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a_sh-v [17]
2 years ago
7

The business cycle affects output and employment in capital and durable goods industries more severely than in industries produc

ing non-durable goods because, ______. Multiple choice question. during a boom, business investment in new capital goods and consumer spending on new durable goods decline sharply during a recession, business and consumer spending on nondurable goods decline sharply during a recession, business investment in new capital goods and consumer spending on new durable goods rise sharply during a recession, business investment in new capital goods and consumer spending on new durable goods can be postponed
Business
1 answer:
Virty [35]2 years ago
6 0

Answer:

During a recession business investment in new capital goods and consumer spending on new durable goods can be postponed

Explanation:

The business cycle are simply cycles or series of cycles of economic expansion and contraction.

An Economic expansion is simply defined as an increase in the level of economic activity, goods and services available. It is a period of economic growth usually measured by a rise in real GDP.

Economic growth

Economic growth is an increase in the capacity of an economy to produce goods and services, usuallycompared from one period of time to another time.

The four phases of the business cycle are;

1. Peak

2.Recession

3. Trough

4. Expansion

The length of a complete cycle usually varies from 2-3 years to 15 years.

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The correct answers are A and C

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The factors which should be considered or taken into consideration while planning for funding the education are:

1. How much amount of debt the person or an individual is willing to incur- It means that the person or an individual need to consider that how amount of money is willing to borrow from bank, friends in order to fund the education.

2. How much project income of the person or an individual will go towards paying debt- It means that the person or an individual need to see that how much the project income of the person will be used for paying the debt.

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After a strong hurricane lashed the Caribbean last year, many impacted countries were forced to borrow money for repairs. Which
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3 years ago
Steinberg Corporation and Dietrich Corporation are identical companies except that Dietrich is more levered. Both companies will
valentina_108 [34]

Answer:

a-1.

Steinberg's debt:

Steinberg's equity:

a-2.

Dietrich's debt:

Dietrich's equity:

b. Disagree as the values of the two companies are the same ( please see below Explanation for further clarification)

Explanation:

It is clear to determine that the value of debt and equity of the two firms is the present value of cash flow received in 1 year, discounted at 12%.

a-1.

In one year:

- Debt holder of Steinberg will receive $910,000 regardless of its EBIT. -=> Thus, Steinberg's debt present value = 910,000 / 1.12 = $812,500

- Given the probability of expansion and recession, Steinberg's shareholder will receive the amount equal EBIT -  amount paid to its debt holders: 0.8 x (3,700,000 - 910,000) + 0.2 x (1,100,000-910,000) = $2,270,000.

=> Thus, Steinberg's equity present value = $2,270,000/ 1.12 = $2,026,786

=> Value of Steinberg = D+E = 812,500 + 2,026,786 = $2,839,286 ( note: no tax applied)

a-2.

In one year:

- Debt holder of Dietrich will receive $1,200,000 when the business expands while only $1,100,000 when the business goes into recession (i.e business loss is 100,000):  0.8 x 1,200,000 + 0.2 x 1,100,000 = $1,180,000

=> Thus, Dietrich's debt present value = 1,180,000 / 1.12 = $1,053,571

- Given the probability of expansion and recession, Dietrich's shareholder will receive the amount equal EBIT -  amount paid to its debt holders: 0.8 x (3,700,000 - 1,200,000) + 0.2 x (1,100,000-1,100,000) = $2,000,000.

=> Thus, Dietrich's equity present value = 2,000,000 / 1.12 = $1,785,714

=> Value of Steinberg = D+E =$1,053,571+$1,785,714  = $2,839,286( note: no tax applied)

a-3.

From the calculation, it is clear that the values of the two companies are the same.

6 0
3 years ago
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