale of a product because the Merchandise that was sold is subject to state sales tax.

<h3>What do credit do to liabilities?</h3>

In accounting, a credit is always been positioned on the right side of an entry and it effect is that it increases liability, revenue or equity accounts and decreases asset or expense accounts.

Because the state sales tax is seen as expenses, then, a credit to a liability account would happen upon the sale of a product because the Merchandise that was sold is subject to state sales tax.

Read more about liability account

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6 0
2 years ago
The broccoli market is perfectly competitive. This means that the price of broccoli is ________ than the price would be if the m
LiRa [457]

Answer:

Price is lower than ; Quantity is higher than Monopolistic Competition

Explanation:

Perfect Competition is a market form with many buyers & sellers, selling homogeneous products at constant prices. Having uniform prices, It has perfectly elastic horizontal demand (Average Revenue) curve, ie = Marginal Revenue curve. Equilibrium price is where MR = MC ; So price = MC. This leads to optimal quantity supplied in market

Monopolistically competitive is market form having many sellers, selling slightly differentiated products, at different prices. Their demand curve (AR curve) is usually downward sloping, lies above the MR curve. Market equilibrium quantity is determined at MR = MC. The corresponding price is determine as per higher demand (AR) curve. Price > MC implies less than optimal quantity supplied in markets

Hence : Broccoli would be lower priced & higher supplied in case of perfect competition market, relatively higher priced  & less supplied in case of monopolistic competition market.

7 0
3 years ago
As a student in the Principles of Management class of Ama Ghana University, you are expected to have experiential knowledge so t
ser-zykov [4K]

Answer:

The organization structure is not clearly defined, Managers are performing duties in various departments at a time.

Explanation:

San Consulting is one of the finest consulting firm in the Greater Accra Region. The firm is always a first choice for individuals who want to pursue their career in business. The Organizational structure of San Consulting is not clearly defined. San's profits are falling because management practices are not according to the other competitive organizations. The managers working at San are facing excess workload and pressure for their work. Their job descriptions is not clearly defined and they are forced to work in multiple departments at the same time due to which they are losing focus on their own work.  

Questions 1: Planning, organizing, leading and controlling

Question 2: The organizational structure needs to be set and every employee should have their defined job role so they are able to complete work with efficiency.

Question 3: The profits of San consulting will rise as there will be less duplication of work and every employee will be able to focus on their own task and will work with efficiency.

Question 4: Matrix. The matrix organizational structure is not suited in this organization. The right organizational structure for San consulting will be Functional Structure.

Question 5: (i) The profits for San Consulting will decline

(ii) The profit will rise because employee will focus more on their specific tasks.

1B. Yes agree. The managers need to focus on the external environment as well to identify the opportunities and threats present which can stimulate changes for the organization.

8 0
3 years ago
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