Answer:
Pretax cost of debt is 8.58%
after tax cost of debt is 5.15%
After tax cost of debt of 5.15% is more relevant because that reflects the true cost of debt bearing in mind that debt has a tax advantage(tax shield).
Explanation:
The pretax cost of debt can be computed using the rate formula in excel as follows:
=rate(nper,pmt,-pv,fv)
nper is the number of coupons the bond would pay i.e 25years(years to maturity)*2=50
pmt is the semiannual coupon interest=$1000*7.8%*6/12=$39
pv is the present price of the bond=$1000*92%=$920
fv is the face value of $1000
=rate(50,39,-920,1000)=4.29%
Annual yield=4.29%*2=8.58%
after tax cost of debt=pretax cost of debt*(1-t)
t is the tax rate of 40%
after tax cost of debt=8.58%*(1-0.4)=5.15%
The accrued interest amount at the end of the accounting period is $16.67
I will prefer to know the OPERATING INCOME. Operating income refers to the operating profits of a company before the taxes and interests are removed. It reflects the true situation of the company and can be used to analyse if a company is making profits from its manufacturing process or not. The net income of a company has some expenses and costs that do not reflect the core operations of the company.
Answer:
The statement is: True.
Explanation:
Every time a company decides to open up businesses abroad, the must make a study in which the possibilities of success in the new region are highlighted. <em>Consumer behavior </em>and <em>buying patterns</em> are two of the main factors they have to consider as well as the <em>performance of the overall economy</em> of the country in the past years.
Answer:
True
Explanation:
A more precise way to describe the situation is that Joe's pizza parlor is a monopolistic competition. But that definition considers that all 'food' items have some degree of close substitute relation.
But yes, if you consider this two conditions:
- a broad definition of monopoly
- other restaurants are not considered close substitutes for the food sold at the pizza parlor
Then yes, Joe has monopoly