1. Explain the characteristics of business.

Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. a) Busines

lbvjy [14]

Answer:

D) Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses.

Explanation:

The Federal Reserve (FED) can respond to excessive pessimism among consumers and businesses by expanding the money supply and lowering interest rates. To deal with excessive optimism they can do the opposite, they can shrink the money supply and increase the interest rate.

4 0

2 years ago

Why Corporations Hedge?

trapecia [35]

Answer:

A hedge is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. Managers hedge because they are undiversified

7 0

2 years ago

Westbrook's Painting Co. plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00% annual coupon, paid semiannual

xeze [42]

Answer:

The component cost of debt used to calculate the WACC will change by 0.70% if the new tax rate was adopted.

Explanation:

This can be calculated using the formula for calculating the component cost of debt used to calculate the WACC as follows:

CD = WD * PCD * (1 - t) ........................ (1)

Where;

CD = Component of cost of debt in WACC

WD = Weight of debt

PCD = Pretax cost of debt

t = tax rate

Note: Since information is provided for only the 20-year noncallable bond in the question, we assume that WD is 100% for simplicity purpose.

We can therefore proceed as follows:

a. CD When tax rate is 25%

Based on equation (1) and the assumption in the note, we have:

CD when t is 25% = Component of cost of debt in WACC = ?

WD = Weight of debt = 100%

PCD = Pretax cost of debt = 7%

t = tax rate = 25%

Substituting into equation (1), we have:

CD when t is 25% = 100% * 7% * (1 - 25%) = 5.25%

b. CD When tax rate is 15%

Based on equation (1) and the assumption in the note, we have:

CD when t is 15% = Component of cost of debt in WACC = ?

WD = Weight of debt = 100%

PCD = Pretax cost of debt = 7%

t = tax rate = 15%

Substituting into equation (1), we have:

CD when t is 15% = 100% * 7% * (1 - 15%) = 5.95%

c. the WACC change if the new tax rate was adopted

Change in WACC = CD when t is 15% - CD when t is 25% = 5.95% - 5.25% = 0.70%

Therefore, the component cost of debt used to calculate the WACC will change by 0.70% if the new tax rate was adopted.

4 0

3 years ago

In the circular flow model businesses demand products and supply resources.

MArishka [77]

This is false. In fact, in the circular flow model, it is the exact opposite for firms. These businesses supply products to the people buying them and demand resources (i.e., land, labor, capital) as a way of creating these products for the consumers.

3 0

2 years ago

Which of the following items are normally classified as current liabilities for a company that has a one-year operating cycle? (

mars1129 [50]

Answer:

Sales tax payable

FICA-social security taxes payable due in 40 days

Portion of long term note due in 1 month

Explanation:

Current Liabilities refer to obligations owed in a 12 month period. Anything longer is classified as Long Term.

From the options listed the current liabilities will therefore be;

Sales Tax Payable which are the taxes that the government charges on goods and services and it is the responsibility of business to collect these and remit them to the Government on time. This is a current liability as these are remitted quite frequently.

The FICA social security taxes payable due in 40 days is also a current liability due its time period being less than a year.

A portion of a long term loan due in a month will be considered current also due to its time period.

8 0

2 years ago

1. Explain the characteristics of business.​

1. Explain the characteristics of business.