ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 13, Problem 6.12P
To determine
The ways of acquiring funds for investment by corporations.
Introduction:
The corporation requires funds for investing and operating in the business. There are different ways a corporation can acquire funds.
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11-The selling price of a product in Oman is higher than the price in Dubai although both products are having the same nature. Customers are buying the product from Dubai due to the price differences. What will be the effect of the customers buying the products from Dubai? (1) Due to this, appreciation in the value AED (United Arab Emirates Dirham) relative to OMR, (2) Due to this, depreciate in the value AED (United Arab Emirates Dirham) relative to OMR, (3) Product sold in Oman market will decrease and the retail price will go down, (4) Product sold in Oman market will decrease and the retail price will go up, (5) The demand for the product and prices will increase in Dubai
a. (2) and (3) only
b. (1), (2), (3), (4) and (5)
c. (1) and (2) only
d. (1), (3) and (5) only
D6)
Suppose there are perfect capital markets with taxes. Investors expect a company to have $120 earnings before interest and taxes in one year. This company has a 25% tax rate, $100 market value of debt, and 20 shares outstanding. This company’s net working capital, depreciation expense, and capital expenditures are all expected to be zero in perpetuity. Investors expect this company to have the same earnings before interest and taxes, market value of debt, tax rate, and number of shares outstanding in perpetuity. The firm’s unlevered cost of equity is 8% and its cost of debt is 5%. Based on this information, what amount would you expect this company’s share price to be closest to?
$5
$20
$40
$80
$100
$200
$400
67. Earnings that are not paid as dividends to stockholders and have cumulative amount are classified as A. non-paid earnings B. common earnings C. retained earnings D. preferred earnings
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- 1. Choose all of the correct items that you think companies would consider when choosing a MARR for a particular project: Group of answer choices A. Their cost of borrowing money from a bank B. Their cost that their financial team thinks they can issue new bonds C. The prevaling rates of return of their competitors stock D. The relative risk of this particular project 2. Procter and Gamble reports a large number of financial metrics including ratios like Return on Equity, and Gross Margin, and many others. What are some reasons that they report these metrics? (Mark all that are correct) Group of answer choices A. They want to have a way of comparing their performance against their competitors . B. They want to see if their total sales went up, but their costs went up even more so their profitability decreased C. They want to see before COVID and after COVID financial ratios to see what impact it had on their finances D. They want to determine if they are meeting their goals for…arrow_forward1.Wealth is defined as the: value of assets that can be converted to cash on short notice. value of all assets less the money that is owed. value of monetary assets. total amount of income earned in a one-year period.arrow_forwardCalculate sales from the following:- Net value added at FC = 600 Net addition to stocks = -40 Sales tax = 60 Depreciation = 20 Intermediate consumption = 200 All values are in dollar million Subsidy = 10arrow_forward
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