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4 years ago

Money obtained through various types of loans is called:

1 answer:

4 0

Borrowed money obtained through loans of various types is called debt capital. capital is a loan made to a company that is normally repaid at some future date. Debt capital is the loan that a business raises by taking out a loan.

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Great Subs Inc., a regional sandwich chain, is considering purchasing a smaller chain, Eastern Pizza, which is currently finance

tatuchka [14]

Answer:

WACC 13.85600%

Explanation:

First we calculate Eastern Pizza CAPM:

$Ke= r_f + \beta (r_m-r_f)$

risk free = 0.08

market rate = 0.12

premium market = (market rate - risk free) 0.04

beta(non diversifiable risk) = 2

$Ke= 0.08 + 2 (0.04)$

Ke 0.16000

Then we solve for WACC

$WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})$

Ke 0.16000

Equity weight 0.8

Kd 0.08

Debt Weight 0.2

t 0.34

$WACC = 0.16(0.8) + 0.08(1-0.34)(0.2)$

WACC 13.85600%

The company will use the data on eastern Pizza to evualuate project presented to it. Also, it will consider the new tax rate to determinate the tax shield.

3 0

3 years ago

Airborne Airlines Inc. has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest pa

ivann1987 [24]

Answer:

7.52%

Explanation:

First and foremost ,the yield to maturity on the old issue is computed using the rate formula in excel as calculated below:

=rate(nper,pmt,-pv,fv)

the nper is the number of times the bond would pay annual coupon interest of $106,which is 20 times

pmt is the amount of annual coupon payment which is $106

pv is the current price of the bond at $860

fv is the face value of the bond at $1000

=rate(20,106,-860,1000)=12.54%

The yield to maturity on the new issue is 12.54% as well

after-tax cost of debt=pretax cost of debt*(1-t)

pretax cost of debt is yield to maturity of 12.54%

t is the tax rate of 40% or 0.4

after-tax cost of debt=12.54% *(1-0.4)=7.52%

5 0

3 years ago

Country A had a population of 2,000, of whom 1,300 worked an average of 8 hours a day and had a productivity of 5. Country B had

SpyIntel [72]

Answer:

Country

c. B had the higher level of real GDP and Country A had the higher level of real GDP per person

Explanation:

Country A's population 2,000, worked 1,300 with 8 hours a day with a productivity of 5 = 52,000 units of something produced. GDP per capita = 52,000 / 2,000 = 26 per capita

Country B's population 2,500, worked 1,700 with 8 hours a day with a productivity of 4 = 54,400 units of something produced. GDP per capita = 54,400 / 2,500 = 21.76 per capita

3 0

3 years ago

Ben cartwright runs the wild west wax museum in carson city, nevada. the museum has been in business for 40 years and is a major

lawyer [7]

Solution and Explanation:

The implicit cost of capital

Implicit cost of capital is the opportunity cost of capital which is already incurred but not reported as a separate cost/expense, Implicit cost is the cost which results from using an existing asset instead of selling or renting it.

For example when a businessman uses his/her existing land which has implicit cost of say $1000 per month but bought it for say $100 many years ago, so $1000 is its implicit cost/current market rent per month which is equal to its oppo

5 0

3 years ago

Gross private domestic investment includes business: a. purchases of capital goods, all new construction, and inventory investme

olganol [36]

Answer:

a. purchases of capital goods, all new residental constructionand inventory investment

Explanation:

It is the investment measure used for determining the GDP. It is an important part of GDP as it is used as an indicator for the productive capacity i.e. future. It involves the purchase i.e. replacement, net addition made to the capital assets, and the investment made in inventories

So according to this, the option a is considered as it involved all three thins that are shown above

5 0

3 years ago