Answer:
a. ABC Inc.
Explanation:
The degree of financial leverage is expressed by the following formula,
= 
The ratio represents the relationship between net operating profits and profits after financial fixed costs.
Higher the degree of financial leverage, higher will be the financial risk.
In the given case, ABC Inc.'s degree of financial leverage is higher which suggests that ABC has employed more of debt in it's financial structure owing to which higher fixed cost obligations in the form of interest payments have been created.
Thus, ABC Inc. will have a greater financial risk.
Answer:
2.88%
Explanation:
Use the following formula to calculate the real rate of return
Real rate of return = 
Where
Nominal Interest rate = 7% = 0.07
Inflation rate = 4% = 0.04
Placing values in the formula
Real rate of return = 
Real rate of return = 
Real rate of return = 1.0288 - 1
Real rate of return = 0.0288
Real rate of return = 2.88%
What are the options to choose from?
Answer:
selling the defective gloves as they are results in a $3,000 higher gain
Explanation:
the manufacturing costs of the defective gloves should be considered a sunk cost since they cannot be recovered:
alternative 1, sell defective gloves = $18 x 1,000 = $18,000 gain
alternative 2, repair the gloves and sell them at normal price = ($40 - $25) x 1,000 = $15,000 gain
alternative 1 (selling the defective gloves as they are) results in a $3,000 higher gain
Answer:
Blanket Mortgage
Explanation:
This type of mortgage would suit developers because of their intention to create many individual parcels out of a large tract of land in order to be resold gradually. Blanket mortgage is a loan type that are used for buying more than one real estate property. This loans are popular with builders and developers because they buy huge lands and sell them in small bits over a period.
