What Is the Gain from Leverage for Bavarian Brew If

question 17

Multiple Choice

What is the gain from leverage for Bavarian Brew if the corporate tax rate equals 34%.In addition the personal tax rate on dividends for investors is 15% and the personal income tax on interest income equals 40%.

• A) $340,000
• B) $65,000
• C) $150,000
• D) $400,000

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Definitions:

Queuing Theory

A body of knowledge about waiting lines.

Little's Law

A principle in queuing theory stating that the long-term average number of customers in a stable system L is equal to the long-term average effective arrival rate, λ, multiplied by the average time a customer spends in the system, W (L = λW).

Poisson Distribution

The Poisson Distribution is a statistical distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space if these events occur with a known constant mean rate and independently of the time since the last event.

FIFO

An inventory valuation method, "First In, First Out," where the oldest inventory items are recorded as sold first, ensuring that the inventory remains up-to-date.