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Dmitrij [34]
3 years ago
10

Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt. The stock is

sue would have no effect on total assets, the interest rate Taggart pays, EBIT, or the tax rate. Which of the following is likely to occur if the company goes ahead with the stock issue?
a. The ROA will decline.
b. Taxable income will decrease.
c. The tax bill will increase.
d. Net income will decrease.
e. The times interest earned ratio will decrease.
Business
1 answer:
shutvik [7]3 years ago
4 0

Answer:

Option c. is correct

Explanation:

A stock is an investment that denotes an ownership share in a company. Purchasing a company’s stock means purchasing a small piece of that company that denotes a share.

In the given question, if the company goes ahead with the stock issue that would not affect total assets: the interest rate Taggart pays, EBIT, or the tax rate then the tax bill will increase.

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Botox Facial Care had earnings after taxes of $340,000 in 20X1 with 200,000 shares of stock outstanding. The stock price was $74
scoundrel [369]

Answer:

$1.7; 44 times

Explanation:

a) EPS(20X1):

= Earnings after taxes / Number of shares

= $340,000 / 200,000

= $1.7

P/E ratio(20X1):

= Price / EPS

= $74.80 / $1.7

= 44 times

EPS(20X2):

= Earnings after taxes / Number of shares

= $378,000 / 200,000

= $1.89

P/E ratio(20X2):

= Price / EPS

= $83.00 / $1.89

= 43.92 times

3 0
3 years ago
If the money supply increases 12 percent, velocity decreases 4 percent, and the price level increases 5 percent, then the change
dimaraw [331]

Answer: Option (A) is correct.

Explanation:

Given that,

Money supply increases (M) = 12 percent

Velocity decreases (V) = 4 percent

Price level increases (P) = 5 percent

Real GDP (Y) = ?

According to the quantity theory of money,

Percent Change in M + Percent Change in V = Percent Change in P + Percent Change in Y

                                                         12% - 4% = 5% + Percent Change in Y

                                    Percent Change in Y = 8% - 5%

                                                                         = 3%

Therefore, change in real GDP must be 3%.

6 0
3 years ago
International data show a positive correlation between income per person and the health of the population.
Y_Kistochka [10]

Answer:

True

Explanation:

In the case when the person income is high so he have an opportunity to have a good food, healthy environment, health care, etc this represents that the higher income defines the good health and if a person is healthy so he would work in efficient way as compared with the sick person

Therefore the given statement is true

3 0
3 years ago
William Welsh, a former Air Force pilot, decides to operate a helicopter tour company to provide customers with breathtaking vie
vekshin1

Answer:

labor

Explanation:

There are four factors of production; land, labor, capital and entrepreneurship:

  • William is the entrepreneur,
  • Capital accounts for the helicopters, facilities and the advertisement.
  • Land in this case is the plot of land where the business will be located.
  • But who will fly the helicopters and perform maintenance operations? Who will sell the tours and perform administrative tasks? William will not fly the 5 helicopters himself, perform maintenance operations and sell the tours.

8 0
3 years ago
Read 2 more answers
The Nixon Corporation’s common stock has a beta of 1.7. If the risk-free rate is 4.8 percent and the expected return on the mark
Archy [21]

Answer:

13.64%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4.8% + 1.7 × (10% - 4.8%)

= 4.8% + 1.7 × 5.2%

= 4.8% + 8.84%

= 13.64%

The (Market rate of return - Risk-free rate of return)  is also called market risk premium

6 0
3 years ago
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