Please help I will mark you as brainliest!!

The marketing manager at a company producing laundry products sees great
long-term profits from selling to many consumers worldwide who care about
low prices. Which of the following tactics would best support this manager's
low-price strategy?

A. Develop products with more features than the competition offers
B. Design simple, inexpensive packaging
C. Offer a customer help line for advice in using the products
D. Work with retailers that specialize in speedy checkout and fast
delivery

Answers

Answer 1

The tactics that would best support this manager's low-price strategy is Designing simple, inexpensive packaging. Thus option B is correct.

What is the manager?

A manager refers to a person who is responsible head of any project and helps in arranging the resources, checking the progress, and timely completion of it in order to achieve the vision and goal of the organization.

In order to cater to a large number of potential consumers the low pricing strategy is used where the manager focuses on simple and inexpensive designs which help in the affordability of consumers.

Therefore, option B is appropriate.

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Related Questions


How would you rate Nike's commitment to corporate social
responsibility and sustainability? Provide evidence.

Answers

Graham's law of diffusion of gases states that the rate of diffusion of a gas is inversely proportional to the square root of its molar mass.

The hypothesis of Avogadro, also known as Avogadro's hypothesis, states that equal volumes of gases, at the same temperature and pressure, contain the same number of particles (atoms, molecules, or ions). (Avogadro's hypothesis)

Dalton's law, also known as the law of partial pressures, states that the total pressure exerted by a mixture of non-reacting gases is equal to the sum of the partial pressures of each gas in the mixture. Mathematically, it can be represented as follows:

P_total = P_1 + P_2 + P_3 + ...

Gay-Lussac's law for volume, also known as the law of combining volumes, states that when gases react, the volumes of the reacting gases and the volumes of the gaseous products, if all measured at the same temperature and pressure, are in simple ratios of whole numbers. (Gay-Lussac's law, volume)

These laws and hypotheses are fundamental principles in the field of gas behavior and provide valuable insights into the properties and relationships of gases.

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A factory is considered what type of resource?


land


labor


physical capital


human capital

Answers

A factory falls under the category of physical capital, representing tangible assets and infrastructure utilized in the production process. Option C.

Physical capital refers to the tangible assets that are used in the production process to create goods or services. These assets include machinery, equipment, buildings, vehicles, and infrastructure. They are essential resources that contribute to the production capacity and efficiency of a business or organization.

A factory is a prime example of physical capital as it represents a dedicated space or facility equipped with machinery, tools, and equipment designed for manufacturing or production activities. It provides the necessary infrastructure and resources for transforming raw materials into finished products.

Factories typically house specialized equipment and machinery specific to the industry or production process they serve. This physical capital enables businesses to carry out mass production, streamline operations, and achieve economies of scale.

Physical capital is an important factor of production alongside other resources such as land, labor, and human capital. It plays a crucial role in enhancing productivity, output, and overall economic growth.

Effective management and investment in physical capital can lead to improved efficiency, cost reduction, and technological advancements in production processes.

In summary, a factory is categorized as physical capital, representing the tangible assets and infrastructure used in the production process. So Option C is correct.

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Risk can be thought of as the possibility of incurring??

Answers

Answer:

Risk can be thought of as the possibility of incurring a loss.

Explanation:

Loss.

What do you think would need to happen to change america’s view of credit cards?.

Answers

The rise in personal debt in US, which was once associated with having a poor moral character, got accepted as a regular part of daily life as the use of credit cards increased.

Despite the fact that credit cards were originally offered in the US in the 1950s, it wasn't until the 1980s that they were widely accepted as a form of payment. Credit cards had a significant impact on the expansion of the US economy by generating enormous profits for the financial sector and a positive rise in the retail sector. While they contributed to a long-lasting boom, they were also a contributing factor in the financial sector's problems during the 2008 credit crisis.

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Heila is the daughter of your neighbor, Mary. She and her 6-year-old son moved in with Mary in August. Mary would like you to prepare a return claiming the grandson as her qualifying child. What do you do? File the return since you know that Mary has done them a favor by allowing them to move in.

Answers

Answer:

The options are missing:

File the return since you know that Mary has done them a favor by allowing them to move in. Explain the residency requirement and file the return showing the grandson lived with Mary for more than half the year. File the return, but only after Mary assures you that Sheila will not be claiming her son. Explain to Mary that she is not eligible to claim her grandson, and that you cannot knowingly file an incorrect tax return.

My answer would be:

4. Explain to Mary that she is not eligible to claim her grandson, and that you cannot knowingly file an incorrect tax return.

Explanation:

This is both a legal and ethical question.

Legally, Mary is not allowed to deduct Heila's son as her dependent because she only lived with her for 5 months and the minimum requirement is 6 months.

Ethically, you are asked to benefit someone that is your friend (or might not), but in order to do so you must break the law. Is it ethical to break the law in order to benefit an specific person? The answer is no, the law should be the same for everyone. To be honest, no one will probably even realize that you did something illegal, but bad actions always have consequences and we do not always realize them.

Project: Lifestyle Budget
Objectives
Consider areas of lifestyle.
Examine financial costs of a variety of lifestyle choices.
Determine lifestyle choice preferences.
Identify factors that alter lifestyle choices.
Download the Lifestyle Budget Project worksheet to your desktop and follow the instructions below.

There are thirteen categories in this Lifestyle Budget activity. Make a choice in each lifestyle budget category and place the cost of the option you choose into the blank line next to each category.

You must choose a dollar amount for each category. Type your choice on the right side next to the dollar sign.

Only one option may be selected in each category.

Once you have made all of your selections, use a calculator to add the total of your choices and enter that amount in the blank line next to the label Total Lifestyle Budget.

Upload the completed assignment as directed by the instructor.

The budget that we will create in this activity will include expenses for the following items:

Housing
Home insurance
Heating
Electricity
Food
Clothing
Medical expenses
Transportation
Auto insurance
Gas
Phone
Entertainment
Gifts

Answers

It should be noted that a lifestyle budget simply means the budget that can be used to plan one's revenue and expenses.

What is a budget?

A budget simply means the financial estimate of the income and expenditure. The areas of lifestyle that needs budgeting include electricity, housing, insurance, transportation, phone bills, electricity, etc.

It should be noted that the financial cost of our lifestyle choices have an effect on us and the economy as a whole. For example, factors such as income and prices of food affect our food choices. Other factors that alter lifestyle choices include marriage, habit, etc.

In conclusion, for the expenses that are listed, you have to attach a monetary value to each one.

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Answer:

Housing       =           80k-250k    or     rent      =     $750 monthly

Home insurance   =   $117 monthly

Heating =          $193 monthly

Electricity        =         $100 monthly

Food           =             $412 monthly

Clothing       =            $10 monthly?

Medical expenses  =  $1000 monthly

Transportation    =      $300-800 monthly

Auto insurance    =     $38 monthly

Gas                       =    same as transport wat

Phone              =         $127 monthly

Entertainment    =       $230 monthly  

Gifts             =             $54 monthly

TOTAL COST if you have a house = 2750 monthly about - house payment

TOTAL COST If you live in a apartment = 3500 monthly about

Explanation:     it was about time I gave back to the people of brainly thank you smart people for making Edge the easiest thing ever  

Promotional discounts are given to stores by manufacturers to place their products in preferred locations in the store and to display their products in a ski manufacturer sells a local ski shop 35 pairs of their new store window: skis for $7000, which is a discount of $2,625. What is the percentage of the discount given to the store? (Round your answer to the nearest whole percent.)

Answers

Answer:

27%

Explanation:

The ski was sold for $7,000 which has a discount of $2,625.

the price before discount is

= $7,000 + $2,625.

=$9,625

the discount as a percentage

=$2,625 / $9,625  x 100

=0.272727 x 100

=27.27%

=27%

the dollar value of all final goods, services, and structures produced in a country in a year is known as

Answers

The dollar value of all final goods, services, and structures produced in a country in a year is known as "Gross Domestic Product (GDP)".

The GDP is term in the economics or gross domestic product is the monetary method to measure of the market value or all the final products or services which is sold in the specific time period in the country.

The reason of known the final goods measure of the size and health of an economy, and it represents the total market value of all the goods and services produced within a country's borders in a given period of time, typically a year. GDP is calculated by adding up the value of all final goods and services produced in the country, and it includes goods and services produced by both domestic and foreign companies operating within the country.

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A great business idea is
A. all you need to succeed.
B. an idea that no one else has ever thought of.
C. something that comes along once in a lifetime.
D. the beginning of a great business.

Answers

Answer:

B. an idea that no one else has ever thought of.

Explanation:

Because buisness it something that you may have rivals such as another company so you want to be better then them so people can use your company more and more.

B an idea that no one else has ever thought of

If i paid $625 interest on $5000 that i borrowed at 5%, how many years did i borrow it?

Answers

To calculate the number of years you borrowed the $5000, you can use the following formula:

Years = Interest ÷ (Loan Amount x Interest Rate)

Where:

Interest = $625

Loan Amount = $5000

Interest Rate = 5% (converted to decimal form: 0.05)

Plugging in the values, we get:

Years = $625 ÷ ($5000 x 0.05) = $625 ÷ $250 = 2.5 years. So you borrowed the $5000 for 2.5 years.

In other words, the interest of $625 results from borrowed $5000 for 2.5 years at a 5% interest rate. The interest is calculated as a percentage of the loan amount and represents the cost of borrowing the money. By dividing the interest by the loan amount and the interest rate, we can determine the years over which the interest was charged.

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Match the job titles with career clusters executive secretary survey researcher Storage and distribution manager loan officer cargo and freight agent general manager

Answers

Answer:

Accountant -  Finance  

Survey Researcher - Science, Technology, Engineering and Mathematics

Loan Officer - Finance

Cargo and Freight Agent - Transportation, Distribution and Logistics

General Manager - Business Management and Administration

Executive Secretary - Business Management and Administration

Storage and Distribution Manager - Transportation Distribution and Logistics

Purchasing Agent - Manufacturing

Explanation: i took the test and got 100

Matching the job titles with career clusters are Executive Secretary in Business Management and Administration, Survey Researcher in Science, Technology, Engineering and Mathematics.

What are career clusters?

Career Clusters provide students with a context for studying traditional academics and learning the skills specific to a career, and provide U.S. schools with a structure for organizing or restructuring curriculum offerings and focusing class make-up by a common theme such as interest.

In the U.S. Department of Education model, 17 Career Clusters link to 70+ more specific Career Pathways each having its knowledge and skills requirements. Within the 70+ career pathways, 1800 Career Specialties are defined. The structure has evolved and may vary by state. Matching more job titles with career clusters are Storage and Distribution Manager - Transportation Distribution and Logistics, Loan Officer Finance, and Cargo and Freight Agent - Transportation.

Further, Distribution and Logistics, General Manager - Business Management and Administration.

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Please help I'm about to fail my class and i will be grounded for life, 100 pts for it! its financial literacy

Part One–Research
Imagine you bought 100 shares of stock three years ago and are selling it today. Select a company and research its stock prices. You can start with websites like Nasdaq and Fidelity. Determine the stock's price three years ago, or the purchase price, and its price today, or the selling price.

Part Two–Determine the Real Return
Calculate the real return of your stock investment using the following information:

Purchase price of 100 shares of stock
Selling price of 100 shares of stock
10% tax rate
3% inflation rate
2% administrative fee on the selling price of the stock
Part Three–Evaluate
Analyze your research and calculations, and answer the following questions:

What company did you select to buy stock in? Why did you select the company?
Consider the real return of the stock investment. Do you consider it a wise investment? Why or why not?

Answers

1. I imagine buying 100 shares of Amazon.com Inc. on January 3, 2020, when the stock price was $93.75, investing $9,375.  

Today, October 31, 2022, the stock price of Amazon.com Inc. is $102.44.

2. The real return on my investment in Amazon.com Inc was a net loss of  7.12% or $667.60.

3. The company I selected to buy its stock three years ago was Amazon.com Inc.

4. I decided on Amazon.com Inc., hoping to earn spectacular returns since it is a multinational technology company.

5. When I consider the actual return on the stock investment in Amazon.com Inc., I think it was an unwise investment.

6. The investment returned a negative real value because I realized less than I initially invested; I actually lost about $667.60 overall.

What is the stock investment?

Stock investment is the purchase of shares for an ownership interest in a publicly-listed company.

The investor makes the investment with the hope that the investee will grow and perform well over some period, enabling the investor to earn some real returns (in the form of dividends and capital appreciation).

Purchase of 100 shares Jan. 3, 2020 = $9,375 (100 x $93.75)

Sales of 100 shares Oct. 31, 2022 = $10,244 (100 x $102.44)

Tax (10%) = $1,024.40 ($10,244 x 10%)

Inflation (3%) = $307.32 ($10,244 x 3%)

Administration fee on sales (2%) = $204.88 ($10,244 x 2%)

Real Returns in dollars = $8,707.40 ($10,244 - $1,024.40 - $307.32 - $204.88)

Loss on returns = $667.60 ($8,707.40 - $9,375)

Loss percentage = 7.12% ($667.60/$9,375 x 100)

Unfortunately, Amazon.com Inc. did not pay any dividends during the period of my investment, and I really lost funds to taxes, inflation, and administration fees when I sold it.

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which of the following class of stock is not allowed to be used in a section 351 transaction?

Answers

The following class of stock is not allowed to be used in a section 351 transaction:  All of these classes of stock can be used in a section 351 transaction. The correct option is D.

In a Section 351 transaction, shareholders transfer assets to a newly-formed corporation in exchange for shares of stock in the new corporation. The goal of such a transaction is to defer any tax liability that may arise from the transfer of assets.

When it comes to the class of stock that can be used in a Section 351 transaction, the answer is not straightforward. Generally, any class of stock can be used, including voting common stock, voting preferred stock, and nonvoting preferred stock. However, there are some limitations.

One class of stock that is not allowed to be used in a Section 351 transaction is nonvoting common stock. This is because nonvoting common stock does not carry any significant rights or privileges, which makes it less valuable than other classes of stock. As a result, if shareholders were to transfer assets in exchange for nonvoting common stock, it would not meet the requirements of a Section 351 transaction.

In conclusion, while all other classes of stock, including voting common stock, voting preferred stock, and nonvoting preferred stock, can be used in a Section 351 transaction, nonvoting common stock is not allowed. It is important to consult with a tax professional to determine the best class of stock to use in a Section 351 transaction and to ensure compliance with all applicable laws and regulations. The correct option is D.

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Complete question:

which of the following class of stock is not allowed to be used in a section 351 transaction?

a. Voting common stock

b. Voting preferred stock

c. Nonvoting preferred stock

d. All of these classes of stock can be used in a section 351 transaction.

The main strength of projective tests is that:

a. the tests are valid

b. meaning they measure what they are supposed to measure.

Answers

The main strength of projective tests is that they provide qualitative information about an individual that can be helpful in psychotherapy. The correct answer is opiton a.

The main strength of projective tests is that they provide qualitative information about an individual that can be helpful in psychotherapy (option a). These tests are designed to elicit unconscious thoughts, feelings, and motivations by presenting ambiguous stimuli. They can offer valuable insights into an individual's personality, emotions, and inner conflicts, which can aid in therapeutic understanding and treatment planning.

However, it is important to note that projective tests also have limitations, and their interpretation requires expertise and careful consideration of multiple factors.

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Negative reinforcement is the application of negative consequences to stop or change undesirable behavior. true or false

Answers

The given statement "Negative reinforcement is the application of negative consequences to stop or change undesirable behavior." is false  because an unpleasant or negative consequence is added or applied in response to a behavior to decrease the likelihood of that behavior occurring again.

For example, if a child is misbehaving in class, the teacher may take away their recess time as a negative consequence. This is designed to discourage the behavior and reduce the chances of it happening again in the future. Negative reinforcement is often used in combination with positive reinforcement, which involves rewarding desirable behavior to encourage its continuation.

It is important to note that negative reinforcement is not the same as punishment, which involves adding a negative consequence to the behavior. Instead, negative reinforcement involves removing a negative consequence in response to a desired behavior. Overall, negative reinforcement can be a powerful tool for changing behavior and promoting positive outcomes.

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here's a career question :)

here's a career question :)

Answers

Answer:

A. stock value of the company

What are the three ways the argument section of a cover letter can be formatted

Answers

You can write a cover letter argument in a bullet point list. A paragraph is an easy way to summarize your argument. Using bullet points is a good way to focus your arguments and have strong facts.

you buy 100 shares in a no-load mutual fund at its nav of $10. during the year, the mutual fund distributes $0.75 in dividends. you redeem the shares for their nav of $12.03, but the fund charges a 5.5 percent exit fee. what percentage return do you earn on the investment?

Answers

The percentage return on the investment is 12.93%.

To find the percentage return on the investment, we need to consider the dividend earned by the buyer before redemption.

So, The dividend earned = Number of shares * Dividend per share= 100 * $0.75= $75Now, we need to calculate the selling price of the shares after the exit fee is charged to the buyer. We have, The exit fee = 5.5% of $12.03 = 0.055 * $12.03 = $0.66Thus, the selling price of the shares after the exit fee is charged= 100 * ($12.03 - $0.66)= $1137.00Next, we will calculate the cost of the shares including the exit fee. We have, Cost of shares including the exit fee= 100 * $10.00 + $0.66 = $1006.66

So, the buyer earns a profit of= $1137.00 - $1006.66 = $130.34

The percentage return on the investment is given by

Profit Percentage = (Profit / Cost Price) x 100

Profit Percentage = ($130.34 / $1006.66) x 100

Profit Percentage = 12.93%

Therefore, the percentage return on the investment is 12.93%.

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needs refer to a person's relationship with other people

Answers

Answer:

Sure what do you need :)

Explanation:

While owning stocks can create strong profits for investors, what makes buying stocks riskier than buying bonds ?

Answers

Answer:

While owning stocks can create strong profits for investors, buying stocks is considered riskier than buying bonds because stocks are more volatile and can fluctuate significantly in value depending on the performance of the underlying company or the overall stock market. Additionally, there is no guarantee that a company will pay dividends or that the stock price will increase, whereas bonds usually pay a fixed interest rate.

the dramatic increase in the average annual cost of natural hazards over the last several decades is partly due to

Answers

The dramatic increase in the average annual cost of natural hazards over the last several decades is partly due to changes in the built environment and changes in societal factors.

Natural hazards are among the most significant economic and societal challenges faced by communities around the world. The majority of the world's population is exposed to multiple hazards, and the risk of damage and destruction is rapidly increasing. Natural hazards cost the world billions of dollars every year, as well as taking a significant toll on human life.

The dramatic increase in the average annual cost of natural hazards over the last several decades is partly due to changes in the built environment and changes in societal factors.

Increases in urbanization, globalization, and interdependence, as well as human behavior, have contributed to increased vulnerability to natural hazards. In addition, advances in technology and access to information have enabled the monitoring and forecasting of natural hazards, resulting in more comprehensive coverage of events and higher estimates of cost.

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write on perfect competition​

Answers

Perfect competition is an ideal type of market structure where all producers and consumers have full and symmetric information, no transaction costs, where there are a large number of producers and consumers competing with one another. Perfect competition is theoretically the opposite of a monopolistic market. lol

Finished goods ______. Multiple choice question. is the same as cost of goods manufactured consists of completed, unsold goods consists of goods that require additional processing before being sold consists of goods that have been sold to customers during the period

Answers

Finished goods consist of completed unsold goods which have not been sold to customers.

What is Finished goods?

Finished goods refer to completed goods or product that have pass through all the manufacturing process and completed they but have not be sold to the intending consumers.

They are completed processed products.

Therefore, Finished goods consist of completed unsold goods which have not been sold to customers.

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You are willing to supply the most cookies at the _____ price, and consumers will demand the most cookies at the _____ price.

Answers

Answer:

The word should be "best"

Explanation:

It may not be, i cannot say for sure without a word bank but my guess is the word "best"

You are willing to supply the most cookies at the best price, and consumers will demand the most cookies at the best price.

Can u mark brainliest?

Usually you would mark the HIGHEST price and consumers would bargain so they will demand a LOWER price for the cookies.

katelyn was just named risk manager of abc company. she has decided to create a risk management program which considers all of the risks faced by abc-pure, speculative, operational, and strategic-in a single risk management program. such a program is called a(n)

Answers

A risk management program which considers all of the risks faced by abc-pure, speculative, operational, and strategic-in a single risk management program. such a program is called enterprise risk management program.

What do you think is the most important aspect of international risk management for a manager why?

Making ensuring that contracts connected to overseas operations, such as those pertaining to quantity, quality, legality, and cost, are being followed is the most important part of international risk management. Therefore, the guidelines for carrying out foreign transactions are the conditions of the contracts. A deal's terms must be met in full.

The process of discovering, evaluating, and controlling risks to an organization's resources and profits is known as risk management. These dangers can be caused by a number of things, such as monetary unpredictability, legal responsibilities, technological problems, strategic management blunders, accidents, and natural calamities.

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Rajiv has a Personal Automobile Policy (PAP) that provides liability coverage with limits of $50/100/50, no medical payment insurance, and uninsured and underinsured motorist coverage with limits of $100/300. He has collision and comprehensive coverage, both of which have a $500 deductible. Suppose one day Rajiv fails to notice a red light, causing him to blindside another car crossing the intersection. Fortunately, he is not badly injured, but the medical bill for his hospital examination nonetheless amounts to $1,938. The driver of the other car, a woman named Simone, suffered severe injuries from the direct impact of the accident, requiring an initial surgery, an extended hospital stay, and additional physical therapy procedures for several subsequent months. The total of her medical bills, plus compensation for being unable to work for nearly a month, totaled $135,947. Simone’s insurance company successfully filed a claim against Rajiv by exercising subrogation rights. Coverage A of Rajiv’s plan will reimburse him for___________ of Simone’s medical bills. Rajiv’s medical bills_____________

Answers

When Simone's insurance company files a claim against Rajiv by exercising subrogation rights, coverage A of Rajiv's plan will reimburse him for $50,000 of Simone's medical bills. Rajiv's medical bills will not be reimbursed by his insurance plan.

The subrogation right is defined as the right of the insurer to pursue legal action against third parties who cause an insurance loss to an insured in exchange for a premium. When the insurer pays the insured for the loss, the insured is reimbursed for the loss.

The coverage provided in Rajiv's plan is given below:

Liability coverage with limits of $50/100/50

No medical payment insurance

Uninsured and underinsured motorist coverage with limits of $100/300

Collision and comprehensive coverage, both of which have a $500 deductible.

The total of Simone's medical bills, plus compensation for being unable to work for nearly a month, totaled $135,947. Simone's insurance company was able to claim a successful claim against Rajiv by using its subrogation right. Coverage A of Rajiv's plan will reimburse him for $50,000 of Simone's medical bills. Rajiv's medical bills will not be reimbursed by his insurance plan.

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who wants to vc wit me im depressed

Answers

When someone you care about is depressed, giving advice or wisdom may be something you do with only good intentions in mind.

So, yes Video calling would be a good option.

The straightforward definition of depression?

Mental disorders like depression are rather thing. It is believed that 5% of individuals worldwide experience this condition. It is characterized by enduring unhappiness and a loss of interest or pleasure in formerly rewarding or delightful activities. It may also between with appetite and sleep.

What is the modern term for depression?

Depression, now known as major depressive disorder or clinical depression, is a common but dangerous mood disease. It creates bad symptoms that interfere with your ability to function on a daily basis, including sleeping, eating, and working.

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I am 48 years, 48 weeks, 48 days and 48 hours old. How old am I?

Answers

48 x 7 (a week has 7 days) =336
336-48= 288
288-48-48=192

Answer:

53

Explanation:

Suppose that the current price of some good is $12.50. If a tax equal to $0.25 per unit increases market price to $12.70 what do we know? COPYRIGHTED MATERIAL. NOT TO BE SHARED. Price elasticity of su

Answers

The increase in market price to $12.70 due to the $0.25 tax implies that the sellers now receive $12.45, which is $0.25 less than the $12.70 that buyers pay per unit.

The difference between the market price and the price received by the seller due to the tax is called the incidence of the tax. What do we know when a tax of $0.25 per unit increases market price to $12.70 when the current price of some good is $12.50?

The tax has two effects: The first is that the price to the buyer will increase by the amount of the tax ($0.25). As a result, the price of the good to the buyer will now be $12.50 + $0.25 = $12.75. The second effect of the tax is that the price received by the seller will decrease. As a result of the tax, sellers would now get $12.70 - $0.25 = $12.45 per unit.

Therefore, the burden of the tax is shared by both the seller and the buyer. The incidence of the tax can be shared in different proportions, and the proportion of the tax incidence borne by the seller or the buyer will depend on the elasticity of the demand and supply curves. The total revenue received by the government from the tax will be equal to the amount of the tax times the quantity sold.

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the yield to maturity on oak corp's bonds is 13%. if their marginal tax rate is 38%, what is oak corp's after-tax cost of debt?

Answers

After-tax cost of debt is 8.06%

What Is the Cost of Debt?

The cost of debt is the actual interest rate that a company pays on its debts, including bonds and loans. Either the before-tax cost of debt, which is the amount owing by the business before taxes, or the after-tax cost of debt may be used to indicate the cost of debt. The majority of the difference between the cost of debt before and after taxes can be attributed to the fact that interest expenses are tax deductible.

The cost of debt is the effective interest rate that a business pays on its debt, such as bonds and loans.

The main distinction between the pretax cost of debt and the after-tax cost of debt is that interest expense is tax deductible.

• The capital structure of a corporation consists of two parts: equity and debt.

The average interest rate paid on all of a company's obligations must be determined in order to calculate the cost of debt.

How the Cost of Debt Works?

A company's capital structure, which also contains equity, includes debt as one component. A company's capital structure describes how it uses a variety of financial sources, including debt in the form of bonds or loans, to fund its overall operations and growth.

Understanding the entire rate that a company pays to use different kinds of debt financing is made easier with the help of the cost of debt measure. Due to the fact that riskier businesses typically have higher loan costs, the metric can also provide investors with a sense of how risky the company is in comparison to others.

Impact of Taxes on Cost of Debt

The interest paid on the debt less any income tax savings from deducting interest payments is the after-tax cost of debt. To determine a company's cost of debt after taxes, divide its effective tax rate by one and multiply the result by the cost of debt. Instead of using the company's marginal tax rate, the effective tax rate is calculated by combining the state and federal tax rates.

A company's pretax cost of debt, for instance, is 5% if all of its debt is represented by bonds it has issued at a 5% interest rate. If the effective tax rate is 30%, the difference between the two is 70%, which is 3.5% of the 5%. The cost of debt after taxes is3.5%

This computation is justified by the tax benefits the corporation experiences by deducting interest as a business expense. 2 Using the previous example as a guide, suppose the business issued $100,000 in bonds at a 5% interest rate. It has a $5,000 yearly interest payment. It declares this sum as an expense, which reduces the business's revenue by $5,000. The corporation writes off its interest, which results in a $1,500 tax savings because it pays a 30% tax rate. As a result, the business only effectively settles its debt for $3,500. This amounts to an interest rate on its debt of 3.5 percent.

BREFING:

The initial cost of debt is the after-tax cost of debt, which has been modified to account for the impact of the marginal income tax rate. It is calculated by deducting the company's incremental tax rate from 100 percent and multiplying the result by the debt's interest rate. The equation is:

Before-tax cost of debt x (100% - incremental tax rate)

= After-tax cost of debt

SOLUTION OF QUESTION=

13%*(100%-38%)=8.06%

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