Rapid technological change occurred in the industrial sector of the United States concurrently with the Civil War, the expansion of railroads, the influx of immigrants, the conquest of the South, and an eruption of social and political unrest in Europe (revolutions in France, Germany, Austria-Hungary, and Italy in the period 1848-1870).Yet financial instability, with frequent events called "panics," was fairly normal -- as was the rise of criminals, embezzlers, and frauds to great wealth and power.1. Is economic theory a reasonably adequate tool for modeling all this, or should we instead choose a multidisciplinary approach?a. Economists try to create models, such as Hyman Minsky's famous "financial instability hypothesis," that link recurring patterns in the economy to non-economic factors such as regulation and deregulation by legislators, income polarization, and the business cycle. Economists bring a level of order to the chaotic. b. Economists usually get it wrong because they are overly focused on money. c. Historians, geographers, soil scientists, chemists, climatologists, and even psychologists do the necessary labor of collecting data, while all economists do is make abstract models that look like science but are actually spurious or, at best, oversimplifications. d. Details matter. Economists generalize.

Afirm's before-tax cost of debt, rd, is the interest rate that the firm must pay on debt. because interest is tax deductible, the relevant cost of debt used to calculate a firm's wacc is the cost of debt, rd (1 – t). the cost of debt is used in calculating the wacc because we are interested in maximizing the value of the firm's stock, and the stock price depends on cash flows. it is important to emphasize that the cost of debt is the interest rate on debt, not debt because our primary concern with the cost of capital is its use in capital budgeting decisions. the rate at which the firm has borrowed in the past is because we need to know the cost of capital. for these reasons, the on outstanding debt (which reflects current market conditions) is a better measure of the cost of debt than the . the on the company's -term debt is generally used to calculate the cost of debt because more often than not, the capital is being raised to fund -term projects. quantitative problem: 5 years ago, barton industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). the bonds currently sell for $845.87. if the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? round your answer to 2 decimal places. do not round intermediate calcu