What do we call the cost that a borrower must payto use debt capital?

Q: Up to what extent can debt financing be useful to the company?

A: Debt financing means raising the capital for the company in the way of selling bonds, debentures,…

Q: what happens to the cost of debt if the pourcentage of debt gets lower in the capital structure

A: Cost of debt is the return that is expected by all debt holders. They get their return in the form…

Q: How much is the gain on debt restructuring?

A: Given data,   Old liability: Principal=P9,000,000 Accrued Interest=P810,000 Interest Rate: 9%   New…

Q: What role do interest rates play in allocating capital to different potential borrowers?

A: Rate of interest : It is the amount paid by a borrower to use the capital borrowed from the…

Q: How can we use special financial functions to determine the total interest?

A: Financial functions have made financial calculations easy using excel, they make you calculate the…

Q: What interest rates should be used in determining the amount of interest to be capitalized? How…

A:

Q: Define the term After-tax cost of debt?

A: Cost of capital is the overall cost of financing the funds from all sources of finance. The cost of…

Q: What are Debt Instruments?

A: Answer: Debt instrument is like a tool a company may use in capital raising. It allows the holders…

Q: What is the distinction between debtor and creditor?

A: Accounts receivable Accounts receivable refers to the amounts to be received within a short period…

Q: Which statement is true? * General borrowings may earn investment income deductible against general…

A: Business may borrow funds for the purpose of business. These borrowings can be general borrowings or…

Q: How can we summarize the firm's ability to meet debt repayment obligations?

A: Debt repayment obligations: It means the repayment obligation for the debt held by the corporation.…

Q: company's cost of debt capital?

A: Cost of debt is the amounts of the cost which are required by the company to pay have to pay to the…

Q: What are some factors that affect capital structure decisions made by management? What are the…

A: Cost of capital is lowest with 100% debt in capital structure.

Q: What is Debt Service?

A: Step 1 The amount of money required to pay interest on the loan with the principal over some time is…

Q: Explain what is capital or capital financing? Examples

A: capital financing is the form of business finance that is raised through equity funds and lenders…

Q: What is the financing surplus or deficit? How is it calculated?

A: Companies generally prepare cash flow statements to check the sources and utilization of cash. As…

Q: In computing the cost of capital, do we use the historical costs of existing debt and equity or the…

A: WACC is cost incurred by entity to finance its capital structure. It is sum of weighted individual…

Q: Who are the providers (savers) and users (borrowers) of capital?

A: The providers are known as savers and the users are known ad borrowers of capital are given below…

Q: When is debt to asset ratio important when raising money

A: Debt to asset ratio is one of the important ratios that we use in finance. This is essentially a…

Q: How to record purchase of a  debt investment? Give an example.

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: What are the two types of debt financing?

A: Debt:   A debt is an obligation that requires on entity called the debtor to pay back a borrowed sum…

Q: Discuss the optimal amount of debt in the presence of taxes and costs associated with financial…

A: Financial distress is a situation or a point where a firm is unable to pay its debt or firm is…

Q: at is the relationship of Debt (Loans) to Borrowers to Financial Intermediaries?

A: The financial intermediaries are very important in the financial world and transactions and there…

Q: Define the term Paid-in capital?

A: Stockholders’ equity: Stockholders’ equity is referred to as the claims of the stockholders on the…

Q: debt

A: Cost of debt can be defined as the rate of interest which a company incurs on its debts. The cost of…

Q: From the borrower’s standpoint, what are the advantages and disadvantages ofsecuring a loan?

A: Secured loans means offering an asset or  property to the lender as a collateral against the funds…

Q: difference between debt and quity

A: A company’s capital consists of two forms, one is equity and the other is debt. When a company is…

Q: Why do we use an after-tax figure for cost of debt but not for cost of equity?

A: Cost of debt is the interest payments a company needs to make for debt financing, whereas cost of…

Q: What will be the Effect of the After-Tax Interest Cost on Loan Decisions?

A: Interest cost for loan borrowers depends mainly upon the rate of interest charged by lenders.…

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: Should market or book value be used for debt and equity?

A: Book value for debt and equity represents the recorded value of the debt and equity in the company's…

Q: The higher the debt level, the greater the burden borne by ___________ and the cost of debt.

A: The cost of debt is the rate a company pays on its debt

Q: Why is the after-tax cost of debt, rather than its before-taxrequired rate of return, used to…

A: The mix of equity and debt is a business organization is known as the capital structure of the…

Q: What is the actual cost of capital to the borrower?

A: The cost of capital to the borrower is the weighted average cost of capital from all sources of…

Q: How Grantor can Release from Assumed Debt?

A: Answer: Release of grantor from assumed debt: It is one of the assumptions of mortgage. When a…

Q: Following the agency theory of capital structure, discuss how debt financing can be used as a…

A: The agency cost of debt is the conflict of interest that exists between a company's shareholders and…

Q: True or false The most essential element of working capital is debt?

A: working capital indicate the position of firm as  is it help to measure the daily expense and its…

Q: What are the benefits of using debt security?

A: The financial instruments which are bought by investors, or corporations, or mutual funds, are…

Q: Why isn’t accounting net income used in the net present value method of making capitalbudgeting…

A:

Q: What are the advantages and disadvantages of short-term versus long-term debt asidentified in this…

A: Short term debt: Short term debts are debts or financial commitments that are expected to be settled…

Q: How is Borrowing capitalized

A: Ans. Borrowing costs are interest and other expenses or costs that an entity incurs in connection…

Q: Are debtors calculated at selling price or finished goods price? and why?

A: The word debtor comes from the word debt which means a company or an individual having a debt…

Q: Which form of financing has the lower after-tax cost, debt or equity? Why?

A: There are two sources of financing for a company. One is debt financing and another is equity…

Q: How do taxes affect the target capital structure?

A: One of the key issues that overseers of corporations should take into consideration once designing…

Q: What is debt

A: The financial statements of the business includes the income statement and balance sheet of the…