Answer:
$4,420,000
Explanation:
Data provided as per the question
Bond issue value = $13,000,000
Tax rate = 34%
The computation of present value of the tax shield is shown below:-
Present value of tax shield = Tax rate in percentage × Bond issue value
= 34% × $13,000,000
= $4,420,000
Therefore for computing the present value of the tax shield we simply multiply tax rate in percentage with bond issue value.
Answer:
a. Trade can make every person better off.
Explanation:
Trade generates a benefit for all parties trading. If a party do not fell like winning with trade, it will stop trading and the trade will not occur. It is important for each party to make sure the other wants to keep trading, so quantity and price will be based upon both parties agreement.
A person can trade for product she produces, for example a person who produce a certain fruit can buy the same fruit when is off-station in their side of the world with another producer.
It could also trade becasue is the raw material of a finished product and it need more input for his facilities.
If a person or a party who is trading thinks is worse than before the trade, then it will stop trading so, as long as there is trade, both parties are better off after the trade.
The answer is expert power.
Answer:
Firm should operate.
Explanation:
Here, we are assuming that this is a situation of short run.
A firm will operate or shut down is totally dependent upon whether the firm will be able to cover its variable cost of not. If a firm will be able to cover all of its variable cost then this firm will not shut down and operates in the short run until it covers all of its variable costs.
In this case, given that,
Total revenue = $1,000
Total cost = $1,500
Variable cost = $500
Profits = Total revenue - Total cost
= $1,000 - $1,500
= -$500
Therefore, this clearly shows that this firm will be able to cover its variable cost of $500 with the total revenue of $1,000. That's why the firm remains in the market even there is a loss of $500.
Hence, this firm should operate.