Converting to a flat tax system would mean everybody would give an equal percentage of their annual income earned for taxes. Now as this seems fair, is it really though? People who have lower incomes would obviously have a lot less money left over after the flat tax was collected. Another disadvantage of flat tax would be the loss of jobs. The IRS would be hit hard considering their line of work would be gone if the United States shifted to a flat tax system (Gordon
ARR AND NPV Accounting rate of return (ARR) is the average profit you expected from an investment; (Average annual profit/ total value of investment)= ARR. Net present value (NPV) determines the value of a project whether to accept or to reject it. According to the scenario; it stated Mr.Javins sometimes used ARR method rather than NPV, since he preferred. This cause conflict with finance team because, ARR is uses profits rather than cash flows, profits affected by non cash items. Therefore, ARR over estimate the profit (higher profit) and ARR don’t count time value of money plus it doesn’t adjust to risk too.
In general, Trade-Off Theory is another approach on gearing. In addition, this theory recognizes that target debt ratio varies from different organisation (Peake and Neale, 2009). However, the application of the shield tax applies to companies that are safe, with tangible assets, taxable income to shield must to have a peak target ratio. Furthermore, that does not have wealth maximization, and are high in risk resort to equity financing. However when expense are involved there are deferments in the optimum and when no expense is involved the target debt ratio is applicable (Brealy, Myers, Allen, 2011).
The Trans Mountain pipeline has characteristics or properties of Natural Monopoly, so it falls into the products of natural monopoly. When there is an economic of scale, that is, average cost decreases as quantity increases, the natual monopoly occurs. As a result, one firm is able to supply total amount of the products at a lower cost in the market than two or more firms. If the govenment does not regulate the Natural Monopoly, it may not benefit the social welfare and the optimal outcomes. In other words, they will produce much less and charge a higher price than social optiaml lead to a high price,low average costs and high profits.
If that point wasn’t already clear, the strongest argument that is pro-raising minimum wage is that, someone who gets paid more money, in turn, has more money. In other words, people who think the minimum wage should be raised, would argue that raising minimum wage would decrease poverty. While this argument certainly makes sense when it isn’t thought about too much, it is an argument that is very easily disproved. The first way this argument is disproven, is when inflation is taken into account. Inflation occurs when the buying power of a dollar decreases.
Regressive taxes are taxes that are the same for all individuals, regardless of income or other monetary values. Examples of such taxes would be gas, food, and other consumer goods. Taxes of these kind are known to reflect greater grievances to the poor than wealthier individuals. A better form of taxation that better benefits low-income individuals are known as progressive taxes. A progressive tax is a tax that is based on income which is why it is considered more favorable for the poor.
The focus of this theory is the strict order in which financing is favored. External financing is never preferred above internal financing. The pecking order theory states that external financing is too expensive, because outside investors possess less information than insiders and therefore involve more costs than necessary. Practically speaking this could imply that equity investors pay too little for a share, and that debt investors have interest rates set too high. Retained earnings are the preferred method of financing according to the pecking order theory.
(2). Basically, our country is more concerned with how much we're spending rather than creating and saving. It's disappointing to learn that those are the aspects that are being measured. Although the main concern is profit for companies to excel, the other factors should still be measured equally. Another quote by Derakhshani claims that, "A consumer economy only works if consumption of goods provides only temporary pleasure.
Economics is defined as the investigation of how people and social orders decide to utilize the constrained assets that nature and past eras have given (Case & Fair, 1999). The ten principles of economics depend on this definition and are the essentials of microeconomics studies. There are three components of the ten principles: how individuals decide, how individuals interface, how the business sector acts overall. In order to choose how to divide the limited resources available fairly and efficiently, we have to face many situations in which we have to make decisions. In economics studies, decision – making is a very crucial skill in every economist.
• Lower Government Acquisitions: Economic growth makes higher assessment incomes and there is less need to use funds on profits. For example, unemployment benefits. Subsequently, it serves to diminish obtaining. Likewise, it assumes a part in decreasing obligation to GDP degrees. DISADVANTAGES Long term financial development puts an awful effect on the inhabitants of any nation.