Answer:
d. decrease the firm's WACC.
Explanation:
As per WACC formula
WACC = ( Weight of Common Equity x Cost of Common Equity ) + ( Weight of Common Debt x Cost of Common Debt x ( 1 - Tax rate ) ) + ( Weight of Preferred Equity x Cost of Preferred Equity )
By assuming the values to prove the answer
Weights
Common equity = 55%
Preferred Equity = 15%
Debt = 30%
Costs
Common equity = 15%
Preferred Equity = 8%
Debt = 12%
Tax rate is 15%
Placing values in the formula
WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 15% ) ) + ( 15% x 8% )
WACC = 8.25% + 3.06% + 1.2% = 12.51%
Keeping others values constant, Now increase the Tax rate to 25% and placing vlaues in the formula
WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 25% ) ) + ( 15% x 8% )
WACC = 8.25% + 2.7 + 1.2% = 12.15%
Hence the WACC is decreased from 12.51% to 12.15% when the tax rate is increased from 15% to 25% keeping other values constant.
Answer:
To reduce the chance of fraud.
Explanation:
An appropriate practice to reduce transaction fraud would be "traceability," which is the ability to track and follow the supply chain of some manipulation. This greatly helps prevent fraud and loss of information.
Financial frauds are actions that a person performs in order to obtain a profit of their own at the cost of damage the economy of another.
Answer:
4. free-market economy
Explanation:
Free-market economy -
A free market refers to the economic system which depends on the demand and supply , where the control of government is nil , is referred to as free - market economy.
It helps to provide all the voluntary exchange occurring in the economy.
The range of the free market economy of a particular country , is present in between very large or completely black market.
Hence, from the given statement of the question,
The correct term is free - market economy.
Answer:
Future value equals the present value multiplied by one plus the rate of interest in decimals.
Explanation:
Future value = present value x (1 + interest rate)
Interest rate = present value x interest rate
