Answer:
1. Dr Cash $4,960
Cr Common Stock Issues $4,960
2. Dr Equipment $1,720
Cr Accounts Payable $1,720
3. Dr Rent Expenses$930
Cr Cash $930
4. Dr Service receivables $820
Cr Service Revenue $820
Explanation:
Preparation of the journal entries
1. Dr Cash $4,960
Cr Common Stock Issues $4,960
2. Dr Equipment $1,720
Cr Accounts Payable $1,720
3. Dr Rent Expenses$930
Cr Cash $930
4. Dr Service receivables $820
Cr Service Revenue $820
USAco, a domestic corporation, manufactures widgets for sale worldwide. In year 2020, USAco had $10 million of net income related to sales of products it manufactures in the US, of which 3 million relates to sales to customers outside the US. USACO also owns a factory, which it uses to produce the above income, and which has an average adjusted U.S. tax basis of $40 million (taking into account the straight-line depreciation method). As a result of these activities, USACo will be allowed a Foreign Derived Intangible Income ("FDII") deduction of _______________
Answer:
USAco
As a result of these activities, USACo will be allowed a Foreign Derived Intangible Income ("FDII") deduction of _______________
$236,250.
Explanation:
a) Data and Calculations
Net income = $10 million
Export sales income = $3 million
Normal tax on $3 million at 21% = $630,000
FDII 13.125% tax on $3 million = $393,750
Difference = $236,250
b) A foreign derived intangible income (FDII) arises from the ownership, sale, or exchange of intangible property, patents, copyrights, trademarks, trade names, or other products tied to intangible assets by USACo, which entitles it to make a tax deduction of the calculated amount or to be taxed at a reduced tax rate of 13.125% instead of the normal 21% corporate tax rate. The FDII is aimed at encouraging US-based corporations to export more goods and services while locating more intangible assets in the US.
Which of the following are mechanisms that have evolved to mitigate potential agency problems?
I) Using the firm's stock options for compensation
II) Hiring bickering family members as corporate spies
III) Boards of directors forcing out underperforming management
IV) Security analysts monitoring the firm closely
V) Takeover threats
Answer:
I) Using the firm's stock options for compensation
III) Boards of directors forcing out underperforming management
IV) Security analysts monitoring the firm closely
V) Takeover threats
Explanation:
Agency problem can be regarded as
conflict of interest which are inherent that can exist between management of a company and its stockholders. It exist when there is expectation that one party act in the best interest of other.
It should be noted that Mechanism that are used in mitigation of potential agency problems are;
I) Using the firm's stock options for compensation
III) Boards of directors forcing out underperforming management
IV) Security analysts monitoring the firm closely
V) Takeover threats
On October 31 of the current year, Bell Sports received a bank statement dated October 30. Information has been obtained from the bank statement and from the records of the business. Prepare a bank statement reconciliation. Use Oct. 31 of the current year as the date.
Answer and Explanation:
The preparation of the bank reconciliation is presented below:
For company books
Balance $4,226
Less: service charges -$16
Adjusted balance $4,210
For bank statement
Balance $4,461
Add: outstanding deposits $448
Less: outstanding checks
Number 110 $37
Number 111 $75
Number 114 $587
Adjusted balance $4,210
In January, Harry and Belinda Johnson had $10,660 in monetary assets: $1,100 in cash on hand; $1,200 in a statement savings account at First Credit Union earning 1.0 percent interest; $4,000 in a statement savings account at the Far West Savings Bank earning 1.1 percent interest; $2,260 in Homestead Credit Union earning a dividend of 1.3 percent; and $2,100 in their regular checking account at First Credit Union earning 1 percent.
If the Johnsons could put most of their monetary assets ($10,660) into a money market account earning 2.3 percent, how much would they have in the account after one year? Round your answer to the nearest dollar.
Answer:
the amount after one year is $10,905
Explanation:
The computation of the amount after one year is shown below:
= Monetary assets ×(1 + earning interest)
= $10,660 × (1 + 0.023)
= $10,660 × 1.023
= $10,905
Hence, the amount after one year is $10,905
We simply applied the above formula
Consider Cowboys Stadium, a large football stadium that can seat approximately 80,000 people (and hold over 100,000 people), located in Arlington, Texas.
If the Super Bowl, the game that determines pro football's champion team for the year, is played in Cowboys Stadium, the quantity of parking spots demanded will far exceed capacity. On a typical game day in the regular season, the quantity of parking spots demanded will only slightly exceed capacity. For smaller events, less than half of the parking spots are typically filled. Assume the marginal cost of providing another parking spot, once the parking lot has already been built, is $0 up to capacity.
In the following table, match each event to the most likely pricing strategy per parking spot.
Pricing Strategy Regular Season Game Super Bowl Small Event
$180 per spot ? ? ?
$4 per spot ? ? ?
$60 per spot ? ? ?
Answer:
180 dollar per spot is matched to the super bowl
4 dollar per spot is matched to small events
60 dollars per spot is matches to regular season game
Explanation:
the principle used in answering this question is that greater demand increases price. so large events would have greater demands for parking sots and hence reduced supply and greater prices.
first of all for the super bowl season the demands for parking spots are high, so that the demands are higher than the supply, so price should be highest here at $180 per spot.
secondly, for small events, the question says that less than half of the parking spots are filled, this means that the demand for parking spots is lower than the supply , so the price would be cheaper and therefore the lowest. The appropriate price would be $4 per spot.
lastly for regular season events, quantity demanded is only a little more than supply. they are almost equal. so the price should be the 60 dollars per spot as it is the second highest amount for the parking spots.
Papa John’s is one of the fastest-growing pizza delivery and carry-out restaurant chains in the country. Presented here are selected income statement and balance sheet amounts (dollars in thousands). Current Year Prior Year Net sales $ 1,242,087 $ 1,242,087 Net income 51,796 22,735 Average shareholders' equity 121,445 134,536 Average total assets 390,143 397,728 Required: 1. Compute ROA for the current and prior years. (Round your answers to 3 decimal places.)
Answer and Explanation:
The computation of the return on assets for the current and prior years are as follows:
As we know that
Return on assets = Net income ÷ average total assets
For current year
= $1,242,087 ÷ $390,143
= 3.184
And, for the prior year
= $1,242,087 ÷ $397,728
= 3.123
100 POINTS PLS HELP
In the hiring process are people who are willing to confirm the job candidate's previous employment
and discuss the candidate's qualifications for the job being applied for
A. Subcontractors
В. Classifieds
C. Personnel
D. References
Answer:
D. references
Explanation:
:)
The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2009, the allowance account had a credit balance of $75,000. Credit sales for 2009 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31.
Required:
1. Does this situation describe a loss contingency? Explain.
2. What is the bad debt expense that Manda Panda should report in its 2009 income statement?
3. Prepare the appropriate journal entry to record the contingency.
4. What is the net realizable value (book value) Manda Panda should report in its 2009 balance sheet?
Answer:
The Manda Panda Company
1. This is not a loss contingency. A loss contingency refers to a probable payment that might result from an uncertain event.
2. The bad debt expense that Manda Panda should report in its 2009 income statement is $70,000 ($73,000 -$75,000 + $72,000).
3. Debit Allowance for Uncollectible accounts $3,000
Credit Bad Debts Expense $3,000
To reduce the allowance account from $75,000 to $72,000.
Debit Bad Debts Expense $73,000
Credit Accounts Receivable account $73,000
To write-off the bad debts.
4. The net realizable value of accounts receivable is $418,000 ($490,000 - 72,000)
Explanation:
a) Data and Calculations:
Allowance for Uncollectible account (credit balance) = $75,000
Credit sales for 2009 = $2.4 million
Year-end Accounts Receivable = $490,000
Bad Debts = $73,000
Estimated allowance for Uncollectible = 3% of all credit sales (3% of $2.4 million) = $72,000
b) A contingency loss requires that a liability be created to account for the loss. This is not the case with making allowances for uncollectible accounts or writing off bad debts. There is no need to create a liability account since no payment will eventually be made to settle any liability in the future.
What is another term for the buying and selling of stocks?
A.) Entrepreneurial ability.
B.) Trading.
C.) Shares.
D.) Lack of scarcity.
Bledsoe Corporation has provided the following data for the month of November: Beginning Ending Raw materials $ 25,100 $ 21,100 Work in process $ 17,100 $ 10,100 Finished Goods $ 48,100 $ 56,100 Additional information: Raw materials purchases $ 72,100 Direct labor cost $ 92,100 Manufacturing overhead cost incurred $ 42,110 Indirect materials included in manufacturing overhead cost incurred $ 4,010 Manufacturing overhead cost applied to Work in Process $ 41,100 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold.
Required: Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold.
Answer:
Bledsoe Corporation
Schedule of Cost of goods manufactured
Particulars Amount
Direct materials:
Beginning material inventory $25,100.00
Add: Purchases $72,100.00
Raw material available for use $97,200.00
Less: Ending material inventory $21,100.00
Raw material used in production $76,100.00
Less: Indirect material $4,010.00 $72,090.00
Direct labor $92,100.00
Manufacturing overhead applied $41,100.00
Total manufacturing costs $205,290.00
Add: Beginning WIP $17,100.00
Total cost of work in process $222,390.00
Less: Ending WIP $10,100.00
Cost of goods manufactured $212,290.00
Bledsoe Corporation
Schedule of COGS
Particulars Amount
Cost of goods sold:
Beginning finished goods inventory $48,100.00
Add: Cost of goods manufactured $212,290.00
Cost of goods available for sale $260,390.00
Less: Ending finished goods inventory $56,100.00
Unadjusted cost of goods sold $204,290.00
Add: Underapplied overhead $1,010.00 ($42,110 - $41,100)
Adjusted cost of goods sold $205,300.00
. The equality of MR and MC is essential for profit maximization in all market structures because if multiple choice 1 MR and MC are equal, economic profits will be zero. MR is less than MC, producing more will increase profits. MR and MC are equal, any other output level will result in reduced profits. MR is greater than MC, producing more will lower profits.
Answer:
MR and MC are equal, any other output level will result in reduced profits.
Explanation:
Marginal cost is the increase in the total cost as a result of producing one additional unit. Marginal revenue is the increase in revenue resulting from the sale of one additional unit. Profit-maximization is the process by which a firm determines the price and output level that will result in the largest profit. The reason behind this strategy is that the total profit reaches its maximum point where marginal revenue equals marginal cost and the firm will continue to produce until marginal profit is zero. The marginal profit equals the marginal revenue minus the marginal cost.
Assuming that turkey chicken pork and beef are substitues supppose that the price of turkey had fallen. This will, other things being equal
wait where did the turkey fall?
sally borrowed $1000 from her friend monique two years ago. their arrangement required sally to repay $250 each year for the subsequent four years. Today with two paymewnts remaining on the loan, Sally offers to repay the loan with a single payment of $475. Assuming no change in interest rates throughout the entire time, should monique accept the signle $475 payment today, why or why not
Answer:
a
Explanation:
Here are the options to this question :
A. yes, 475 is more than the PV of the two remaining payments
B. More information is needed to decide
C. Monique is indifferent between the options, the PVs are equivalent
D. No, the PV of the remaining two payments is more than 475
We have to determine the present value of the remaining two payments and compare the options
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = 0
Cash flow in year 2 = 0
Cash flow in year 3 = 250
Cash flow in year 4 = 250
I = 2%
PV = $466.54
$475 is greater than $466.54. Therefore, she should accept the single $475 payment
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
It's best if you share the details of a personal appointment when you need to request time off work. True Or False
Answer:
False
Explanation:
find three examples of managers
you would describe as master managers. Write a paper describing these individuals
as managers and why you think they deserve this title.
ms
Answer:
All managers must be comfortable with three main types of activities or roles. To do their jobs, managers assume these different roles. No manager stays in any one role all of the time, but shifts back and forth. These roles are leadership (or interpersonal), informational, and decision making.
Explanation:
Hope it helps kahit na ndi ko na sagot ung main question.
The three examples of managers that we would describe as master managers are advertisement manager, accounting manager and analytics manager. The roles of managers are leadership, informational, and decision making.
What is an information?An information refers to something that has the power to inform. At the most fundamental level information pertains to the interpretation of that which may be sensed.
The digital signals and other data use discrete signs or alogrithms to convey information, other phenomena and artifacts such as analog signals, poems, pictures, music or other sounds, and the electrical currents convey information in a more continuous form.
Information is not knowledge itself, but its interpretation is important. An Information can be in a raw form or in an structured form as data. The information available through a collection of data may be derived by analysis by expert analysts in their domain.
Learn more about information here:
brainly.com/question/27798920
#SPJ5
FORco, a country F corporation, wants to open a sales office in the United States. FORco does not form a U.S. subsidiary, but instead operates in the U.S. as a branch. Country F does not have a income tax treaty with the U.S. If FORco loans operating funds to the U.S. branch, when the U.S. branch makes interest payment to FORco, the interest payment will be subject to:____.
Answer:
C. Subject to 30% withholding tax under the Branch Interest Withholding tax rules.
Explanation:
Options are "A. No interest withholding as the interest is deemed paid by the foreign corporation, since the U.S. branch is not a U.S. corporation. B. No interest withholding tax since the recipient of the interest is a foreign corporation. C. Subject to 30% withholding tax under the Branch Interest Withholding tax rules. D. Subject to 15% withholding tax under the Branch Profits tax rules. Reset Selection"
The interest payment will be subject to 30% withholding tax under the Branch Interest Withholding tax rules. Interest paid by a branch's U.S. trade or business, is considered U.S. source income and is subject to U.S. withholding tax at a rate of 30%, unless the tax is reduced or eliminated by a specific treaty or Code provision.
-At which point are you producing all running shoe
inserts and no hiking boot inserts?
-Which production point would be a goal for the future
but cannot be attained now?
Answer is A,X
Answer:
the guy above is right trust me (kid in all cp classes)
Explanation:
but yea he is correct
the majority of retailers are what
Garcia Company issues 8.50%, 15-year bonds with a par value of $390,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12.50%, which implies a selling price of 79. The effective interest method is used to allocate interest expense. 1. Using the implied selling price of 79, what are the issuer's cash proceeds from issuance of these bonds.
Answer:
$308,100
Explanation:
Calculation for what are the issuer's cash proceeds from issuance of these bonds
Using this formulaIssuer's cash proceeds from issuance of bonds=Fave value*Implies a selling price percentage
Let plug in the formula
Issuer's cash proceeds from issuance of bonds=$390,000*79/100
Issuer's cash proceeds from issuance of bond=$308,100
Therefore the issuer's cash proceeds from issuance of these bonds will have be $308,100
Decision making is often a biased and flawed process. This activity is important because a person who can identify and be aware of their biases may be able to make better decisions for themselves and may be able to diagnose flawed decisions that affect their workplace.The goal of this exercise is to test your knowledge of the nine fundamental decision-making biases.Availability BiasRepresentativeness BiasSunk-Cost BiasAnchoring and Adjustment BiasConfirmation BiasOverconfidence BiasHindsight BiasFraming BiasEscalation of Commitment BiasFirst, hover over each name and read the scenario. Next, click and drag each name into the appropriate area in the chart to correspond with the decision-making bias its scenario best represents.
Answer:
Availability Bias(Amber)
Representativeness Bias(Logan)
Sunk-Cost Bias(Katrina)
Anchoring and Adjustment Bias(Sue)
Confirmation Bias(Mike)
Overconfidence Bias(Bill)
Hindsight Bias(Kathy)
Framing Bias(Allison)
Escalation of Commitment Bias(Patrick)
Explanation:
Bias can as well be regarded as cognitive bias, it can be explained as tendency that comes in when making decisions or taking actions in ways that are illogical.It should be noted Decision making can often be biased as well as flawed process.
The fundamental decision making bias are been listed below as;
1)Availability Bias
2)Representativeness Bias
3)Sunk-Cost BiasAnchoring
3)Adjustment Bias
4)Confirmation Bias
5)Overconfidence Bias
6)Hindsight Bias
7)Framing Bias
8)Escalation of Commitment Bias
You decide to set aside $120 a month for your future. Assuming an interest rate of 6.35%, how much will you have after 25 years? How much more would you have if you invested for 30 years?
Answer:
After 20 years you will have "$87,784.99" and after 30 years you will have "$41,151.55".
Explanation:
The give values are:
After 25 years,
Cash Flow per period,
C = $120
Interest rate per period,
i = [tex]\frac{6.35 \ percent}{12}[/tex]
= [tex]0.52916667 \ percent[/tex]
Number of period,
n = [tex]25\times 12[/tex]
= [tex]300[/tex]
The future value will be:
= [tex]C\times \frac{ [(1+i)^n-1]}{i}[/tex]
On substituting the given values, we get
= [tex]\frac{120[ (1+0.0052916667)^{300} -1]}{0.0052916667}[/tex]
= [tex]120[\frac{(4.8711 -1)}{0.0052916667} ][/tex]
= [tex]87,784.99[/tex] ($)
After 30 years,
Cash Flow per period,
C = $120
Interest rate per period,
i = [tex]\frac{6.35 \ percent}{12}[/tex]
= [tex]0.52916667 \ percent[/tex]
Number of period,
n = [tex]30\times 12[/tex]
= [tex]360[/tex]
The future value will be:
= [tex]C\times \frac{ [(1+i)^n-1]}{i}[/tex]
On substituting the given values, we get
= [tex]\frac{120[ (1+0.0052916667)^{360} -1] }{0.0052916667}[/tex]
= [tex]\frac{120[ (1.0052916667)^{360} -1]}{0.0052916667}[/tex]
= [tex]120[\frac{(6.6857 -1)}{0.0052916667} ][/tex]
= [tex]128,936.54[/tex] ($)
Thus
You will have:
= [tex]128936.54-87784.99[/tex]
= [tex]41151.55[/tex] ($)
Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the following questions. Assume that the base year is 2012. Good2012 Price2012 Quantity2013 Price2013 Quantity A$2.00 500$2.50600 B$4.001,000$5.00900 C$2.00 200$1.00300 What was the real gross domestic product (GDP) in 2013
Answer:
$5400
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Real GDP is GDP calculated using base year prices. Real GDP has been adjusted for inflation.
($2 x 600) + ($4 x 900) + ($2 x 300) = $5400
Prepare a journal entry for the purchase of office equipment on February 19 for $31,700, paying $7,600 cash and the remainder on account. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is enter.
CHART OF ACCOUNTS
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Office Supplies
14 Prepaid Insurance
15 Land
16 Office Equipment
17 Automobiles
LIABILITIES
21 Accounts Payable
22 Unearned Rent
23 Notes Payable
24 Salaries Payable
EQUITY
31 John Doe, Capital
32 John Doe, Drawing
Journal
Prepare a journal entry for the purchase of office equipment on October 27 for $32,750, paying $6,550 cash and the remainder on account. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
GENERAL JOURNAL
DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT
1
2
3
REVENUE
41 Fees Earned
42 Sales Commission
Answer:
A. Dr Office equipment $31,700
Cr Cash $7,600
Cr Accounts payable $24,100
B. Dr Office equipment $32,750
Cr Cash $6,550
Cr Accounts payable $26,200
Explanation:
Preparation of the journal entry
A. Based on the information given if the purchase of office equipment on February 19 was the amount of $31,700 in which the amount of $7,600 was paid as cash while the remainder on account which means that the journal entry will be:
Dr Office equipment $31,700
Cr Cash $7,600
Cr Accounts payable $24,100
($31,700-$7,600)
B. Based on the information given if the purchase of office equipment on February 19 was the amount of $32,750 in which the amount of $6,550 was paid as cash while the remainder on account which means that the journal entry will be:
Dr Office equipment $32,750
Cr Cash $6,550
Cr Accounts payable $26,200
($32,750-$6,550)
100 POINTS + BRAINLIEST PLEASE HELP ME
Answer:
Hi there! Hope this helps you!
Explanation:
Three goals: Exercise,eat healthy, and do my work on time
I would write these on a paper and then I will check them with a pen, and every month I will try to do it and make a habit.
I dont know if this helped....
Have a great day!
Answer:
One of my career goals is a ufc fighter anther is a rapper third is a you tuber. I guess I would have to keep moving forward and never give up, if I feel doubt then I have to turn myself around.
Explanation:
Overcoming a challenge can very difficult for many people. I can't really remember a time I overcame a challenge, I guess I always stayed positive and It wasn't really a big deal to me, I just dealt with it and life goes on. But I can tell you some challenges I will or am trying to overcome in my present and future life. First, High School can be difficult for others for so many reasons, but my main problem getting through high school is passing and graduating. I guess I was dealing with a lot and couldn't really focus on my school work, so I failed and haven't passed a lot of classes so I'm very behind on my credits to graduate. Now I'm in twelfth grade and it's like taking every single class of high school I didn't pass all in one, so it's very overwhelming and a lot of work. Second, another challenge I will be overcoming in the future is to accomplish my goals and passion. I want to become a UFC fighter, rapper, and You Tuber. These goals are big dreams and achieving them can be almost not possible, but anything can be possible, you just have to have the mind set and tell yourself you can do anything. But it can be difficult if you don't know what to do or how to work towards your drams, so that's my main problem. Finally, my main challenge I'm trying to overcome is getting through life, some and many people don't really worry about life because there taking care of and been told they don't have to worry about anything. I have a rough life filled with tough love and scars and tears. But growing up didn't change my soul, I still believe I can accomplish anything and overcome anything. From what I learned from my challenges is that life can be overwhelming and can become hell but sometimes you have to go through hell to get to heaven. And going through experiences can make you wiser by learning from your mistakes and sometimes even learning from other peoples mistake. But I'm trying, it's seems like it's almost impossible to accomplish things I want to accomplish because bad things just happen to me and pulls me down and makes me want to give up on everything.
An investor obtained a fully amortizing mortgage five years ago for $95,000 at 11-percent for 30 years. Mortgage rates have dropped, so that a fully amortizing 25-year loan can be obtained at 10-percent. There is no prepayment penalty on the mortgage balance of the original loan, but three points will be charged on the new loan and other closing costs will be $2,000. All payments are monthly.
Required:
a. Should the borrower refinance if he plans to own the property for the remaining loan term? Assume that the investor borrows only an amount equal to the outstanding balance of the loan.
b. Would your answer to part (a) change if he planned to own the property for only five more years?
Answer:
a) yes, you should refinance the loan
b) yes, you should refinance the loan
Explanation:
the original monthly payment = $904.71
after 60 payments, the principal owed = $838.79
the difference between both payments = $904.71 - $838.79 = $65.92
in order to determine whether the loan should be refinanced or not, we must find the present value of refinancing costs:
are 300 payments of $65.92 worth more than $2,000?
PV = $65.92 x 110.162 (PVIFA, 0.833%, 300 periods) = $7,261.88 ≥ $2,000
PV = $65.92 x 47.07(PVIFA, 0.833%, 60 periods) = $3,102.85 ≥ $2,000
On January 1, 2019, Cullumber Corporation acquired machinery at a cost of $1650000. Cullumber adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2022, a decision was made to change to the double-declining balance method of depreciation for this machine. Assuming a 30% tax rate, the cumulative effect of this accounting change on beginning retained earnings, is
Answer:
$0
Explanation:
Since in the given situation there is a depreciation method change i.e. from the straight-line method to double-declining method so there would be no impact restrospectively.
Hence, there would be no cumulative impact as it creates the impact prospectively
So the impact would be zero
Suppose that you are running a business and you need some extra space for one year. Your bank offers you a loan of $200,000 at 0% interest. You consider borrowing this amount, buying the building, using it for one year, and then selling the building to pay back the loan. Unfortunately, the economy in which you are operating is experiencing deflation at a rate of 10% per year.
After one year, you should be able to sell the building for _.
Suppose that owning the building for a year would earn you $5,000. To decide whether or not you will be better off by owning it for one year and then selling it, you sought advice from three different people: (1) Your brother says that you should not buy the building because in one year it will cost you $100,000. (2) Your accountant says that you should definitely buy the building because you can borrow $100,000 at zero interest while the building will generate $5,000 in extra income. Then when you sell it, you will be $5,000 richer. (3) Your bookkeeper says that if you sell the building in a year, you will have to come up with more money to pay off the loan than you will make in extra income.
Keeping in mind that the economy experiences deflation at the rate of 10%, yourbookkeeper is right because: ________
a. When the nominal interest rate is zero, you do not incur any cost when you take out a loan.
b. The extra income you will earn will be less than the cost of owning the building for the year.
c. When the nominal interest rate is zero, the cost of a building is its full purchase price
Answer:
a. $180,000
b. The extra income you will earn will be less than the cost of owning the building for the year.
Explanation:
a) Data and Calculations:
Bank loan = $200,000
Interest rate = 0%
Cost of building = $200,000
Deflation rate = 10%
After one year, the price of the building will reduce to $180,000 ($200,000 * 90%)
So with deflation rate of 10%, you should be able to sell the building for only $180,000.
Expected revenue from owning the building for a year = $5,000
Cost of owning the building for a year = $20,000 ($200,000 - $180,000)
Therefore, the cost of owning the building for a year outstrips the revenue from owning the building by $15,000 ($20,000 -$5,000)
b. When The extra income you will earn then will be less than the cost of owning the building for the year.
Explanation:
a) When Data and Calculations:Then Bank loan = $200,000After that Interest rate = 0%Then Cost of building = $200,000Now Deflation rate = 10%Now After that one year, the price of the building will be reduce to $180,000 ($200,000 * 90%)So with deflation rate of 10%, you should be able to sell the building for only that is $180,000.When the Expected revenue from owning the building for a year = $5,000
After that the Cost of owning the building for a year = $20,000 ($200,000 - $180,000)So thus that Therefore, the cost of owning the building for a year outstrips the revenue from owning the building by $15,000 ($20,000 -$5,000)Learn more about:
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Compute the future value of $1,900 continuously compounded for: a. 7 years at an annual percentage rate of 8 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. 5 years at an annual percentage rate of 11 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. 8 years at an annual percentage rate of 5 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. 5 years at an annual percentage rate of 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$14,407.72
$10,604.64
$15,979.32
Explanation:
The formula to be used is :
FV = PV x е^r x N
FV = Future value
P = Present value
R = interest rate
N = number of years
$1,900 x e^0.08 x 7 = $14,407.72
$1,900 x e^0.11 x 5 = $10,604.64
$1,900 x e^0.05 x 8 = $15,979.32
In 1880 five aboriginal trackers were each promised the equivalent of 100 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 2002 the granddaughters of two of the trackers claimed that this reward had not been paid. The Victorian prime minister stated that if this was true, the government would be happy to pay the $100. However, the granddaughters also claimed that they were entitled to compound interest.
Required:
a. How much was each granddaughter entitled to if the interest rate was 4%?
b. How much was each entitled to if the interest rate was 8%?
Answer:
A. $11,969.3
B. $1,195,909.1
Explanation:
a. Calculation for How much was each granddaughter entitled to if the interest rate was 4%
First step is to calculate the Time period
Time period=2002-1880
Time period=122 years
Now let calculate the Future value using this formula
Future value=PV(1+r)^122 years
Let plug in the formula
Future value=$100(1+0.04)^122 years
Future value=$100(1.04)^122 years
Future value=$11,969.3
Therefore How much was each granddaughter entitled to if the interest rate was 4% will be $11,969.3
b. Calculation for How much was each entitled to if the interest rate was 8%
First step is to calculate the Time period
Time period=2002-1880
Time period=122 years
Now let calculate the Future value using this formula
Future value=PV(1+r)^122 years
Let plug in the formula
Future value=$100(1+0.08)^122 years
Future value=$100(1.08)^122 years
Future value=$1,195,909.1
Therefore How much was each entitled to if the interest rate was 8% will be $1,195,909.1
The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct?
i. If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.
ii. The demand for gasoline will fall in the future.
iii. The demand for electricity will rise in the future.
iv. The demand for diesel will rise in the future.
a. (i) and (ii)
b. only (i)
c. (ii) and (iv)
d. (i), (ii) and (iii)
Answer:
d. (i), (ii) and (iii)
i. If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future. ii. The demand for gasoline will fall in the future. iii. The demand for electricity will rise in the future.Explanation:
Currently electric cars are expensive because their supply is very limited, but if the supply increases, their price should fall.
Since less cars will consume gasoline and diesel, their demand should decrease in the future.
Since more cars will consumer electricity, its demand should increase in the future.
