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3 years ago

The use of debt in the firm's capital structure will increase ROE if the firm:_____.

Business

1 answer:

DIA [1.3K]3 years ago

8 0

Answer: c. earns a higher return than the rate paid on debt.

Explanation:

If the debt that the company incurs leads to the company making more money than they are paying as interest for the debt, then more money will be available as net income which would increase the Return on Equity.

ROE is calculated by dividing the Net Income by Shareholder equity. Interest is an expense. If this expense is lower then the increase in net income as a result of the debt then it follows that net income would increase and so would ROE.

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Evaluate an open economy from the spending approach in order to get the three sectorial balances, private, external, and public.

velikii [3]

Answer:

GDP for an open economy from the spending approach follows this equation:

GDP = Consumption + Investment + Government Spending + Net Exports (Exports - Imports)

It can also be written as:

GDP = C + I + G + NX (X - N)

The balance of private consumption is simply equal to C, the balance of public spending is G, and the balance of the external sector is net exports or NX.

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2 years ago

Which statement best describes the difference between a market and traditional economy

icang [17]

Answer: in a traditional economy, decisions are based on habit and custom

Explanation:

4 0

8 months ago

If the contribution margin is not sufficient to cover fixed expenses: a. total profit equals total expenses. b. a net operating

erik [133]

Answer:

Option b. a net operating loss occurs.

Explanation:

contribution margin is simply known to be that portion of sales revenue that is yet to be consumed by variable costs and so is an addition to covering the fixed costs. The higher the contribution margin ratio, the more smaller or fewer the units that will need to be manufactured to become profitable. In short, it is sales revenue minus fixed expenses.

3 0

3 years ago

Last year, Jose had to invest. He invested some of it in an account that paid simple interest per year, and he invested the rest

VladimirAG [237]

Answer:Please refer to the explanation section

Explanation:

The question is incomplete. We do not have the rate interest for both accounts. We also do not know how much is invested in each account. The question also has a typo, the question says "he invested some of it in an account that paid simple interest per year and invested the rest in an account that paid simple interest per year". We will make some assumption in order to provide a proper solution to this question

Assumptions:

Firstly we will assume he invested in a simple interest account and a compound interest account. assume

The total investment is $1000. $5000 is invested in each account.

Therefore the Present Value (PV) is $5000 for both accounts

Interest rate (R) is 10% per year for simple interest and 10% per per year Compounded monthly for compound interest account

Period (n) = 1 year

Simple Interest Account

Future Value (Simple Interest) = P(1 + Rn)

Future Value (Simple Interest) = $5000(1 + 0.10 x 1) = $5500

Interest from Simple interest account = 5500 - 5000 = $500

Compound interest Account

Future Value (Compound interest) = P(1 + R)^n

Future Value (Compound interest) = $5000(1 + 0.10/12)^12 = 5523.565337

Interest form Compound interest account = 5523.57 - 5000 = $523

compound interest account earned more interest than Simple interest Account

5 0

2 years ago

Read 2 more answers

A company has two departments, Y and Z that incur wage expenses. An analysis of the total wage expense of $40,000 indicates that

dusya [7]

Answer:

Dept. Y = $18,200

Dept. Z = $21,800

Explanation:

Wages expense for this question consist of direct wages and indirect wages. The direct wages are allocated to their respective departments while the indirect wages are apportioned between the two departments.

Therefore, first do the allocation then the remainder $24,000 is apportioned equally between the two departments, Dept. Y and Dept. Z.

Dept. Y Dept. Z

<u>Departmental wage expenses :</u>

Direct wages $6,200 $9,800

Indirect wages $12,000 $12,000

Total $18,200 $21,800

4 0

3 years ago