Why is the rate that debt holders require to entice them to lend money to a company
Question:
Why is the rate that debt holders require to entice them to lend money to a company different from the company’s effective cost of debt capital?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 62% (16 reviews)
The value of a companys debt is determined by a number of fa...View the full answer
Answered By
James Warinda
Hi! I’m James Otieno and I'm an experienced professional online tutor with countless hours of success in tutoring many subjects in different disciplines. Specifically, I have handled general management and general business as a tutor in Chegg, Help in Homework and Trans tutor accounts.
I believe that my experience has made me the perfect tutor for students of all ages, so I'm confident I can help you too with finding the solution to your problems. In addition, my approach is compatible with most educational methods and philosophies which means it will be easy for you to find a way in which we can work on things together. In addition, my long experience in the educational field has allowed me to develop a unique approach that is both productive and enjoyable.
I have tutored in course hero for quite some time and was among the top tutors awarded having high helpful rates and reviews. In addition, I have also been lucky enough to be nominated a finalist for the 2nd annual course hero award and the best tutor of the month in may 2022.
I will make sure that any student of yours will have an amazing time at learning with me, because I really care about helping people achieve their goals so if you don't have any worries or concerns whatsoever you should place your trust on me and let me help you get every single thing that you're looking for and more.
In my experience, I have observed that students tend to reach their potential in academics very easily when they are tutored by someone who is extremely dedicated to their academic career not just as a businessman but as a human being in general.
I have successfully tutored many students from different grades and from all sorts of backgrounds, so I'm confident I can help anyone find the solution to their problems and achieve
0.00
0 Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Why is the rate used to discount FCFF different from the rate used to discount FCFE?
-
The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory 500 units 2,800 units Purchased Purchased 1,100 units Apr. 1 Oct. 1 $19 $24 $25 During the year,...
-
Linda is taking a five-course load her first semester: English, math, French, psychology, and history. In how many different ways can she earn three As and two Bs? Enumerate the entire set of...
-
Consult another reference in which Hund's rule is outlined, and on its basis explain the net magnetic moments for each of the cations listed in Table 20.4.
-
Refer to the simple linear regression relating number of employees y to age x of a fast-growing firm, Exercise 9.21 (p. 487).The SAS printout is reproduced on the next page. a. Find SSE, s2, and s on...
-
Design a generic post-implementation evaluation form. The form should consist of questions that you could use to evaluate any information system. The form should evaluate the training received and...
-
Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The...
-
Various cost and sales data for Medco, Inc., are given below for the just completed year: Required: 1. Prepare a schedule of cost of goods manufactured. 2. Prepare an income statement. 3. Assume that...
-
The yield to maturity on SodaFizzs debt is 7.2%. If the companys marginal tax rate is 21%, what is SodaFizzs effective cost of debt?
-
Sandage Auto Parts has debt outstanding with a market value of $2 million. The companys common stock has a book value of $3 million and a market value of $8 million. What weight is equity in Sandages...
-
Recall that Blades, the U.S. manufacturer of roller blades, generates most of its revenue and incurs most of its expenses in the United States. However, the company has recently begun exporting...
-
What are the elements of partnership ?
-
1. (2x+3)dx
-
Determine whether the statement is true or false. If it is true, explain why. If it is false, explain why or give an example that disproves the statement. If |r(t)| = 1 for all t, then |r'(t)| is a...
-
Rosalie owns 50% of the outstanding stock of Salmon Corporation. In a qualifying stock redemption, Salmon distributes $80,000 to Rosalie in exchange for one-half of her shares, which have a basis of...
-
How might a job costing system used by a service organization differ from a job costing system used by a manufacturing organization?
-
Why is it important for movie studios to have accurate costs for each movie produced?
-
How does a job costing system help a company evaluate the profitability of jobs?
-
You borrowed $15,000 for buying a new car from a bank at an interest rate of 12% compounded monthly. This loan will be repaid in 48 equal monthly installments over four years. Immediately after the...
-
Discuss how debt restructuring, settlement, or modification works. Discuss the journal entries for debtor and creditor
-
Could CNL be a viable business? If so, under what conditions and what level of production (and, since production is directly related to production workers, employees)? All information provided for...
Study smarter with the SolutionInn App