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natali 33 [55]
2 years ago
8

Suppose you are in charge of the financial department of your company and you have to decide whether to borrow short or long ter

m. Checking the news, you realize that the government is about to engage in a major infrastructure plan in the near future.
a. Predict what will happen to interest rates.
b. Will you advise borrowing short or long term?
Business
1 answer:
Degger [83]2 years ago
6 0

Answer:

a. Interest rate will rise.

b.   Borrowing on short term

Explanation:

A. The interest rate will likely go up if government embark on major infrastructure plan in the future. The reason for the rise is that it`s assumed that government will borrow to finance the infrastructure plan and when government borrows, there will be less money in the economy which will make credit scarce and interest rate to rise because of the depleting credit level in the economy.

B. I will advise to borrow on short term because of the impending rise in interest rate. If borrow on short term, the fluctuation in the interest rate will unlikely affect the short term facility. In contrast, if borrow on long term, the impeding rise in the interest rate might increase finance cost for the firm  in servicing the facility and also erode the facility value.

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Explanation:

Solution

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8 0
2 years ago
In December 2016, Shire Computer’s management establishes the 2017 predetermined overhead rate based on direct labor cost. The i
Oksana_A [137]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

The predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $754,000 of overhead costs and $580,000 of direct labor cost.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

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5 0
2 years ago
XYZ Advisers is a federal covered adviser with an office in State A. It has 400 clients in State A; 6 clients in State B; and 3
Stels [109]

Answer:

None of the states.

Explanation:

Since XYZ Advisers is a federal covered adviser, it implies that it is registered with the Security and Exchange Commission (SEC) but not registered with any of the states. Therefore, only the SEC has its registration that it can revoke.

However, it is compulsory for the XYZ Advisers or any other adviser carrying out a business in any state to notify the State in which it is carrying out a business. This is to enable the relevant State to carry out an investigation and issue an order against the adviser whenever the the Administrator of a State received a complaint against a federal covered adviser. But the state still does not have the registration of the federal covered adviser it can revoke.

Therefore, none of the State Administrator(s) has the authority to revoke XYZ Adviser's registration.

8 0
2 years ago
You are considering the following two mutually exclusive projects that will not be repeated. The required rate of return is 11.2
postnew [5]

Answer:

a. project A; because its NPV is about $335 more than the NPV of project B.

Explanation:

As in the question it is mentioned that the required rate of return for project A and project B is 11.25% and 10.75% respectively.

Here we have to determined the net present value for both projects having different required rate of return

So based on the net present value the first option is correct as the project A is more than the project B

Therefore the first option should be accepted

5 0
2 years ago
Bonita Company has a factory machine with a book value of $87,800 and a remaining useful life of 5 years. It can be sold for $32
qwelly [4]

Answer: Old machine should be replaced.

Explanation:

The variable manufacturing cost will reduce by:

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Over a period of 5 years this will be:

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Selling the old machine would bring in $32,000:

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The cost of the new machine would reduce this gross benefit by:

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= $76,900

<em>Net income will increase by a total of $76,900 over the 5 year period if the new machine is bought so it should be bought. </em>

4 0
2 years ago
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