Debits (negatives) in the current account of the balance of payments accounts include
a. imports of goods.
b. exports of services.
c. transfers received from other countries.
d. purchases of U.S. government bonds by foreigners.
e. all of the above.
A
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A requirement for acquiring a related firm to generate value is
a. it be profitable b. you be profitable c. y ou will alter operations because of the acquisition d. all synergies between the firms were exploited before the acquisition
Assume that the user cost of capital (C) is simply
where r is the after tax rate of return, ? is the depreciation rate, ? is the corporate tax rate and,
r is the individual tax rate. Now assume further that the after-tax rate of return is 10 percent
and the economic depreciation rate is 2 percent. The firm faces corporate taxes of 35 percent
with an individual tax rate of 25 percent. Suppose that we now know that the present value of
depreciation allowances is 0.20. In addition, there is an investment tax credit of 0.10. What
effect does this new information have on the user cost of capital?