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skad [1K]
3 years ago
5

SME Company has a debt-equity ratio of .60. Return on assets is 7.5 percent, and total equity is $486,000. a. What is the equity

multiplier
Business
1 answer:
polet [3.4K]3 years ago
7 0

Answer:Equity multiplier=1.6

Explanation:

Debt equity ratio is given as  debt/equity , Therefore

Debt  = Debt equity ratio  X Equity

=0.60 x $486,000

= $291,600

The  Total assets given as Liability(debt+equity)  will now be

=$291,600+$486,000

=$777,600.

Therefore Equity multiplier, Total assets/Total equity

=(777,600/486,000)=1.6

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The financial system sees commercial enterprise cycle fluctuations in preference to slow, easy boom is a crucial trouble of Economic shocks.

The required details for Economic shocks in given paragraph

An financial surprise refers to any extrude to fundamental macroeconomic variables or relationships that has a considerable impact on macroeconomic effects and measures of financial performance, which includes unemployment, consumption, and inflation. Shocks are regularly unpredictable and are generally the end result of occasions concept to be past the scope of regular financial transactions. Economic shocks have full-size and lasting outcomes at the financial system, and, in accordance to actual commercial enterprise cycle theory (RBC), are concept to be the foundation purpose of recessions and financial cycles. Economic shocks are random, unpredictable occasions which have a full-size effect at the financial system and are due to matters outdoor the scope of financial models.

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6 0
1 year ago
According to federal law, an insurance company under the provisions of the Investment Company Act of 1940 must allow a variable
torisob [31]

Answer: 24 months

Explanation:

The law of the state allows for periods more than 24 months, a 2 years of conversion privilege is required by federal law.

7 0
3 years ago
Because your mother is about to retire, she wants to buy an annuity that will provide her with $75,000 of income a year for 20 y
siniylev [52]

The calculated present value of the annuity is $915,166.70.

Explanation and Solution:

Annuity is a collection of fixed payments made or earned either at the close or at the beginning of any term such that a significant initial payment or receipt may be turned into a set of comparatively minor payments or receipts. An annuity that lasts indefinitely is called perpetuity.

The formula for the present value of the annuity is given by:

P = \frac{1- (1+i)^{-n} }{i}  * R

Where;

R = annual payment = $75,000

i = interest rate = 5.25%

P = Present value of annuity

n = number of years = 20 years

P = \frac{1- (1+5.25)^{-20} }{5.25}  * 75,000

P = $915,166.70

5 0
3 years ago
The product is shown without a decimal point. Where should the decimal point be placed?
mojhsa [17]

Answer:

Answer:B Place the decimal point after 2

Explanation:

All you have to do is multiply 3.12 times 4

7 0
2 years ago
Breezy Company is considering the replacement of equipment that has a current book value of $340,000. Breezy has an oppprtunity
Rzqust [24]

Answer:

$340,000

Explanation:

A sunk cost is a cost that has already been incurred and cannot be affected by any decision that someone makes. E.g. once you pay an expense like rent, the cost will not be recovered or altered by any decision that you make. Sunk costs is simply money that has been spent and cannot be recovered.

7 0
3 years ago
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