Explain why the author uses the following formula to explain the amount of money a firm needs to repay an outstanding principal balance
Support your answer with n example that shows how much in EBT a firm in a 30% tax bracket would require to repay $1,000 in principal.
Before-tax cost of debt repayment = (principal repayment) / (1 - tax rate)
While debt interest payments are made before taxes, principal payments are not. Thus, a firm must earn enough in EBT so that after paying taxes there remain sufficient funds to pay the principal. For example, a firm in a 30% tax bracket with a $1,000 required principal repayment would need to have $1,000/(1-.30 ) = $1,428.57 in EBT so that they would have sufficient funds to pay both taxes and principal.
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No matter how hard we resist, we cannot ______.
Fill in the blank(s) with the appropriate word(s).
Top managers often use a(n) ________ system, which provides summary graphics and a user-friendly interface that aids in decision analysis.
A. e-commerce B. executive support C. expert support D. enterprise resource management E. transaction-processing
On September 12, Ryan Company sold merchandise in the amount of $5,800 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ryan uses the periodic inventory system and the net method of accounting for sales. The journal entry or entries that Ryan will make on September 12 is (are):
A.
| Sales | 5,800 | |
| Accounts receivable | 5,800 |
B.
| Accounts receivable | 5,684 | |
| Sales | 5,684 | |
| Cost of goods sold | 4,000 | |
| Merchandise Inventory | 4,000 |
C.
| Accounts receivable | 5,684 | |
| Sales | 5,684 |
D.
| Accounts receivable | 5,800 | |
| Sales | 5,800 | |
| Cost of Goods Sold | 4,000 | |
| Merchandise inventory | 4,000 |
E.
| Accounts receivable | 5,800 | |
| Sales | 5,800 |
The practice of returning production jobs to the United States is known as__________
Fill in the blanks with correct word.