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A New Firm Is Developing Its Business Plan

question 66

Multiple Choice

A new firm is developing its business plan. It will require $565,000 of assets, and it projects $452,800 of sales and $354,300 of operating costs for the first year. Management is quite sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 7.5%, but the bank requires it to have a TIE of at least 4.0, and if the TIE falls below this level the bank will call in the loan and the firm will go bankrupt. What is the maximum debt ratio the firm can use? (Hint: Find the maximum dollars of interest, then the debt that produces that interest, and then the related debt ratio.)

Understand the federal government's power to tax and spend, and the constitutional limitations on these powers.

Identify key amendments that protect individual freedoms and understand their application to both federal and state actions.

Define state action and its significance in the applicability of constitutional protections.

Describe the process and criteria of judicial review in the context of legislative and executive actions.

Definitions:

Demographic Data

Information collected about populations or specific groups, including age, sex, income level, and education, which is used for statistical analyses.

Individuality

The unique characteristics and qualities that distinguish one person from another.

Self-Esteem

An individual’s subjective evaluation of their own worth, encompassing beliefs about oneself as well as emotional states, such as triumph, despair, pride, and shame.

Mental Image

A representation of a sensory experience formed in the mind without the presence of external stimuli.