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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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v91. If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is

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The real exchange rate is 1 dollar = 2 Argentine pesos

The exchange rate is an economic term to refer to the relationship between two currencies. The exchange rate establishes the proportion of value that exists between two currencies. For example:

1 Dollar is equivalent to 4 Argentine pesos

However, this rate does not represent reality in some places, there may be situations in which the proportions established by the exchange rate are not faithful to reality. For example:

3 Dollars or 6 Argentine pesos are used to buy 1 gallon of milk.

In this example, it is evident that in reality, the dollar is not equivalent to 4 Argentine pesos but to 2 due to the proportion of value concerning a product. Therefore, the real exchange rate is 2 Argentine pesos for every American dollar.

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3 years ago

Larkspur, Inc. had net sales in 2020 of $1,447,100. At December 31, 2020, before adjusting entries, the balances in selected acc

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Answer:

The entry to record bad debt expense:

Debit Bad debts expense $24,446

Credit Allowance for Doubtful Accounts $24,446

Explanation:

1. At December 31, 2020,

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Before adjusting, Allowance for Doubtful Accounts had a debit balance of $1,940. So Bad debt expense will be: $1,940 + $22,506 = $24,446

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3 years ago

The Cole Beverage Company (CBC) has a soft drink product that has a constant annual demand of 3,600 cases per year. A case of th

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Answer:

a. 480

Explanation:

The computation of the economic order quantity is given below:

$EOQ = \sqrt{\frac{2\times annual \ demand \times ordering\ cost }{carrying \ cost}} \\\\= \sqrt{\frac{2\times 3600\times \$32}{\$1} }$

= 480 units

The carrying cost could be determined below:

= $4 × 25%

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hence, the carrying cost is $1

Therefore the economic order quantity is 480

Thus, the correct option is a.

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Prepare the journal entry to record autumn company’s issuance of 63,000 shares of no-par value common stock assuming the shares:

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