Answer:
EV = -$400
The expected value of buying the insurance policy is -$400
Explanation:
Expected value of buying the insurance policy;
EV = expected benefits - insurance cost
EV = xE - C
chances of collection being damaged x = 10% = 0.1
Insurance cost C = $500
Benefit E = $1000
Substituting the values;
EV = 0.1 × 1000 - 500 = 100 - 500
EV = -$400
The expected value of buying the insurance policy is -$400
Answer:
A) It is a use of cash, and will be shown in the investing section as a subtraction.
B) Depreciation Expense
C) Chester’s long-term debt will rise by $10,000,000
D) Broad differentiation
E) Andrews ROE will increase.
Explanation:
A) As the company will do a cash dibursement will be considered cash use and because is investing on it to increase future cash flow
B) A period cost is a cost which cannot be capitalized into an asset. As cost which occur as the time passes over the years Which is the case for depreciation expense
C) bonds payable for 10,000,000 will be recorded
the leverage is a ratio to analize the firm it does not influence the accounting
D) The company differenciate his products from the rest of their competitors in a great variety of products rather than a single buyer segment.
E) ROE will increase as the leverage makes the debt weight increase while the equity weight (proportion of the company owned by the stockholders)
For the rest ofthe options the information provided is insufficient please do another question with the information
Answer: the question is: How do you measure whether both the policy and the right processes were followed?
Explanation:
Answer:
After cost of debt for a floatation cost of 2% is 6.62%
Explanation:
After tax cost of debt = Market interest × (1- tax rate)
We will get the cost of debt using the time value of money principle.
PV = -$1,000
Pmt = $1,000 × 9%
=$90
P/yr = 1
N = 20
FV =1,000
Tax rate = 25%
YTM
The market interest rate is 9% using financial calculator hence;
After-tax cost of debt = Market interest × (1-tax rate)
= 0.09 × (1 - 0.25)
= 0.0675 or 6.75%
If floatation cost is 2%, then
Net receipts after floatation cost = Cost × (1 - floatation rate)
= 0.0675 × (1- 0.02)
= 0.06615 or 6.62%
Answer: tend to self correct and the decline would be cushioned.
Explanation:
The permanent income hypothesis is simply refered to as a theory that relates to consumer spending which states that individuals will spend money based on the disposable income that they expect in their lifetime.
According to Classical economists, the permanent income hypothesis was an argument supporting their view that, during a recession, the economy would tend to self correct and the decline would be cushioned.
