Use the Following Data: ROA = 10%; Total Liabilities =

question 23

Multiple Choice

Use the following data: ROA = 10%; Total liabilities = 90% of assets; EBITDA = 10% of liabilities.Calculate the relative chance of failure using the following model: Log(relative chance of failure) = -6.445 - 1.192 ROA + 2.307 (liabilities/assets) - 0.346(EBITDA/liabilities) .

• A)1.7%
• B)1.09%
• C)0.16%
• D)none of the options

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Definitions:

Deadweight Loss

The loss of economic efficiency that can occur when equilibrium for a good or service is not achieved.

Tariff

A tax imposed by a government on imported goods, often used to protect domestic industries and to raise government revenue.

Total Surplus

The sum of consumer and producer surplus, representing the total net benefit to society from the production and consumption of goods and services.

World Price

The international market price of a good or service, influenced by factors like supply and demand, tariffs, and trade agreements.