Answer:
The answer is an intermediary between the saver and the borrower
Explanation:
In this example, the bank is acting as an intermediary between the saver and the borrower.
Answer:
39.45%
Explanation:
For the computation of capital structure weight of the common stock first we need to follow some steps which is shown below:-
Step 1
The Market value of common stock = Shares of common stock × Price of common stock
= 100,000 × $37
= $3,700,000
Step 2
The Market value of preferred stock = Shares of preferred stock × price of preferred stock
= 6000 × $30
= $180,000
Step 3
The Market value of bonds = No. of bonds × par value × Selling rate
= 5,000 × $1,000 × 110%
= $5,500,000
Step 4
Total capital = $3,700,000 + $180,000 + $5,500,000
= $9,380,000
and finally
Capital structure weight of common stock = market value of common stock ÷ total capital
= $3,700,000 ÷ $9,380,000
= 0.3945
or
= 39.45%
Answer:
The correct answer is A
Explanation:
The formula to compute the present value interest factor using excel is as:
= 1/(1+r)^ n
where
r is the rate
n is number of years
So, in case of A,
The present value interest factor is:
= 1/(1+0.06)^5
= 0.74725
In case of B,
The present value interest factor is:
= 1/(1+0.06)^8
= 0.62741
In case of C,
The present value interest factor is:
= 1/(1+0.06)^10
= 0.55839
In case of D,
The present value interest factor is:
= 1/(1+0.08)^5
= 0.68058
In case of E,
The present value interest factor is:
= 1/(1+0.08)^10
= 0.46319
Therefore, it is highest in option A.
It is the required rate of return; this is the lowest possible rate of return on an investment that would still provide incentive to individuals or companies who invest. Below this threshold, there exists no real reward for putting money into the project, and there will likely be no investors.
