Answer:
Explanation:
The Hamada equation is given as:
given that:
= 1.15, T = tax rate = 40% = 0.04, equity = $11.4 million, debt = $7.6 million.
The debt to equity ratio D / E = debt / equity = $7.6 million / $11.4 million = 0.67
Substituting values:
Answer:
Unter Corporation
1. The payback period of the investment is:
= 5 years.
2. No. The payback period would not be affected if the cash inflow in the last year were several times as large. The payback period was reached in the 5th year, which is half-way before the last year. As it stands, no cash inflows after the 5th year will have any impact on the payback period.
Explanation:
a) Data and Calculations:
Cash flows:
Year Investment Cash Inflow Cumulative inflow
1 $ 42,000 $ 3,000 $3,000
2 5,000 $ 6,000 9,000
3 $ 12,000 21,000
4 $ 14,000 35,000
5 $ 16,000 51,000
6 $ 15,000
7 $ 13,000
8 $ 11,000
9 $ 10,000
10 $ 10,000
Total $47,000 $110,000
<span>Correct answer is "C". An opportunity cost is the the loss of the next best alternative when one alternative is chose. If two choices are mutually exclusive (you can have one but not the other), then choosing one means the loss of the other activity is the opportunity cost. Opportunity cost is not merely the money or financial cost difference between two options (choice b) but also covers the lost time (option d) or pleasure (option a) as another option may provide more of either (therefore having increased utility).</span>
Answer:
Increase in government purchases will have a larger impact om real gross domestic.products.
Explanation:
Consumers' behaviors are unpredictable and they also have a choice between spending the increase in their disposable income due to the decrease in personal taxes and saving.
Consumers can choose to save this increase rather than spending it. And when it is saved it has little impact real gross domestic product.
Whereas if it is government, increase government purchases has direct impact on real gross domestic product. Its multiplier's effect is larger than that of the consumers'