Market for loanable funds

Assignment Help Accounting Basics
Reference no: EM131023196

Firms care about their after-tax rate of return on investment projects. In the market for loanable funds, draw a graph and explain the effect of an increase in taxes on business profits. (For simplicity, assume no change in the federal budget deficit or budget surplus.) What happens to the equilibrium real interest rate and the quantity of loanable funds? What will be the effect on the level of investment by firms and the economy's capital stock in the future?

Reference no: EM131023196

Previous Q& A

  Ordinary annuity for a comparable rate of return

Bank made payments of $235 per month at the end of each month for 30 years to purchase a piece of property. He promptly sold it for $204,113. What annual interest rate would he need to earn on an ordinary annuity for a comparable rate of return?

  What rate should firm use to discount projects cash flows

Titan Mining Corporation has 9.6 million shares of common stock outstanding and 400,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.3, and the bonds have 20 yea..

  Is this change likely to have much effect on the economy

Economist François Velde of the Federal Reserve Bank of Chicago has proposed making the current penny worth 5 cents. If the U.S. Treasury adopted Velde's proposal, what would be the effect on the value of M1? Is this change likely to have much eff..

  Calculate the price-earnings ratio

Daniel Brown owns stock in Eastman Computers. Based on information in its annual report, Eastman Computers has reported after-tax earnings of $22,000,000 and has issued 10,000,000 shares of common stock. The stock is currently selling for $48.40 a sh..

  How businesses and consumers prefer to carry out transaction

The Chinese government has refused to print currency in denominations higher than the 100-renminbi note, which is the equivalent of about $16. The United States prints $100 bills and all other countries print currency in denominations that are at ..

  Received two quarterly dividend payments

During the four quarters for 2015, the Haydens received two quarterly dividend payments per share of $0.15 each, one quarterly payment of $0.26, and one quarterly payment of $0.21. If they owned 200 shares of stock, what was their total dividend inco..

  What is the book value for a share of southern energy stock

Southern Energy Exploration reports that the corporation’s assets are valued at $480,000,000, its liabilities are 100,000,000, and it has issued 60,000,000 shares of stock. What is the book value for a share of Southern Energy stock?

  Cost structure-what is the breakeven point in units

White machine shop fabricates polished steel casings. They currently sell 20,000 casings at a selling price of $45. They have the following cost structure: Variable costs per unit $30 Fixed costs $150,000 Required (each requirement is independent): W..

  Write a one page reaction paper about the given video

Write a 1 page reaction paper about the following video. The Century Of The Self (2002): Happiness Machines (Ep. 1of4)_agk - https://vimeo.com/143890324

  Profitability of new investment in plant and equipment

Suppose that the economy is currently in a recession but economic forecasts indicate that the economy will soon enter an expansion. What is the likely effect of the expansion on the expected profitability of new investment in plant and equipment?

Reviews

Write a Review

 

Similar Q& A

  You want to have 9000 by the time you finish college in 5

you want to have 9000 by the time you finish college in 5 years. how much money should you deposit each quarter for the

  Emerging trends in accounting

Assume that actual cash inflows turn out to be $91,000 per year. Determine the amount of Mr. Holt's bonus if the original computation of net present value were based on $90,000 versus $70,000.

  Indicated that actual claims were less than expected

1.In 2012, Quapau Products introduced a new line of hot water heaters that carry a one year warranty against manufacturer's defects. Based on industry experience,

  Identify the four basic financial statements

Identify the four basic financial statements. Describe the purpose of each of the four financial statements.

  What problems might handy-man services encounter in

handy-man services is a repair-service company specializing in small household jobs. each client pays a fixed monthly

  Determining total gain and the taxable gain

Sable sells a passive activity with an adjusted basis of $245,000 for $305,000. Suspended losses attributable to this property total $45,000. The total gain and the taxable gain are:

  Transactions related to long-term bonds

Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co. On July 1, 2011 Quirk retired $150,000 of the bonds at 102 plus accrued interest. Quirk uses straight-line amortization.

  Deferred income tax liability in balance sheet

Larsen Corporation reported $100,000 in revenues in its 2010 financial statements, of which $44,000 will not be included in the tax return until 2011. The enacted tax rate is 40% for 2010 and 35% for 2011. What amount should Larsen report for defe..

  Cleaners inc is considering purchasing equipment costing

cleaners inc. is considering purchasing equipment costing 30000 with a six-year useful life. the equipment will provide

  Identify the relevant costs to make this part internally

Identify the relevant costs to make this part internally and should Sycamore produce the part or continue to buy it from the outside supplier?

  Cane company manufactures two products called alpha and

cane company manufactures two products called alpha and beta that sell for 150 and 110 respectively. each product uses

  Adjusting entry to be made by watson shoe company

On July 1, the Watson Shoe Store paid $6,000 to Ace Realty for 4 months rent beginning July 1. Prepaid rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Watson Shoe Company is ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd