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… a balance between the tax advantages of the debt and the various costs of using financial leverage. Costs of debt include agency costs, bankruptcy costs, and loss of future financing flexibility. A firm is allowed to deduct interest expenses form gross income when determining taxable income. So, … income to determine taxable income. The tax benefit from interest payments is calculated as follows: Tax benefit = Tax rate * Interest Payments.
Bankruptcy costs is a function of the cost of going bankrupt and the probability of bankruptcy. Firms with volatile earnings and high cash flows have a higher probabilities of bankruptcy at any given level of debt for any given level of earnings. Direct costs of bankruptcy include deadweight and legal costs while indirect costs are costs that arise because investors perceive a firm to be in trouble. Other things … indirect costs are costs that arise because investors……
References
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1. INTRODUCTION
This project plan is for a hypothetical struggling hospital in the NY Metropolitan area. The hospital is on the verge of bankruptcy but is the only pediatric hospital in the area. It also boasts of some of the most innovative researchers and physicians in the ……
References
Healthcare Business. (2013, May 15). Report: Hospitals waste billions using outdated technology. Retrieved from Health Care Business Tech: http://www.healthcarebusinesstech.com/outdated-technology-wastes-money/
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… on the other hand have seen business dry up due to mandated quarantine orders. Small business owners and large corporations have filed for bankruptcy. All of this impacts the banking sector and Wells Fargo specifically because of its role in managing loan products, using interest rates to ……
References
Beasley, M. (2020). How to Leverage ERM Principles to Better Respond to COVID-19-Related Risks. ERM Professional Insights.
Derysh, I. (2020). Watchdog questions why Wells Fargo reported giving only one large PPP loan to a Black-owned business. Retrieved from https://www.salon.com/2020/07/22/watchdog-questions-why-wells-fargo-reported-giving-only-one-large-ppp-loan-to-a-black-owned-business/
English, C. (2020). Wells Fargo Forced to Cut Its Dividend After Fed Stress Test. Here’s What Other Banks Did. Retrieved from https://www.barrons.com/articles/wells-fargo-forced-to-cut-its-dividend-after-fed-stress-test-51593467664
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… of the bank’s business operations. It is imperative to note that banks that have high credit risk also have high risk of experiencing bankruptcy and this puts the bank depositors in danger (Bhattarai, 2016). To sustain sufficient profit level in this intensely competitive setting, there is a ……
References
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...Bankruptcy While the U.S. enjoys the largest insurance market, U.S. companies no longer own the majority of the insurance market share in the country. Foreign companies do with 74% (Vaughan & Vaughan, 2013). This goes to show the extent to which foreign companies have grown in the insurance industry thanks to the globalization of insurance but also to the spread of wealth throughout the world. Insurance companies and finance go together as the former depends upon the latter for return on investment (ROI). Part of the problem with the globalization of insurance is that everything has been globalized—right down to investable markets. Since 2008, central banks around the world have lowered rates to the point that it is impossible for insurance funds to obtain a targeted ROI without investing in risk assets. Likewise, regulatory bodies have gone global as well with organizations like the Common Framework for the Supervision of Internationally……
References
Egan, M. (2018). Tax cut triggers $437 billion explosion of stock buybacks. Retrieved from https://money.cnn.com/2018/07/10/investing/stock-buybacks-record-tax-cuts/index.html
Flegm, E. H. (2008). The Need for Reliability in Accounting. Why historical cost is more reliable than fair value. Journal of Accountancy, 205(5), 34.
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Light, L. (2019). More than Half of All Stock Buybacks are Now Financed by Debt. Here’s Why That’s a Problem. Retrieved from https://fortune.com/2019/08/20/stock-buybacks-debt-financed/
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Vaughan, E. J., & Vaughan T. M., (2013). Fundamentals of Risk and Insurance, 11th Edition.
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