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Aleks [24]
2 years ago
8

A firm is considering two different capital structures. The first option is an all-equity firm with 75,000 shares of stock. The

second option is 50,000 shares of stock plus some debt. Ignoring taxes, the break-even level of earnings before interest and taxes between these two options is $95,000. How much money is the firm considering borrowing if the interest rate is 8 percent
Business
1 answer:
Contact [7]2 years ago
6 0

Answer:

$395833

Explanation:

Calculation to determine How much money is the firm considering borrowing if the interest rate is 8 percent

Amount to borrowed=(95000 / 75000) = [95000 – (X * 0.08)] / 50000

Amount to borrowed=1.26 = [95000 – (X * 0.08)] / 50000

Amount to borrowed=63333.33 = 95000 – (X * 0.08)

Amount to borrowed=31666.65 = X * 0.08

Amount to borrowed=X=31666.65/0.08

Amount to borrowed=$395833.33

Therefore How much money is the firm considering borrowing if the interest rate is 8 percent will be $395833

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For a bank, when a person deposits money into the bank, this: a creates a liability and an asset for the bank. b creates a liabi
Blizzard [7]

Answer:

The answer is A.

Explanation:

Bank deposits from customers create both a liability and an asset for the bank.

1. As a liability: The deposit is the customer's money. The bank is keeping the money for the customer. The customer can withdraw the fund any time.

2. As an asset: The money deposited by the customer can be used by the bank to generate revenue pending when the customer withdraws the money. The money not yet withdrawn by customers is still in the possession of the bank and the bank controls it.

8 0
2 years ago
Data related to the inventories of Mountain Ski Equipment and Supplies is presented below:
guajiro [1.7K]

Answer:

<em>b. $ 90,000.</em>

Explanation:

Net realizable value(Market value) for apparel=Selling price minus associated selling expenses e.g sales commission.

Market value for  Apparel= $ 120,000-(120,000*10%)

                                          =$ 120,000-12,00

Market value for  Apparel =$108,000

Apparel cost=$90,000

The lower of the above costs is $90,000.

Lower of cost or market is one of approaches of valuing and reporting inventory. Ending inventory is usually stated at historical cost. When original cost of the ending inventory is greater than the net realizable value, meaning that the inventory has lost value. The inventory has decreased in value below historical cost, then its carrying value is reduced and reported on the balance sheet. The method for reporting this is called current market value.

4 0
3 years ago
How are bonds payable usually classified on the balance sheet?
earnstyle [38]

Bonds payable that are <u>long-term obligations</u> are typically recorded on the balance sheet.

<h3><u>How do long-term liabilities work?</u></h3>

Long-term liabilities are debts owed by a business that won't be paid off for at least a year. To give a clearer picture of a company's present liquidity and its capacity to meet its obligations as they come due, the current part of long-term debt is broken out separately from other debt.

Long-term liabilities are also referred to as noncurrent liabilities or long-term debt. The balance sheet's part that may include debentures, loans, deferred tax liabilities, and pension obligations is where long-term liabilities are stated following more immediate liabilities.

Liabilities that are greater than one year in duration or that are not due within the next 12 months are referred to as long-term liabilities. The time it takes a business to convert its inventory into cash is known as its operational cycle.

Learn more about long-term liabilities  with the help of the given link:

brainly.com/question/17283456

#SPJ4

7 0
1 year ago
Another bank is also offering favorable terms, so Rahul decides to take a loan of $22,000 from this bank. He signs the loan cont
Wittaler [7]

Answer:

$22,897.74

Explanation:

Given:

Loan amount (P) = $22,000

rate (R) = 8% = 8/100=0.08/365 = 0.000219178082

Number of days(n) = 6 month = (6 x 365)/12 = 182.5

Total Amount = ?

A = P(1+ I)^n\\A = 22,000(1+0.000219178082)^{182.5}\\=22,000(1.000219178082)^{182.5}\\=22,000(1.04080658)\\= 22,897.744

Therefore, he have to pay $22,897.74 to the bank.

5 0
3 years ago
Karen runs a print shop that makes posters for large companies. it is a very competitive business. the market price is currently
jeka94
<span>She has fixed costs of $250. Her variable costs are $1,000 for the first thousand posters, Her variable costs are $800 for the second thousand Her variable costs are $750 for each additional thousand posters. To calculate Average fixed cost that is AFC per poster we need two factors: Total fixed cost = 250 and Number of poster = 1000 So now AFC will be (250/1000) that is 0.25.</span>
6 0
3 years ago
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