Increases in Discretionary Income Can Occur as a Result of All

question 183

Multiple Choice

Increases in discretionary income can occur as a result of all of the following EXCEPT:

• A)a decrease in gross income.
• B)an increase in taxes.
• C)a decrease in disposable income.
• D)a decrease in savings.
• E)an increase in inflation.

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Definitions:

Floatation Costs

Expenses incurred by a company when it issues new securities, including underwriting fees, legal fees, and registration fees.

Required Rate of Return

The required rate of return is the minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with fixed dividends.

After-Tax Cost of Debt

The interest expense on debt adjusted for taxes, showing the actual cost of debt financing after considering the tax shield.