Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 01, 2024

A small business owner is weighing her option in raising $30,000 from debt or equity. The corporate tax rate is 21%. The business can receive

A small business owner is weighing her option in raising $30,000 from debt or equity. The corporate tax rate is 21%. The business can receive an interest only bank loan for $30,000 at 4%.

requirement:

a. what is the after-tax cost of the bank loan for a 1 year period?

b. would the bank loan be consider Debt or Equity?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Estimating Economic Models

Authors: Atsushi Maki

1st Edition

0415589878, 978-0415589871

More Books

Students also viewed these Finance questions

Question

★★★★★

A cylinder having an initial volume of 100 ft3 contains 0.2 lbm of water at 100 F. The water is then compressed in an isothermal quasi-equilibrium process until it has a quality of 50%. Calculate the...

Answered: 1 week ago

Question

★★★★★

2. Imagine that your friends teenage son was involved in a serious car accident in which one of his friends died. Although the accident occurred 3 months ago, her son refuses to talk about the...

Answered: 1 week ago

Question

★★★★★

Athena Riding Clubs financial statements follow. Required 1. Explain how Athena Riding Clubs four statements relate to each other. 2. Which statements are most closely associated with the goals of...

Answered: 1 week ago

Question

★★★★★

1 0 ) Bruce lied about his health history when he purchased a life insurance policy. He died 3 years after the policy was issued. Which life insurance policy provision will require the life insurer...

Answered: 1 week ago

Question

★★★★★

Complete parts (a) and (b) below. The number of dogs per household in a small town Dogs 0 2 3 4 5 Probability 0.649 0.219 0.086 0.024 0.014 0.007 (a) Find the mean, variance, and standard deviation...

Answered: 1 week ago

Question

★★★★★

After researching the different forms of business organization, Natalie Koebel decides to operate "Cookie Creations" as a proprietorship. She then starts the process of getting the business running....

Answered: 1 week ago

Question

★★★★★

P. 6-1 The financial statements of an actual capital projects fund leave it to the report reader to draw inferences on key transactions. The accompanying statements of the parks, recreations, and...

Answered: 1 week ago

Question

★★★★★

An infinite solid circular cylinder is initially at a uniform temperature of 150 C. At time t = 0 the temperature around the entire boundary is suddenly reduced to 0C, and maintained thereafter....

Answered: 1 week ago

Question

★★★★★

6. Germs Co. revalued its building with historical cost of P40,000,000 and accumulated depreciation of P10,000,000 to a fair value of P48,000,000. Income tax rate is 30%. Requirements: a. Compute for...

Answered: 1 week ago

Question

★★★★★

In a report, 2-3 pages single-spaced, describe the purpose of the audit software and describe its capabilities.Provide at least two examples of how companies have used the software as it relates to...

Answered: 1 week ago

Question

★★★★★

(Appendices) Describe the difference between F.O.B. shipping point and F.O.B. destination. LO56

Answered: 1 week ago

Question

★★★★★

(Appendices) What are sales returns? Why do sales returns occur? LO86

Answered: 1 week ago

Question

★★★★★

(Appendices) What are the components of cost of goods available for sale and of cost of goods sold? Assume that the firm uses the gross method of recording purchase discounts. LO45

Answered: 1 week ago

Previous Question Next Question