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3 years ago

Successful use of financial leverage requires a firm to:

Business

1 answer:

Y_Kistochka [10]3 years ago

8 0

Answer: d. earn a higher return on its investments than the interest rate it pays to acquire funds.

Explanation:

When firms borrow money they usually do it with one thing in mind, that is to maximise or to make more profit. They believe that with the borrowed money they can improve the operations of the business and therefore make higher returns.

Seeing as they would have to pay the bank or financial institution they lent the money from a certain amount of interest, it would be within their best interests to make enough money from their investments to pay off the leverage. Not only also, do they have to make enough to pay off the loan but they have to make higher than that so that they can actually make a profit after paying off the interest on the leverage.

This is why their investments must give a higher rate return than the interests rate they pay for the leverage.

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You are considering in investing one of the two options: Investment A requires a $255,000 upfront payment from you and generates

Ainat [17]

Answer:

Option (E) Never

Explanation:

NPV from Investment Project 1 = ($255,000) + $21,000 / (r)

NPV from Investment Project 2 = ($175,000) + $29,000 / (r)

The question says that find the number of years that equals the total return which means the NPV from both investments is equal:

($255,000) + $21,000 / (r) = ($175,000) + $29,000 / (r)

$21,000 / (r) - $29,000 / (r) = $255,000 - $175,000

-$8000 / r = $80,000

r = - 8000 / 80000 = -0.01 = - 10%

The negative sign shows that project A can not make a positive NPV that will be equal to that of project B and vice versa. It can also be illustrated by putting the value of r in "NPV from Investment Project 1"

NPV from Investment Project 1 = ($255,000) + 21000 / -0.01

= ($255,000) - $210,000 = ($465,000)

This shows that the company will have to make losses of $465,000 which is not possible because company will not select projects with negative NPVs.

3 0

3 years ago

All businesses encounter difficulties and must deliver bad news. Bad news can be disappointing, irritating, and even maddening t

Stella [2.4K]

Answer:

The correct option is A

Explanation:

In order to reduce the bad feelings which are linked with the negative messages, one must make sure that the receiver knows the reason for the rejection and feels the news was sensitive and also believes that the matter was handled carefully and fairly.

A negative message which is insincere could be irritating, maddening and frustrating to the receiver. So, the message should not lead the reader to trust or believe.

5 0

2 years ago

If an economy is producing at a point on its production possibilities frontier, it is: a.efficient in production and allocation.

irinina [24]

Answer:

d.efficient in production but not necessarily in allocation.

Explanation:

The production possibility curve portrays the cost of society's choice between two different goods. An economy that operates at the frontier has the highest standard of living it can achieve, as it is producing as much as it can using the same resources. If the amount produced is inside the curve, then all of the resources are not being used.

- all points on the curve are points of maximum productive efficiency

- However, an economy may achieve productive efficiency without necessarily being allocatively efficient. Market failure (such as imperfect competition or externalities) and some institutions of social decision-making (such as government and tradition) may lead to the wrong combination of goods being produced (hence the wrong mix of resources being allocated between producing the two goods) compared to what consumers would prefer, given what is feasible on the PPF.

8 0

2 years ago

When the store hires two workers, they are able to serve 16 customers per hour. When the store hires three workers they are able

kotegsom [21]

Answer: $24

Explanation:

Given that,

Two workers serve = 16 customers per hour

Three workers serve = 22 customers per hour

Each customer spends an average of $4 in the store.

Total revenue from Two workers = 16 × $4

= $64

Total revenue from Three workers = 22 × $4

= $88

Therefore, the marginal benefit of hiring the third worker would be:

= Total revenue from Three workers - Total revenue from Two workers

= $88 - $64

= $24

7 0

3 years ago

In the ________, the perfectly competitive firm will react to profits by ________

ElenaW [278]

In the long run, perfectly competitive firms will react to profits by increasing production.

Firms in a perfectly competitive world earn zero profit in the long run. While firms can earn accounting profits in the long run, they cannot earn economic profits.

In the long run, perfectly competitive firms will react to profits by decreasing production. CORRECT: In the long run, perfectly competitive firms will respond to losses by exiting the market. In the long run, perfectly competitive firms will respond to losses by reducing production.

A perfectly competitive market achieves long‐run equilibrium when all firms are earning zero economic profits and when the number of firms in the market is not changing.

In the long run, profits and losses are eliminated because an infinite number of firms are producing infinitely divisible, homogeneous products. Firms experience no barriers to entry and all consumers have perfect information.

Learn more about a perfectly competitive firm here: brainly.com/question/25327136

#SPJ4

8 0

1 year ago