Answer:
c) the marginal cost of capital
Explanation:
The cost which a company bears to add one dollar / unit of capital is called marginal cost. We know that the company raise funds through different sources which can be debt from banks and stocks (common and preferred). This process of raising capital involves a cost which is termed as marginal cost of capital or the cost required to raise an additional unit of capital.
Answer:
the net book value of the asset halfway through its useful life will be less than if straight-line depreciation is used.
Explanation:
Let me use an example to illustrate this.
An asset has a useful life of 4 years. It costs $1000. It has a salvage value of 0
If the straight line depreciation method is used , the depreciation expense every year = $1000/ 4 = $250
The net book value halfway through its useful life = $1000 - ($250 x 2) = $500
If double declining method is used, the depreciation expense in the first year would be = 2/4 x $1000 = $500
The net book value at the beginning of year 2 = $1000 - $500 = $500
Depreciation expense in year 2 = 2/4 x $500 = $250
The net book value at the beginning of year 3 = $500 - $250 = $250
We can see that the net book value halfway through the useful is lower when double declining depreciation method is used
Answer:
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A step lease covers the landlord's expected increases in expenses by increasing the rent on an annual basis over the life of the agreement.
