1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Hoochie [10]
3 years ago
11

Which of the following statements does correctly explain the effect of additional debt on the weighted average cost of capital (

WACC)? Debtholders’ prior and "fixed" claim decreases the risk of stockholders’ "residual" claim, so the cost of stock (rs) goes down. Additional debt decreases the pre-tax of cost of debt (rd) because the decresaed risk of bankruptcy. The net effect of additional debt on WACC is to increase WACC. The net effect of additional debt on WACC is uncertain.
Business
1 answer:
Aleksandr-060686 [28]3 years ago
5 0

Answer: The net effect of additional debt on WACC is uncertain.

Explanation:

Weighted Average Cost of Capital (WACC) refers to the rate of return that a company is paying it's capital providers on average be it debt holders or shareholders.

Adding additional debt to the mix effects the WACC in an uncertain way due to the different ways the WACC could react. For example, adding additional debt decreases the after-tax cost of debt because debt is tax deductible which means that more money can flow to shareholders so that reduces the cost of equity. At the same time however, Additional debt can increase the risk of bankruptcy meaning that the before tax cost of debt rises which also increase the WACC.

The effect can swing either way thereby making it uncertain.

You might be interested in
Thomas Malthus’s predictions turned out to be wrong due to:
just olya [345]

Answer:

The correct answer is letter "A": technological advances such as those during the Industrial Revolution.

Explanation:

British Anglican clergyman and erudite Thomas Malthus (1766-1834) believed the<em> population would grow geometrically, while food production would grow arithmetically. In such a way scarcity will appear in the long run that will require a decrease in the birth rate</em>. However, Malthus's theory has been proven to be wrong so far due to the introduction of technological advances attributed to the Industrial Revolution by the second half of the 18th century which allowed mass-production of goods.

8 0
3 years ago
Two countries, cadmia and palladia, have formed a free trade agreement. this has resulted in cadmia importing sugar from palladi
Verizon [17]
This is an  example of "trade diversion".

Exchange redirection is a monetary term identified with global economic aspects in which exchange is occupied from a more productive exporter towards a less proficient one by the arrangement of free trade agreement. In a international trade circumstance, a business that can offer a lower cost item for importation into a specific nation has a tendency to make an exchange redirection far from another importer or nearby makers whose costs are higher for a comparative item. 
8 0
3 years ago
Market equilibrium is: Select one: a. the point at which a nation reaches full employment b. the time period used to determine t
fenix001 [56]

Answer:So far we have learned to measure real GDP, but how do we end up with that real GDP? Of all of the different amounts of national income and price levels that might exist, how do we gravitate toward the one that gets measured each year as real GDP?

In short, it is the interaction of the buyers and producers of all output that determines both the national income (real GDP) and the price level. In other words, the intersection of aggregate demand (AD) and short-run aggregate supply (SRAS) determines the short-run equilibrium output and price level.

Once we have a short-run equilibrium output, we can then compare it to the full employment output to figure out where in the business cycle we are. If current real GDP is less than full employment output, an economy is in a recession. If current real GDP is higher than full employment output, an economy is experiencing a boom. If the current output is equal to the full employment output, then we say that the economy is in long-run equilibrium. Output isn’t too low, or too high. It’s just right.

Explanation: hope this helps

6 0
2 years ago
Accounts receivable are shown as _____ in the AR customer file.
Nikolay [14]

Answer:

credits

Explanation:

i guess eeeeeeeeeee

5 0
2 years ago
Read 2 more answers
Disparate treatment could be legal if the discrimination: a. results in increased efficiency. b. is performed by a governmental
marta [7]

Answer:

The correct answer is D

Explanation:

Disparate treatment is the treatment which differing conduct or performed toward the individuals, where the differences are grounded on the individual age, colour, national origin, race, disability or religion status.

This treatment would be legal if the discrimination would be BFOQ (termed as bona fide occupational qualification), the courts must have held that in few situations that the factor like sex or religion might be BFOQ, which is important qualification for performing a job.

7 0
3 years ago
Other questions:
  • For the execution of a successful communication strategy, staff synchronization _____.
    7·2 answers
  • What is the best order to look for funding sources
    5·1 answer
  • Which entity within the federal government is responsible for arranging economic and humanitarian aid to foreign countries?
    8·2 answers
  • Brown and Peterson studied how well participants can remember groups of three letters (like BRT, QSD) after various delays. They
    6·1 answer
  • yyyytttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttyutttttyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyytyyttt
    6·2 answers
  • Q.23 :-Your Boss says- ' I want the job done, I do not have time to listen to your
    5·1 answer
  • An
    7·1 answer
  • Despite Alisa’s request for a 7% wage increase for workers with seniority, Katherine flat out rejects the request and cites the
    14·1 answer
  • Question 18 of 20
    9·1 answer
  • Ali had previously calculated the Economic Order Quantity required to efficiently control costs at his company. His calculations
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!