Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The additional debt capacity depends on the interest rate and /or maturity term. If the maturity term is fixed, the lower interest rate will _______ the additional debt capacity.
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- 32. In computing the present value of the lease payments, the lessee should use the implicit rate of the lessor, assuming that the implicit rate is known to the lessee. use both its incremental borrowing rate and the implicit rate of the lessor, assuming that the implicit rate is known to the lessee. use its incremental borrowing rate in all cases. use the implicit rate in all cases.arrow_forwardExplain the Leverage and the Incremental Cost of Debt with example?arrow_forwardWhy might a company become involved in an interestrate swap contract to receive fixed interest payments andpay variable?arrow_forward
- When estimating cost of debt, the firm should not simply use current short-term rates because these rates do not reflect expectations regarding Group of answer choices long-term inflation expansionary monetary policy contractionary monetary policy short-term inflationarrow_forward1. Explain how an installment loan differs from revolving credit in terms of risk and the nature of the return to the lender.arrow_forwardInterest prepaid by the buyer, which may be used to reduce the stated interest rate the lender charges, are known as ▼ margins. points. payment caps. variable investments.arrow_forward
- What are the two best arguments favor debt reduction (i.e., the pros)?arrow_forwardThe additional debt capacity depends on the interest rate and /or maturity term. If interest rate is fixed, the longer maturity will _______ the additional debt capacity.arrow_forwardExplain the nature of long term debt.arrow_forward
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