3) Sole proprietorships and partnerships cost less to establish while corporate forms have hugh legality that costs. 4) Sole proprietors
(Points : 5) is increased with a debit is decreased with a credit is not an expense account All of the above 1. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5) it has limited life its owner's personal resources are at stake its ownership is easily transferable via the sale of shares of stock it is simple to establish 2. (TCO A) The Dividends account _____. (Points : 5) is increased with a debit is decreased with a credit is not an expense account All of the above 3.
e. Do you expect that those notes will be called or redeemed? a. MSFT is raising money for general corporate purposes, which may include funding for working capital, capital expenditures, repurchases of stock and acquisitions. Also they choose to raise money at this time because the yields for treasury instruments are low, so Microsoft can issue in a lower rate. b. No, because the yields for treasury instruments are very low at the time, so the premium the company will add to their rate is very low, and the investors will get less money for the same level of riskiness, so the paper is not really cheap.
b) 1. The three risks that are normally considered in capital budgeting are: Stand-alone risk, Corporate risk, Market (or beta) risk. 2. Market risk is most relevant. 3.Stand-alone risk is easiest to measure.
A rising ROE suggests that a company is increasing its ability to generate profit without needing as much capital. It also indicates how well a company's management is deploying the shareholders' capital. In other words, the higher the ROE the better. Falling ROE is usually a problem. CAGR: Operating income, % Operating income (EBIT) measures a company's earning power from ongoing operations and it largely used by investor because it excludes the effects of different capital structures and tax rates used in different companies.
| Countries are similar in their ability to produce goods efficiently | B. | International trade is rarely beneficial to a country | C. | Potential world production is greater with unrestricted free trade than it is with restricted trade | D. | Trade is a zero-sum game | | |
One, the bond performs and you make 35% more. Second, you can lose money because the paper doesn't perform to the full term. It is a riskier choice than par or premium because you’re banking on the fact that the company does well. However, the upside is much better. In my opinion, I believe the risk can be worth it because you can make a lot of money this way.
With these potential benefits, target companies will often agree to be purchased when they know they cannot survive alone. Here the issue is of financing the merger. A firm’s optimal capital structure is that mixture of debt and equity than minimizes its weighted average cost of capital (WACC). Since the after-tax cost of debt is lower than equity for many corporations. It turns out that, while debt reduces a company’s tax liability because interest payments are deductible expenses, increasing amounts of debt raise both the cost of equity capital and the interest rate on debt because of the increasing probability of bankruptcy.
Verizon Communications averages fairly close to the industry average in most areas of financial ratios. The biggest discrepancy is in its debt to equity ratio. Debt to equity ratio indicates the feasibility that a company will be able to pay off its’ debts in “the event of a liquidation” (investinganswers.com, 2014). According to investinganswers.com, “a high debt to equity ratio indicates that a company may not be able to generate enough cash to satisfy its debt obligations” (2014). With a debt to equity ratio as above average as Verizon Communications’, the probability that the company will be able to pay off its’ debts if a liquidation was to occur is unlikely.
We are going to discuss the level of business risk for some of those factors. In the later part we will also calculate the volatility of some important accounts of the financial statements from the historical data given in the case to get the overall idea about its business risk. Centralized Authority:It has both pros and cons depending on the size of an organization. In a small organization the more the authority is centralized the less it faces business risk. But following centralized organizational structure in a huge corporation like AHP is questionable.