1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Dafna1 [17]
3 years ago
12

A new firm is developing its business plan. It will require $715,000 of assets (which equals total invested capital), and it pro

jects $450,000 of sales and $355,000 of operating costs for the first year. Management is reasonably sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 7.5%, but the bank requires it to have a TIE of at least 4.0, and if the TIE falls below this level the bank will call in the loan and the firm will go bankrupt. The firm will use only debt and common equity for financing. What is the maximum debt to capital ratio (measured as debt/total invested capital) the firm can use
Business
1 answer:
Serga [27]3 years ago
4 0

The maximum debt to capital ratio (measured as debt/total invested capital) the firm can use is 44.29%.

<h3>Maximum debt to capital ratio:</h3>

TIE:

TIE = EBIT / Interest

EBIT =$450,000 -$355,000

EBIT= $95,000

Interest:

4 = $95,000 / Interest

Interest = $95,000 / 4 = $23,750.

Amount of debt:

Amount of debt=$23,750 / .075

Amount of debt= $316.666.70

Debt Ratio:

Debt ratio= $316,666.70 / 715,000 ×100

Debt ratio=44.289%

Debt ratio=44.29%(Approximately)

Inconclusion the maximum debt to capital ratio (measured as debt/total invested capital) the firm can use is 44.29%.

Learn more about debt to capital ratio here:brainly.com/question/16820767

You might be interested in
John is a newly minted quality engineer at MakeStuff Inc. His boss tells him to increase the process capability index of their m
-Dominant- [34]

Answer:

Yes, it does, though one might question if the underlying process is really better.

Explanation:

Process capability index is a statistical measure which determine the output with specification limits, in the above case increasing the increasing the upper specification limit reduces the lower specification limit as it produces the ability of output.

4 0
3 years ago
Introducing a new product into the market is called.
KengaRu [80]

Introducing a new product into the market is called commercialization. The procedure for introducing a new product to the market for initial sale.

<h3>What is commercialization?</h3>

The process of bringing new products or services to market is known as commercialization. The commercialization process encompasses all aspects of a new product or service's development, distribution, marketing, sales, customer service, and other vital services.

Thus, commercialization is the introducing new product.

For more details about commercialization, click here

brainly.com/question/6331465

#SPJ1

5 0
2 years ago
Global Technology’s capital structure is as follows: Debt 50 % Preferred stock 35 Common equity 15 The aftertax cost of debt is
solmaris [256]

Answer:

The computation is shown below:

Explanation:

The computation is shown below:

For weighted cost of each source of capital is

Debt:

= Cost of debt × Weight of debt

= 9% × 50%

= 4.5%

Equity

= Cost of equity × weight of equity

= 16% × 0.15

= 2.4%

Preferred stock

= Cost of preferred stock × weight of preferred stock

= 12.50% × 35%

= 4.375%

Now the weighted average cost of capital is

= 4.5% + 2.4% + 4.375%

= 11.275%

Therefore in the first part we multiplied the cost with the weight of each source of capital

And, then we add the all answers

8 0
3 years ago
Ralph was involved in a bar fight and sustained a blow to the back of the head from a beer bottle. he was dazed and could not se
My name is Ann [436]
Occipital lobe

The occipital lobe is one of the four major lobes in the brain's cerebral cortex. It is located at the back of the head (see attached image). The occipital lobe's primary function is processing and making sense of visual information we receive through our eyes. Damage or trauma to the occipital lobe (in John's case when he got hit on the back of his head) can cause temporary or permanent vision impairment, subject to the severity of the trauma. 

6 0
3 years ago
Jack's manufacture company have experienced inflation for the past three years as follows: the first year's periodic inflation r
ankoles [38]

Answer:

8.09%

Explanation:

Year          Inflation rate    1 + Inflation rate

1                     0.03                     1.03

2                     0.04                     1.04

3                         x                       1+x

Average rate  0.05                   0.05

1 + Average rate  = [(1+r1)*(1+r2)*(1+r3)]^(1/3)

1.05 = [1.03*1.04*(1*x)]^(1/3)

[1.0712*(1+x)] = (1.05)^3

[1.0712*(1+x)] = 1.157625

1 + x = 1.157625 / 1.0712

1 + x = 1.080681

x = 1.080681 - 1

x = 0.080681

x = 8.09%

Thus, the periodic Inflation rate in year 3 is 8.09%

5 0
3 years ago
Other questions:
  • Southwest Airlines (SWA) has enjoyed a sustained competitive advantage, allowing it to outperform its competitors over several d
    13·1 answer
  • A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If
    5·1 answer
  • In July 2009, Hungary successfully issued 1 billion euros in bonds. The transaction was managed by Citigroup. Who is the issuer
    15·1 answer
  • Many institutional investors are aggressive in protecting and enhancing their investments. They are shifting from _________ to o
    12·1 answer
  • While boating one afternoon with his father, ernesto jr. was given a gift certificate by the local coast guard representative fo
    14·1 answer
  • What is seen as a major downfall to pepfar funding?
    10·2 answers
  • A buyer has deposited 10% of the sales price of a condominium with the broker as earnest money, and the bank has agreed to lend
    10·1 answer
  • Allied made its first and only purchase of inventory for the period on
    11·1 answer
  • Here is a linear demand function: Q = 10 -0.5P. Find its price function by inverting the demand function. Then find its total re
    8·1 answer
  • Choose one career position that is available in most hotels. What challenges would someone face while working in this position?
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!