Answer:
The correct answer is D. The Tradeoff Theory suggests that a firm should choose a debt level where the tax savings from increasing leverage are just offset by the increased probability of incurring the costs of financial distress.
Explanation:
The trade-off theory of capital structure states that companies choose their leverage ratio to maximize benefits and minimize costs. The classic version of the hypothesis goes back to Kraus and Litzenberg, who observed a balance between the risk of loss of welfare from impending bankruptcy and the tax benefits of outside capital. In the trade-off theory, debt and equity financing are calculated in such a way that the present value of the tax shield is as large as possible and the present value of the costs of “financial distress” is possibly small.
Answer:
Sam’s Home Store can enforce the contract against Restore Construction Company
Explanation:
In contract law, only the parties involved in a contract can take action to enforce the contract. In this case Sam' Home Store signed the contract with Restore, so they can enforce it. Any third party beneficiaries from the contract, like United Building Supplies, are not entitled to enforce anything.
Answer:
The correct answer is letter "D": the more substitutes a good has.
Explanation:
Price elasticity of demand is the result of the relation between changes in price and quantity demanded for a good or service. <em>Price elasticity of demand is calculated dividing the percentage change in quantity demanded by the percentage change in price.</em> If the result is equal to or greater than 1, the demand is elastic. This situation implies a minimum change in price will affect by far the quantity demanded of that good or service.
Thus,<em> products with many substitutes are elastic because a minimal change in their price would represent a large change in quantity demanded since consumers will find similar products that satisfy their needs in the same proportion.</em>
Answer:
Option (a) is correct.
Explanation:
Given that,
Equity = 140 Millions
Debt = 155 Millions
Debt Equity Ratio = Debt ÷ Equity
= 155 Millions ÷ 140 Million
= 1.11
KCE is financing its new project with 25 Millions
Let the New debt issued by x
and the New equity financed be (25-x)
.
Debt Equity Ratio = Debt ÷ Equity
1.11 = (155 + x) ÷ (140 + 25 - x)
1.11 = (155 + x) ÷ (165 - x)
183.15 - 1.11x = 155 + x
28.15 = 2.11 x
x = 13.34
Option (a) is the most nearest to this answer.
New Debt = 155 + 13.34
= 168.34 Millions
New Equity = 140 + 11.66
= 151.66 Millions
if you have a higher score you can get loans easy buy stuff and you will almost always qualify for the best interest rates
so the ANSWER:D
