Answer:
The answer is: C) Investment spending by businesses varies inversely with the interest rate.
Explanation:
This statement is true all the time. When a company evaluates the costs and benefits of an investment, interest rate plays a fundamental part in those calculations. The two basic reasons for that are:
- The higher the interest rate a company (or any individual) has to pay for a loan, the harder it is for the company to repay the loan.
- The interest rate a bank charges is usually correlated to the opportunity cost of an investment. The higher the interest rates banks charge, the higher the internal rate of return (which is used to calculate the Net Present Value of an investment) will be. This is because banks don´t print money, they take in deposits and then they loan the money the someone else. So if the interest rate the bank charges is high, usually the interest rates the bank pays for the deposits is also high. Instead of investing, a company might just put their money on the bank and earn a better return rate.
I believe the answer is A) A decrease in the cost in the goods and services.
Answer: 1. 18 times
2. Park is in better position
Explanation:
1. Times interest earned is a financial ratio that measures interest coverage. It's essentially to check if a company can pay it's debt payments and is calculated by either EBIT or EBITDA divided by the total interest expense. The higher the better and anything above 2.5 times is usually considered.
Calculating would therefore be,
= $6,120,000 /$340,000
= 18 times.
2. As mentioned in the first answer, for the Times interest earned, the higher it is, the more favourable it is. So Park Company will be considered safer and are most definitely in a better or worse position than its competitor to make interest payments if the economy turns bad. The fact that theirs is 18 means that they can pay off their interest expense 5 times more than their competitor who can only repay 12 times.
If you need any clarification do comment.
Joann, most likely, has Point of Services type of insurance plan. There are six types of the insurance health plans that differs by their premium and benefit. The HMO plan, the PPO plan, the EPO plan, and the Point-of-Service Plan (POS) are the types of insurance plan that shares a similar benefit. However, the POS plan gives the most freedom in term of health providers. Thus, POS plan is the most suitable answer.
