To better evaluate the denials of Medicare claims at ABC Hospital, Shelly (the Coding Manager) and

Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as

Elina [12.6K]

Answer:

The question is missing the options which are below:

A Real risk-free rate differences.

B Tax effects.

C Default risk differences.

D Maturity risk differences.

E Inflation differences.

The correct answer is option C,default risk differences.

Explanation:

Default risk is the increase in return given to an investor to compensate the investor for the likely losses that may arise due to the inability of the borrower to make funds available to the investor on the maturity date or even in required amount.

Different debt instruments have different default risk depending on their credit rating as rated by international rating agencies.Such rating is a function of many factors,which includes:

Balance sheet position

Profitability

Liquidity strength of the company

Macro-economic factors and some others.

Liquidity refers to the ability of the company to settle obligations such as repayment of bonds and interest when due.

Invariably,liquidity has a higher impact in determining credit rating as well as default risk of an instrument.

3 0

2 years ago

Cal Lury owes $25,000 now. A lender will carry the debt for four more years at 10 percent interest. That is, in this particular

vitfil [10]

Answer:

$6,185.31

Explanation:

Value of debt at end of 4 years = $25,000 * (1 + 10%)^4

Value of debt at end of 4 years = $25,000 * (1.10^4)

Value of debt at end of 4 years = $25,000 * 1.4641

Value of debt at end of 4 years = $36,602.50

Let x be the annual payments

x * [1 - (1 + 13%)^-12] / 13% = $36,602.50

x * [1 - (1.13)^-12] / 13% = $36,602.50

x * [1 - 0.2307059] / 13% = $36,602.50

x * 0.7692941/0.13 = $36,602.50

x * 5.91764692 = $36,602.50

x = $36,602.50/5.91764692

x = 6185.313266375142

x = $6,185.31

So therefore, his annual payment will be $6,185.31.

4 0

3 years ago

Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at

Alja [10]

Answer:

1st Plan Earning per Share $ 1.80

2nd Plan Earning per Share $ 2.30

The Second Plan provides better earnings per share.

Explanation:

1st Plan:

Income before Interest and taxes 1,008,000

Bonds Payable Interest: (144,000)

Income before taxes 864,000

Income tax expense (345,600)

Net Income 518,400

Quantity of Common Stock:

$ 1,440,000 / $5 = 288,000

Earing per share:

518,400 / 288,000 = $1.80

2nd Plan:

Income before Interest and taxes 1,008,000

Bonds Payable Interest: (72,000)

Income before taxes 936,000

Income tax expense (374,400)

Net Income 561,600

Preferred Shares Dividends (120,000)

Available for common stock 441,600

Quantity of preferred Stock:

$1,200,000 / $10 =120,000 shares

Dividends on Preferred Shares:

120,000 x $1 = 120,000

Quantity of Common Stock:

$ 960,000 / $5 = 192,000

Earing per share:

441,600 / 192,000 = $2.30

3 0

3 years ago

Suppose you know that the price elasticity of demand for your product is 0.5, and you are thinking about raising your price by 8

satela [25.4K]

Answer: Option (c) is correct.

Explanation:

Given that,

Price elasticity of demand = 0.5

Percentage increase in price = 8%

Price elasticity of demand = $\frac{Percentage\ change\ in\ quantity\ demanded}{Percentage\ change\ in\ price}$

0.5 = $\frac{Percentage\ change\ in\ quantity\ demanded}{8}$

Percentage change in quantity demanded = 0.5 × 8

= 4%

Therefore, if the price rises by 8% then as a result quantity demanded decreases by 4%.

4 0

3 years ago

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour."

Allushta [10]

Answer:

total opportunity cost is $44

Explanation:

given data

parking fee = $4

earn = $10 per hour

time = 4 hour

to find out

opportunity cost

solution

we first find 4 hour earning that is

earning = earn × time

earning = 10 × 4

earning in 4 hours = $40

and

saving = $4

so total opportunity cost = saving + earning

total opportunity cost = $4 + $40

so total opportunity cost is $44

8 0

2 years ago