The major real world benefit of debt is that interest payments are: a. smaller than the...
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The major real world benefit of debt is that interest payments is that it is tax deductible expense.
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major real world benefit of debt is that interest payments are:
a. smaller than the...
1) If the substitution effect of the real interest rate on saving is smaller than the...
1) If the substitution effect of the real interest rate on saving is smaller than the income effect of the real interest rate on saving, then a rise in the real interest rate leads to a in consumption and a_ _in saving, for someone who's a lender (saver). A) fall; fall B) fall; rise C) rise; fall D) rise, rise 2) For a borrower, an increase in the real interest rate will lead to A) higher current consumption and less...
When discussing financing strategies, the benefits and costs of using debt should be of primary concern....
When discussing financing strategies, the benefits and costs of using debt should be of primary concern. The most important benefit from including debt in a firm's capital structure stems from the fact that firms can deduct interest payments for tax purposes but cannot deduct dividend payments. This makes it less costly to distribute cash to security holders through interest payments than through dividends. The total dollar amount of interest paid each year and, therefore, the amount that will be deducted...
As per the capital structure theories, the companies can benefit by having debt since the interest...
As per the capital structure theories, the companies can benefit by having debt since the interest expense is deductible for tax purposes, creating an interest tax shield. The interest tax shield, on the other hand, increases in value the higher the coupon rate on the debt and the higher the tax rate. Ignoring financial distress costs, Why or Why not the company then choose to pay as high a coupon rate as possible?
if corporate and personal taxes exist, and interest payments are tax-deductible for corporations, would firms take on as much debt as possible?
if corporate and personal taxes exist, and interest payments are tax-deductible for corporations, would firms take on as much debt as possible?
6. Suppose a debt restructuring in which the sum of the future payments to be made...
6. Suppose a debt restructuring in which the sum of the future payments to be made by the debtor is greater than the amount owed by the debtor on the restructuring date. Please indicate which of the following statements is correct. Assertion 1: Debtor will not recognize profit on restructuring and must recalculate the interest rate of the modified debt. Assertion 2: Regardless of whether the sum of future payments is greater or less than the debt at the date...
1.7 If the real interest rate is negative, then: a) the inflation rate is larger than...
1.7 If the real interest rate is negative, then: a) the inflation rate is larger than the nominal interest rate. b) the inflation rate is smaller than the real interest rate. c) the inflation rate is smaller than the nominal interest rate. d) lenders will gain. e) the real value of a loan will increase.
if transactions cost are zero, there is no information asymmetry or personal taxes and bankruptcy is cost less, but corporate taxes exist and interest payments are tax-deductible, what is the optimal amount of debt to have?
if transactions cost are zero, there is no information asymmetry or personal taxes and bankruptcy is cost less, but corporate taxes exist and interest payments are tax-deductible, what is the optimal amount of debt to have?
D37. A major disadvantage for shareholders, of using debt financing, is: the company is locked in...
D37. A major disadvantage for shareholders, of using debt financing, is: the company is locked in to fixed payments of interest and principal shareholder control is altered interest is not deductible for tax purposes debtholders assume full control of the company 38. If a company declares a 10% share dividend on its ordinary shares, the account to be debited on the date of declaration is: Retained Earnings Ordinary Share Dividend Payable Paid-up Capital Ordinary Shares 39. An appropriate journal entry...
Single concave spherical mirrors produce images that * (A) could be smaller than, larger than, or...
Single concave spherical mirrors produce images that * (A) could be smaller than, larger than, or the same size as the actual object, depending on the placement of the object. (B) are always smaller than the actual object. (C) are always larger than the actual object. (D) are always the same size as the actual object. (E) are always real. --- If a radio transmitter has a vertical antenna, should a receiver’s antenna be vertical or horizontal to obtain the...
Which of the following is not a characteristic of pollution permits? a. Real-world markets for pollution...
Which of the following is not a characteristic of pollution permits? a. Real-world markets for pollution permits include sulfur dioxide and carbon. b. Firms for whom pollution reduction is very expensive are willing to pay more for permits than firms for whom pollution reduction is less expensive. c. Prices are set by supply and demand. d. Allowing firms to trade their permits reduces the total quantity of pollution beyond the initial allocation.
1) If the substitution effect of the real interest rate on saving is smaller than the income effect of the real interest rate on saving, then a rise in the real interest rate leads to a in consumption and a_ _in saving, for someone who's a lender (saver). A) fall; fall B) fall; rise C) rise; fall D) rise, rise 2) For a borrower, an increase in the real interest rate will lead to A) higher current consumption and less...
D37. A major disadvantage for shareholders, of using debt financing, is: the company is locked in to fixed payments of interest and principal shareholder control is altered interest is not deductible for tax purposes debtholders assume full control of the company 38. If a company declares a 10% share dividend on its ordinary shares, the account to be debited on the date of declaration is: Retained Earnings Ordinary Share Dividend Payable Paid-up Capital Ordinary Shares 39. An appropriate journal entry...
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