Answer:
Additional premium is 3%
Explanation:
Without debt the shareholders' rate is computed thus:
Ke=Rf+beta*(Mrp-Rf)
Ke=4.5%+1.0*(5%)
Ke=9.50%
With debt financing added to the capital structure, the equity beta changes to 1.6,the shareholders' expected return is computed thus:
Ke=4.5%+1.6*(5%)
Ke=12.5%
The additional premium required is the increase in expected return of 3%(12.5%-9.5%)
The 3% is to compensate the equity shareholders for taking the risk of getting little or no dividends at all because the debt-holders interest must be paid first
If
teamwork and support are high on your priority list, a closed corporation may
be a poor choice for a business.
A closed corporation is generally a smaller corporation, it means that it is held by a
limited number of shareholders and is not publicly traded. There are
many different types of corporations.
Answer:
c) produce in the short run but shut down in the long run.
Explanation:
Option C is correct because the price charged is above the average variable cost which means the firm is still covering its variable cost of production. Moreover, if the firm still continues the same in the long run then it will shut down its operation. But if the price charged is below or equal to average variable cost then the firm will shut down its production even in the short run.
Answer:
"Plea bargains" would be the correct approach.
Explanation:
- The mechanism by which a convicted criminal as well as lawyer arrive at a mutually agreeable conclusion of such a criminal proceeding needs to be approved by the judge.
- It is indeed a deal during which the offender seeks to make a reduced case guilty verdict and indeed the complainant offers to dismiss an even more severe punishment.
Based on the calculation below, incremental after-tax operating cash flow is $675,000
<h3>How to calculate incremental after-tax operating cash flow</h3>
This can be calculated as follows:
Profit before interest and tax = Revenue - Operating costs – Depreciation = $1,000,000 - $200,000 - $300,000 = $500,000
Operating income = Profit before tax – (Profit before tax * Tax rate) = $500,000 – ($500,000 * 25%) = $375,000
Therefore, we have:
Incremental after-tax operating cash flow = Operating income + Depreciation = $375,000 + $300,000 = $675,000
Learn more about cash flows here: brainly.com/question/18301011.
#SPJ1