SWFT Corp Partner Estates Trusts
42nd Edition
ISBN: 9780357161548
Author: Raabe
Publisher: Cengage
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According to the M&M propositions WITH and WITHOUT taxes, should a financial manager spend time analysing a firm’s capital structure? What is the optimal capital structure with and without tax? Discuss.
What are the sources of short-term funding available to large corporations? Differentiate these sources from those needed to raise funds for a long-term capital investment.
Please provide as much detail as possible. It must be a detailed explanation for each.
What are some of the tax-factor benefits of capital budgeting?
a) annual depreciation... how and why is it a benefit?
b) interest on loans...why?
c) investment tax credits...why?
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- All of the following are sustainable methods businesses can use to raise capital (funding) except for ________. A. borrowing from lenders B. selling ownership shares C. profitable operations D. tax refundsarrow_forwardWhat are some of the tax-factor benefits of capital budgeting?arrow_forwardThe ideal taxation system is a good tax system, that is, it must complygovernment needs whose spending is increasing over time, which can encouragesociety to achieve the optimal allocation of resources, which can lead to their achievementequitable distribution of income and wealth and enables the implementation of economic stability.The ideal taxation is taxation that can direct the utilization of economic surplus forachieve optimal and dynamic use of economic resources.Please explain what kind of tax is the best and can be used assource of government revenue or financing in carrying out its tasks to achieveand improve people's welfare!arrow_forward
- If Congress wants to stimulate the economy, explainhow it might alter each of the following: (a) personaland corporate tax rates, (b) depreciation expenseschedules, and (c) the differential between the taxrate on personal income and long-term capitalgains. How would these changes affect corporateprofitability and free cash flow? How would theyaffect investors’ choices regarding which securities to hold in their portfolios? Might any of theseactions affect the general level of interest rates?arrow_forwardWhat is opportunity cost and why is it an important concept in the capital budgeting process? The opportunity cost concept applies to almost every financial decision we make as individuals. Can you give an example from your own experience? What is capital rationing from the perspective of capital budgeting? Give an example of a strength and a weakness of the accounting rate of return approach.arrow_forwardExplicit consideration of taxes is a necessary aspect of any complete economic study of an investment project. True or false?arrow_forward
- Explain the concept of Tax Deduction in WACC. Does this tax deduction make debt finance Cheaper Then Equity Financearrow_forwardHow are human and physical capital investment decisions similar? How do they differ? What determines the profitability of a physical capital investment? Do human capital investors make profits? If so, what is the source of the profit? Explain.arrow_forward
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