Why is interest expense said to cost the firm substantially less than the actual expense, while dividends
Question:
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 60% (15 reviews)
The Interest expense is a tax deductible item to the corporation while divi...View the full answer
Answered By
Ayush Mishra
I am a certified online tutor, with more than 3 years of experience in online tutoring. My tutoring subjects include: Physics, Mathematics and Mechanical engineering. I have also been awarded as best tutor for year 2019 in my previous organisation. Being a Mechanical Engineer, I love to tell the application of the concepts of science and mathematics in the real world. This help students to develop interest and makes learning fun and easy. This in turn, automatically improves their grades in the subject. I teach students to get prepared for college entry level exam. I also use to teach undergraduate students and guide them through their career aim.
5.00+
2+ Reviews
10+ Question Solved
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
Question Posted:
Students also viewed these Accounting questions
-
Why is interest expense ignored when computing return on net operating assets (RNOA)?
-
Why is interest expense disallowed if it is incurred to purchase or hold tax-exempt obligations?
-
Why is interest expense reported as a non-operating expense instead of as an operating expense on a multiple-step income statement?
-
Review the Financial Statements provided to each group on Blackboard (You may use laptops for this exercise). [ Focus on: a) Is the company Profitable b) Does the company have a lot of liabilities c)...
-
A set E in a metric space is called clopen if it is both open and closed. a) Prove that every metric space has at least two clopen sets. b) Prove that a metric space is connected if and only if it...
-
You will find scores on three variables. The outcome variable is overall health (Health)-the higher the score, the healthier the person is. The predictor variables are preference for sweets (Sweets),...
-
What reasons can you give in support of, and against, the development of separate financial accounting guidelines and standards that reflect the financial consequences of environmental issues?
-
Assume the following: the sales price to consumers is $150 the retailers markup is 50% Whirlpools after tax profit margin is 4% The hurdle rate is 20% Populations are as follows: Brazil 182...
-
If u=(-1,8) and v = =(-2,7), find: the direction (8) for vector v. Round to three decimals.
-
If you borrow $5,000 to buy a car at 12% compounded monthly, to be repaid over the next four years, what is your monthly payment? (a) $131 (b) $137 (c) $1,646 (d) $81 (e) $104
-
What is the difference between book value per share of common stock and market value per share? Why does this disparity occur?
-
Discuss some financial variables that affect the price-earnings ratio.
-
Calculate the performance metrics listed in the table above. Based on these metrics, evaluate the campaign. Uniqlo is a Japanese retail brand that has grown into a global brand in 15 countries thanks...
-
A 70g bullet moving east at 40 m/s strikes a 1.2kg block suspended and becomes embedded in the block. How high will the bullet-block system rise above its original point?
-
Explore the concept of the "antihero" in contemporary fiction. How does this character archetype differ from traditional heroes, and what does its popularity suggest about changing societal attitudes...
-
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $186 per unit during the current year. Its income statement is...
-
Organisations use safe work practices to ensure the health and safety of workers using essential functions and features of equipment used to clean kitchen premises and equipment. List at least three...
-
Table where investors invest $5M for 5M shares Amount Invested by Series A VC PPS (price per share) Number Shares $5,000,000 $1.00 Security Common-Founders 5,000,000 Pre Series A # Shares 7,750,000 %...
-
Some people have proposed that all nuclear power plants in the United States be phased out over the next 20 years. Explain why you agree or disagree
-
Define relevant costs and discuss: (1) whether all future costs are relevant for decision making and (2) whether variable costs are always relevant and fixed costs are always irrelevant
-
In what ways can you become a better empathic listener? How does using continuer statements instead of terminator statements help you in that effort?
-
Swampy Ox Real Estate (SORE) has been growing at a constant 5 percent rate for many years, and it expects to continue this growth long into the future. On January 1 of this year, which is the slow...
-
If a firm buys on terms of 3/15, net 45, what is the APR of its nonfree trade credit? What is the effective annual rate, r EAR ?
-
What is the APR and r EAR on the nonfree credit associated with credit terms of (a) 2/15, net 45 (b) 3/5 net 45?
-
You have just retired with savings of $ 1 . 5 million. If you expect to live for 3 0 years and to earn 8 % a year on your savings, how much can you afford to spend each month? Assume that you spend...
-
Mrs . Page had just completed a series of dental appointments. Typically Mrs . Page is a positive and very complimentary of the dental healthcare team. However, today you notice that she is very...
-
what is my principal reduction balance if my mortgage balance is $ 1 1 7 , 0 0 0 at a mortgage rate of 6 . 2 5 % and I make my payment of 9 3 6
Study smarter with the SolutionInn App