Marginal revenue for a monopolist is computed as :
1 answer:
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Answer:
The solution to the given problem is given below.
Explanation:
1. Do you believe that the company needs outside financing?
Yes, Company needs outside finance total $ 40,000 as $25,000 in month of Feb and $15,000 in month of Apr il.
2. What is the minimum line of credit to request from a lender?
Minimum line of credit needed is $40,000
3. Do you think you are a good candidate for the line of credit? Why?
Yes, we are good candidate for line of credit because we can start repayment by May and repay by July and after repayment we will have ending March Cash balance $100,000 .
Detailed calculations are attached with the image.
Answer:
5.925%
Explanation:
For computing the cost of debt, first we have to determine the YTM by using the Rate formula that is shown in the attachment
Given that,
Present value = $1,050
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 8% = $80
NPER = 20 year - 1 year = 19 year
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 7.50%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 7.50% × ( 1 - 0.21)
= 5.925%
