In the circular flow of income and spending, financial institutions … [1] act as an intermediary between those who have surplus funds and those who have deficit funds.
[2] are not always useful, as households generally spend all their available funds.
[3] create an injection into the flow by collecting savings from participants with surplus units only; therefore, there is no need to provide funds to deficit units.
[4] generally exist to collect investment spending and transform it into savings.

Afirm's before-tax cost of debt, rd, is the interest rate that the firm must pay on debt. because interest is tax deductible, the relevant cost of debt used to calculate a firm's wacc is the cost of debt, rd (1 – t). the cost of debt is used in calculating the wacc because we are interested in maximizing the value of the firm's stock, and the stock price depends on cash flows. it is important to emphasize that the cost of debt is the interest rate on debt, not debt because our primary concern with the cost of capital is its use in capital budgeting decisions. the rate at which the firm has borrowed in the past is because we need to know the cost of capital. for these reasons, the on outstanding debt (which reflects current market conditions) is a better measure of the cost of debt than the . the on the company's -term debt is generally used to calculate the cost of debt because more often than not, the capital is being raised to fund -term projects. quantitative problem: 5 years ago, barton industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). the bonds currently sell for $845.87. if the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? round your answer to 2 decimal places. do not round intermediate calcu

In the supply-and-demand schedule shown above, at the lowest price of $50, producers supply music players and consumers demand music players.

Karen is working on classifying all her company’s products in terms of whether they have strong or weak market share and whether this share is in a slow or growing market. what type of strategic framework is she using?