"Eastern Corporation has $21,000,000 in equipment that has a 15 year class life. The equipment is 8 years old. Eastern is sellin
g the equipment for $10,000,000. Eastern uses simplified straight line depreciation (zero salvage value) and has a marginal tax rate of 34%. What is the terminal cash flow? Assume no working capital."
I would recommend Ladder because it is easy to apply. If they don't like it they have a 30 day cash back and can decrease or increase your coverage over time.
Money multiplier refers to the reciprocal of required reserve ratio.
The formula for determining money multiplier is as follows:
= 1 ÷ Reserve requirement ratio
If the households are desired to hold more currency in hand then as result the there will be leakage in the form of households holding cash with themselves.
Hence, this will lead to decrease the money multiplier because of higher reserve requirement ratio for the banks.
