Exhibit 5-5 Demand Curve for Computers

question 26

Multiple Choice

Exhibit 5-5 Demand curve for computers

In Exhibit 5-5, the total revenue at point B on the demand curve equals:

• A) OA.
• B) CB.
• C) AB.
• D) OABC.

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Definitions:

Interest Tax Shield

The reduction in income taxes that results from taking the interest expense as a deductible charge.

Capital Structure

The capital structure is the mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity which funds its overall operations and growth.

Tax Rates

The segment of earnings an individual or corporate entity owes to the government in taxes.

Interest Tax Shield

The saving in taxes due to deductible interest expenses, which reduces taxable income and ultimately decreases the tax liability.