Answer:
Interest rates would rise.
Explanation:
There would be a decrease in the amount of loanable funds borrowed.
if the government were to increase the tax on interest income, a reduction in the amount of funds borrowed would happen because the cost of borrowing would then become higher and people would have to pay more than they would have paid for every amount borrowed
Answer:
The correct answer is $80 million.
Explanation:
According to the scenario, the computation of the given data are as follows:
First debt, Book value = $40 million
Second debt, Book value = $40 million
So, we can calculate the company's total book value by using following formula:
Total book value = First debt, Book value + Second debt, Book value
= $40 million + $40 million
= $80 million
No significant interest equity investment
<h3><u>
Explanation:</u></h3>
A technique used in accounting by a firm for the purpose of recording the profits that are obtained from its investments made on other company refers to an equity method. This investment is an equity investment. The profits that are obtained for the investments made by a firm is reported by the company to the firm that made the investment.
In the scenario given, Intervale Railway y is considering investing in Pale Co. stock for three months which is only 5% of the voting stock of Pale Co. For considering it to be a significant investor, more than 20% and less than 50% of the voting stock must be held by the firm. The firm is holding 5% of the voting stock and hence the investment is considered to be No significant interest equity investment.
