Use the Following to Answer Questions: Table: GoodsClassification
Shirt
Rainfall

question 53

Essay

Use the following to answer questions: Table: GoodsClassification
Shirt
Rainfall
Smog Reduction
PlayStation Controller
Cable TV
National Defense
Baltimore Aquarium
Chewing Gum
Your Economics Textbook
Free Public Library
Your Teacher's Open Office Hours
Pen
Free Public Bus Service
-Describe the difference between each of the following three pairs of goods or services according to whether they are excludable or nonexcludable and rival or nonrival. $\begin{array}{|l|l|}\hline \text { a. } & \text { a city police department and a commercial security system } \\\hline \text { b. } & \text { movies on } \mathrm{HBO} \text { and movies on PBS (Public Broadcasting Service) } \\\hline \text { c. } & \text { fish in the ocean and fish in a fish farm }\\\hline\end{array}$

Identify and define the key components and consequences of financial restructuring, liquidation, and reorganization for distressed firms.

Distinguish between business risk and financial risk and their sources.

Understand the effects of financial leverage on WACC and the firm's cost of equity.

Analyze the impact of debt financing on firm value, considering direct bankruptcy costs and tax shields.

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Definitions:

Effective Interest Rate

The interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears.

Effective Interest Rate

The actual annual interest rate that takes compounding into account, providing a more accurate representation of the cost of borrowing.

Net 25

A payment term indicating that the full payment is due within 25 days from the invoice date.

365-Day Year

A calendar basis used in various financial calculations, assuming the year consists of exactly 365 days for simplifying interest and other time-sensitive computations.