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3 years ago

What does negative savings rate mean?

Business

1 answer:

Arada [10]3 years ago

4 0

Answer:

see below

Explanation:

The negative savings rate is when the bank's interests on deposits fall below zero percent. It means that banks should charge customers interest on savings rather than pay interests on customer deposits. The negatives savings rate is meant to encourage customers to consume more, as opposed to saving. The objective is to promote spending to boost the economy.

The negative savings rate encourages banks to give more loans. The banks find it more prudent to offer loans and earn interest instead of being charged for holding customer deposits.

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Problem 16-15 MM and Taxes [LO2] Meyer & Co. expects its EBIT to be $111,000 every year forever. The firm can borrow at 8 pe

Aleks04 [339]

Answer:

a) 12.87%

b) 11.03%

Explanation:

EBIT with no debt = $111,000

net income = $111,000 x (1 - 22%) = $86,580

total value of the firm with no debt = $86,580 / 12% = $721,500

value of the firm after debt is taken = $721,500 + ($165,000 x 22%) = $757,800

debt to equity ratio after debt is taken = $165,000 / ($757,800 - $165,000) = 27.834%

new cost of equity (Re) = 12% + [(12% - 8%) x 27.834% x (1 - 22%)] = 12.87%

WACC = (0.72166 x 12.87%) + (0.27834 x 8% x 0.78) = 9.288% + 1.737% = 11.025$ = 11.03%

4 0

3 years ago

A truck acquired at a cost of $285,000 has an estimated residual value of $14,100, has an estimated useful life of 43,000 miles,

777dan777 [17]

Answer:

a. $270,900

b. $6.30

c. $24,570

Explanation:

(a) The depreciable cost = $270,900

(b) The depreciation rate = $6.30

8 0

3 years ago

An investor is in a 30% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what yield must municipals

Yuki888 [10]

Answer:

0.063 or 6.3% (or more)

Explanation:

Given:

Combined Tax Bracket = 30% = 30/100 = 0.30

Yields of corporate Bonds = 9% = 9/100 = 0.09

Yield to Shift Investors to choose municipal bonds = ?

Calculation:

Yield from corporate bond = (After tax yield) x Yield rate of corporate Bonds

= (0.70) x (0.09)

= 0.063 or 6.3%

Working note:

After tax yield = (1 - tax rate )

After tax yield = (1 - 0.30 )

After tax yield = (0.70)

so, they must give 6.3% yield

7 0

3 years ago

Tyra owns a nail salon that’s located in a strip mall. Her rent every month includes $1,800 base rent and 10% of her gross sales

Sliva [168]

Answer:

The right answer is percentage lease.

Explanation:

A percentage lease can be defined as the lease in which the person who takes the place on rent has to give a fixed base rent plus some percentage of the total sales.

In the given scenario, Tyra is giving the base rent plus 10% of her total sales as monthly rent to the owner which corresponds to the percentage lease.

Hence, the most appropriate answer is percentage lease.

6 0

3 years ago

International Data Systems' information on revenue and costs is relevant only up to a sales volume of 106,000 units. After 106,0

cupoosta [38]

Answer:

Option A. $792,000

Option B. $211,800

Explanation:

At the level 106,000 Units, the price per unit and variable cost per unit will remain at $16 and $8 per unit.

Option A.

Sales (106,000 Units * $16) $1,696,000

Variable cost (106,000* $8) $848,000

Fixed costs $56000

Operating Profit $792,000

Option B.

When the production exceeds 106,000 units level, the price per unit and variable cost per unit will remain at $9.8 and $8.5 per unit.

Sales (206,000 * $9.8) $2,018,800

Variable cost (206,000 * $8.5) $1,751,000

Fixed costs $56,000

Operating Profit $211,800

The profit has been decreased substantially due to increase in Marginal cost.

7 0

3 years ago