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When a company's interest payment Blank______, the company's tax bill Blank______.
stays the same; increases
decreases; decreases
increases; decreases
increases; increases
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- 5 Which of the following would not affect a company's net income? A change in the company's income taxes Changing the selling price of a company's product Paying a dividend to stockholders Advertising a new productWhat does an increase in the allowance for receivables result in? A A decrease in current liabilities B An increase in net profit C An increase in working capital D A decrease in working capitaWhich of the following is a disadvantage of long-term debt as a means of company financing? Group of answer choices Debtholders have preferential status in the event of a company being wound up. Tax relief is available on interest payments. Debt is often quicker to arrange compared to equity. The amount and timing of interest payments is predictable, making budgeting easier.
- A firm has decided to switch from FIFO to LIFO. Ceteris paribus (all things being equal), what impact will the change in accounting have on the following variables? Assume an inflationary environment. Net profit will: OA increase OB decrease OC not change OD. cannot determineTo minimize dead weight loss resulting from taxation, A.tax rates should increase in times of need and reduced in other periods. B.tax rates should be kept stable over time. C.tax rates should alternate between 0 and higher rates every other year. D.tax revenue should be maximized.Corporate Finance If a company is profitable and pays taxes, why is the cost of its debt rd(1-t), lower than thecost if the company did not pay taxes rd? i.e. why has the formula been multiplied by (1-t)?
- Suppose the firm makes the change but its competitors react by making similar changes to their own credit terms, with the net result being that gross sales remain at the current 1,000,000 level. What would be the impact on the firms after-tax profitability?Moving to another question will save this response. Question 1 An increase in the corporate tax rate for company X will generally O Increase X's cost of equity capital Increase X's cost of debt capital O Increase X's weighted average cost of capital O Reduce X's cost of debt capital Shot on vivo Z1x Vivo Al camera WIDE Moving to another question will save this response.How is the sales tax rate usually determined? Does the company get to keep the sales tax as earned revenue?
- The fair rate of return rule means that regulators determine the fair rate of return on capital for the company and allow Blank______. Multiple choice question. an increase in rates only if the company wants to generate revenues that are over and above this fair rate an increase in rates only if the companies can prove that they are unable to generate revenues at all and this fair rate would help them achieve it an increase in rates only if the company can show that revenues are sufficient to achieve this fair rate an increase in rates only if the company can show that revenues are insufficient to achieve this fair rateWhat would be a reason a company would want to overstate income?A. to help nudge its stock price higherB. to lower its tax billC. to show a decrease in overall profitsD. none of the aboveWhich statement about the cost of capital is incorrect? * A. If a company’s tax rate increases then, all else equal, its WACC will increase. B. A company’s target capital structure affects its WACC. C. WACC calculations is based on the after-tax costs of all individual capital components. D. Flotation costs can increase the WACC.
