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Dynamo Hydraulics has $9,000,000 in current assets of which $4,000,000 are considered permanent current assets. The firm also has an additional $6,000,000 invested in fixed assets. Dynamo's CFO is considering two possibilities: (1) He could finance all fixed assets and half of the company's permanent current assets with long term financing costing 7%. The rest of the assets are financed with short term credit at 4%. Dynamo's earnings before interest and taxes are $3,000,000. Determine Dynamo's earnings after tax under this arrangement, given that the tax rate is 30%. (2) The CFO's alternative is to finance all fixed assets and permanent current assets plus half of its temporary current assets with long term financing and the rest with short term finance. The same interest rates and the same tax rate apply as in part (1). (3) Which is the better financing alternative?
Consider a financial intermediary, such as a bank, that participates in the credit market. This intermediary borrows from some households and lends to others. Discuss the effects on this years’ consumption, C1, from the following changes:
The Central Bank of Muji wishes to eliminate the recessionary gap while expansionary monetary policy. The central bank can do so by stimulating consumption and planned investment.
q1. consider the firm with a single factor of production defined implicitly by the relation z q3 4q where z is the
Consider the following information about the market for magic beans. This a perfectly compet-itive market, with upward-sloping supply and downward-sloping demand. Suppose that the market is currently in equilibrium.
The plane cost $1.5 million and, for depreciation purposes, is assumed to have a zero salvage value at the end of 5 years.
A monopoly producing a chip at a marginal cost of $6 per unit faces a demand elasticity of ?2.5. Which price should it charge to optimize its profits?
Find the equilibrium price and quantity. Find the consumer and producer surplus at the equilibrium. Find the socially optimal level of output of paper. How can a corrective tax bring about this equilibrium? How much revenue would the corrective tax r..
Is a decrease in the unemployment rate necessarily a good thing for the nation? Explain.
The increase in population caused by immigration is also causing both good and bad problems in the United States, causing some people to feel threatened
After acquiring a substitute product, to achieve greater profitability, one should:
Observe and study the service economy operation processes. Identify possible service operations topics, for example service process, service blueprint, service encounters and service quality.
Spring is here, and Becky and her dad would like to go fishing for the weekend in Washington. Becky could either go to the river in town where anyone can fish without a permit, or she could drive up to a stream located on her family's property in the..
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