The company cost of capital refers to the expected rate of return that investors require from a company's assets and operations.
It represents the cost of financing the company's operations and is an important metric for assessing the financial performance of the company. Cost of capital is expressed as a percentage and is determined by the weighted average of the costs of debt and equity capital. Debt capital refers to money borrowed from creditors, such as banks, and must be repaid with interest. Equity capital, on the other hand, refers to money invested by shareholders in exchange for ownership in the company.
The cost of debt is typically lower than the cost of equity because it is less risky for investors. However, companies with too much debt may have difficulty paying off their creditors, leading to bankruptcy. Equity capital is more expensive than debt capital, but it does not have to be repaid and does not incur interest charges.Cost of capital is an important metric for companies to consider when making investment decisions.
NPV is the difference between the present value of cash inflows and the present value of cash outflows, and is used to determine the profitability of an investment. If the NPV is positive, the investment is considered profitable, while a negative NPV indicates that the investment will not be profitable.
To know more about expected visit:
https://brainly.com/question/32070503
#SPJ11
Veach Division has total assets (net of accumulated depreciation) of $462,000 at the beginning of year 1 . One of the assets is a machine that has a net book value of $47,040. Expected divisional income in year 1 is $55,440 including $2,940 in income generated by the machine (after depreciation). Veach's cost of capital is 10 percent. Veach is considering disposing of the asset today (the beginning of year 1). Required: a. Veach computes ROI using beginning-of-the-year net assets. What will the divisional ROI be for year 1 assuming Veach retains the asset? b. What would divisional ROI be for year 1 assuming Veach disposes of the asset for its book value and there is no gain or loss on the sale? Note: Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1). c. Veach computes residual income using beginning-of-the-year net assets. What will the divisional residual income be for year 1 assuming Veach retains the asset? d. What would divisional residual income be for year 1 assuming Veach disposes of the asset for its book value and there is no gain or loss on the sale?
a. The formula for computing ROI is as follows: ROI = Operating Income / Invested Assets; ROI = $55,440 / $462,000; ROI = 12%.Therefore, the divisional ROI for year 1 assuming V each retains the asset is 12%.b. The formula for computing divisional ROI is as follows:
ROI = Operating Income / Invested Assets; ROI = $52,500 / $414,960; ROI = 12.7%.Therefore, the divisional ROI for year 1 assuming V each disposes of the asset for its book value and there is no gain or loss on the sale is 12.7%.c. The formula for calculating residual income is as follows:
Residual Income = Operating Income - (Cost of Capital * Invested Assets); Residual Income = $55,440 - (0.10 * $462,000); Residual Income = $8,040Therefore, the divisional residual income for year 1 assuming V each retains the asset is $8,040.d.
The formula for calculating residual income is as follows: Residual Income = Operating Income - (Cost of Capital * Invested Assets); Residual Income = $52,500 - (0.10 * $414,960);
Residual Income = $10,704 Therefore, the divisional residual income for year 1 assuming V each disposes of the asset for its book value and there is no gain or loss on the sale is $10,704.
To know more about assuming visit:
https://brainly.com/question/23902050
#SPJ11
A Big Mac costs $5.58 in the U.S. and Peso 75 in Argentina. If the nominal exchange rate between dollar and Peso is peso 37.46/$. Please calculate: (5 points)
What is the real exchange rate between U.S. Big Mac and Argentina Big Mac?
Which currency is overvalued and why?
The nominal exchange rate between the dollar and peso is Peso 37.46/$. If we divide the price of the U.S. Big Mac by the price of the Argentinian Big Mac, we obtain the nominal exchange rate between the Big Macs from both countries.
The nominal exchange rate between the two Big Macs is 2/4.93 = 0.405. This implies that, according to the nominal exchange rate, the peso is undervalued by roughly 59 percent. This is because the nominal exchange rate is less than the ratio of Big Mac prices in the United States and Argentina.
The real exchange rate is defined as the nominal exchange rate multiplied by the ratio of the price level of a fixed basket of goods in the two countries. The peso is overvalued, which means that the currency's purchasing power is higher than it should be.
To know more about dollar visit:
https://brainly.com/question/14686140
#SPJ11
The manufacturer of a product called Space Pets estimates the demand for their product to be QD = 134 − 10p. Currently, the price p = 6.
Calculate the price elasticity of demand. Round to the nearest 100th. Do not forget to include a negative sign.
Price elasticity of demand measures the responsiveness of demand for a good or service to a change in price.
Elasticity is negative for normal goods since price and quantity move in opposite directions and positive for inferior goods since price and quantity move in the same direction.
Given QD = 134 − 10p and p = 6, we can solve for QD as follows: QD = 134 − 10p = 134 − 10(6) = 94Therefore, Q = 94 and P = 6.To calculate PED, we need to find the percentage change in quantity demanded and the percentage change in price. We can do this using the midpoint formula:
Percentage change in quantity demanded = ([tex]ΔQ / ((Q1 + Q2)/2)) x 100%[/tex]
Percentage change in price =[tex](ΔP / ((P1 + P2)/2)) x 100%[/tex]where Q1 is the original quantity demanded, Q2 is the new quantity demanded, P1 is the original price, and P2 is the new price.
Let's assume that the new price is p2 = 8.
Then, the new quantity demanded is:[tex]QD2 = 134 − 10p2 = 134 − 10(8) = 54[/tex]
Percentage change in quantity demanded = [tex](Q2 - Q1) / ((Q1 + Q2)/2) x 100% = (54 - 94) / ((94 + 54)/2) x 100% = -40 / 74 x 100% = -54.05% (rounded to the nearest hundredth)Percentage change in price = (P2 - P1) / ((P1 + P2)/2) x 100% = (8 - 6) / ((6 + 8)/2) x 100% = 2 / 7 x 100% = 28.57%[/tex] (rounded to the nearest hundredth)
Using the formula for PED, we ge[tex]t:PED = (ΔQ/ΔP) x (P/Q) = (-54.05%/28.57%) x (6/94) = -1.9[/tex](rounded to the nearest hundredth)
Therefore, the price elasticity of demand for Space Pets is -1.9. This means that demand is relatively elastic since a 1% increase in price leads to a 1.9% decrease in quantity demanded.
To know more about responsiveness visit :
https://brainly.com/question/9874005
#SPJ11
(a) Assume a company that manufactures sporting products is considering the acquisition of additional machinery that will enable it to produce and sell more sports products. The company is evaluating three proposals. Proposal 1: involves the purchase of an equipment that costs M42 000 and is expected to contribute an annual net cash inflow of M14 500 per year during the equipment's five-year estimated useful life. Proposal 2: involves the purchase of an equipment that will cost M28 000 and is expected to contribute the following additional net cash inflows during the equipment's three-year estimated useful life. Neither of the equipment that costs M42 000 nor the one that cost M28 000 is expected to have any scrap value. Assuming all the cash flows are deflated (i.e., without the effect of inflation) The nominal cost of capital is 19.5% and the general inflation rate of 3.5%. Required: a) Differentiate between real and nominal interest rate and calculate the real cost of capital (round it off to 1 decimal place) b) Using the real cost of capital, determine the net present value of each proposal c) Assuming there is capital rationing, indicate the proposal that should be undertaken and give ONE reason for your answer. d) Discuss ONE weakness associated with the NPV that might tend to affect the decision to purchase the equipment made using projections from the NPV and suggest ONE way that might be resolved. e) Discuss ONE situation where the Net Present Value may be preferred to the Internal Rate of Return.
a) The nominal interest rate is the stated or quoted interest rate, which does not take into account the effects of inflation. whereas, the real interest rate is the adjusted interest rate that accounts for inflation.
b) The net present value of each proposal is NPV1 = ∑(M14,500 / (1 + 0.16)^t) - M42,000 and NPV2 = ∑(Net Cash Inflow / (1 + 0.16)^t) - M28,000.
c) The proposal with the highest positive NPV should be chosen.
d) One weakness of NPV is that it assumes perfect knowledge and accuracy in projecting future cash flows. To address this weakness, sensitivity analysis or scenario analysis can be performed to assess the impact of varying cash flow projections on the NPV.
e) One situation where NPV may be preferred over the internal rate of return (IRR) is when there are mutually exclusive projects with different scales of investment.
a) Differentiate between real and nominal interest rate and calculate the real cost of capital:
Nominal interest rate: The nominal interest rate is the stated or quoted interest rate, which does not take into account the effects of inflation. It is the rate at which money grows or is borrowed without considering the impact of inflation.
Real interest rate: The real interest rate is the adjusted interest rate that accounts for inflation. It represents the rate at which the purchasing power of money grows or is borrowed, taking into consideration the inflation rate.
To calculate the real cost of capital, we need to adjust the nominal cost of capital by subtracting the inflation rate. In this case, the nominal cost of capital is given as 19.5%, and the general inflation rate is 3.5%.
Real cost of capital = Nominal cost of capital - Inflation rate
Real cost of capital = 19.5% - 3.5%
Real cost of capital = 16%
Therefore, the real cost of capital is 16%.
b) Using the real cost of capital, determine the net present value of each proposal:
To calculate the net present value (NPV) of each proposal, we need to discount the net cash inflows using the real cost of capital. The NPV formula is:
NPV = ∑(Net Cash Inflow / (1 + Real Cost of Capital)^t) - Initial Cost
Proposal 1:
Initial Cost: M42,000
Net Cash Inflow: M14,500 per year (for 5 years)
NPV1 = ∑(M14,500 / (1 + 0.16)^t) - M42,000
Proposal 2:
Initial Cost: M28,000
Net Cash Inflows: Varying amounts per year (for 3 years)
NPV2 = ∑(Net Cash Inflow / (1 + 0.16)^t) - M28,000
c) Assuming there is capital rationing, indicate the proposal that should be undertaken and give ONE reason for your answer:
To determine the proposal that should be undertaken, compare the NPV of each proposal. The proposal with the highest positive NPV should be chosen.
d) Discuss ONE weakness associated with the NPV that might tend to affect the decision to purchase the equipment made using projections from the NPV and suggest ONE way that might be resolved:
One weakness of NPV is that it assumes perfect knowledge and accuracy in projecting future cash flows. However, in reality, future cash flows may be uncertain and subject to change. To address this weakness, sensitivity analysis or scenario analysis can be performed to assess the impact of varying cash flow projections on the NPV.
e) Discuss ONE situation where the Net Present Value may be preferred to the Internal Rate of Return:
One situation where NPV may be preferred over the internal rate of return (IRR) is when there are mutually exclusive projects with different scales of investment. The NPV takes into account the absolute value of cash flows and considers the project's profitability in monetary terms. On the other hand, the IRR provides the percentage rate of return and may not accurately reflect the scale or magnitude of the project's profitability. In such cases, comparing the NPV of different projects can provide a clearer picture of their relative profitability and value.
Learn more about NPV from the given link
https://brainly.com/question/18848923
#SPJ11
Discuss the North-South gap in terms of economic development, environmental issues, security and migration and explain how the Biden Administration addresses these issues from the perspective of US interests
The North-South gap refers to the difference between the northern hemisphere countries, which are typically more prosperous, and the southern hemisphere countries, which are generally less developed. This gap has implications for economic development, environmental issues, security, and migration. The Biden Administration is seeking to address these issues from the perspective of US interests by implementing policies that aim to promote economic growth, protect the environment, enhance security, and manage migration.
Economic development: The North-South gap is evident in the differences in economic development between countries. The northern hemisphere is home to many developed economies, while the southern hemisphere has many developing economies. The Biden Administration is working to close this gap by promoting trade and investment in developing countries, providing development assistance, and supporting efforts to reduce poverty and inequality.
Environmental issues: The North-South gap also manifests itself in environmental issues. Developing countries are often more vulnerable to the negative impacts of climate change and environmental degradation than developed countries. The Biden Administration is addressing this issue by promoting clean energy and environmental sustainability, both domestically and internationally.
Security: The North-South gap also has implications for security. Many developing countries are plagued by conflict, terrorism, and other security challenges. The Biden Administration is working to address these issues by providing security assistance, promoting democracy and human rights, and supporting peacekeeping efforts.
Migration: The North-South gap also fuels migration, as people from developing countries seek better economic opportunities and greater security in developed countries. The Biden Administration is addressing this issue by promoting legal immigration, improving border security, and addressing the root causes of migration by providing development assistance and promoting stability in developing countries.
In conclusion, the North-South gap has significant implications for economic development, environmental issues, security, and migration. The Biden Administration is addressing these issues from the perspective of US interests by promoting economic growth, protecting the environment, enhancing security, and managing migration.
To know more about environmental visit:
https://brainly.com/question/21976584
#SPJ11
84.75. To maximize profits or minimize losses, the firm should Multiple Choice continue producing 1,800 units. continue production, but reduce output. increase production. shut down.
The optimal level of production for a company is a critical decision. A company's production decision is influenced by several variables, including the market's demand for the commodity, the firm's production expenses, and the amount of revenue that can be earned from each commodity.
The optimal production level is achieved when a company maximizes its profit or minimizes its losses. Given the situation in question, the business should continue production and increase its production to maximize profit.To find the profit-maximizing output level, the business must compare the marginal cost of each unit with its marginal revenue. In other words, the profit-maximizing output level occurs
To know more about optimal visit:
https://brainly.com/question/28587689
#SPJ11
Hoffman Company offers warehouse workers a $.25 increase in their hourly wage the following month if they exceed production criteria by 10% or more. This is an example of a(n)________plan.
Hoffman Company's offer of a $.25 increase in the hourly wage to warehouse workers if they exceed production criteria by 10% or more in the following month is an example of an Incentive plan.
An incentive plan is a formal scheme intended to encourage or motivate people to perform better or to improve the quality of their work. Incentive plans are used by a wide range of organisations and employers to boost morale and productivity, and they can take a variety of forms, ranging from bonus payments to gift vouchers, prizes, or recognition ceremonies. The objective of an incentive plan is to provide an additional layer of motivation or encouragement to workers to do their jobs well and to produce high-quality work that helps the organisation achieve its goals and objectives.
Learn more about motivation from the given link:
https://brainly.com/question/30937628
#SPJ11
A compensation system that is based on the achievement of specific objectives of the client is known as a . a. pay-for-results compensation
b. a markup charge
c. commission system d. fee-based system
A compensation system that is based on the achievement of specific objectives of the client is known as C. commission system.
A compensation system that is based on the achievement of specific objectives of the client is commonly referred to as a commission system. In this type of system, individuals or entities receive compensation based on a percentage or commission of the value of the goods or services they sell or the specific objectives they achieve on behalf of their clients.
Commission systems are often used in sales-related roles, where individuals earn a commission based on the volume of sales they generate or the revenue they bring in for the company. The compensation is directly tied to the results achieved, incentivizing the individual to perform well and meet or exceed the set objectives.
Pay-for-results compensation (option A) is a broader term that encompasses various types of compensation systems, including commission systems. It refers to compensation structures where payment is directly tied to the outcomes or results achieved.
A markup charge (option B) is a pricing mechanism where a percentage is added to the cost of a product or service to determine the selling price. It is not directly related to a compensation system based on client objectives.
A fee-based system (option D) typically involves charging clients a set fee or hourly rate for specific services rendered, regardless of the outcomes achieved. It is not specifically tied to client objectives or performance-based compensation.
To learn more about, compensation system, click here, https://brainly.com/question/32656518
#SPJ11
Jonathan Edwards is evaluating a business opportunity to sell cookware at trade shows. Mr. Edwards can buy the cookware at a wholesale cost of $390 per set. He plans to sell the cookware for $470 per set. He estimates fixed costs such as plane fare, booth rental cost, and lodging to be $5,600 per trade show.
A Determine the number of cookware sets Mr. Edwards must sell at a trade show to break even (zero profit or loss). Use the following structure to answer this question:
Determine the amount of the contribution margin per unit.
Calculate the break-even point in units.
Calculate the break-even point in sales dollars.
B Assume Mr. Edwards desires to earn a profit of $6,400 per show.
Determine the sales volume in units (sets of cookware) necessary to earn the desired profit.
Determine the sales volume in dollars necessary to earn the desired profit.
Mr. Edwards would need to sell 150 sets of cookware, generating $70,500 in sales, in order to earn a profit of $6,400 per trade show.
A. To determine the break-even point, we need to calculate the contribution margin per unit and then use it to calculate the break-even point in units and sales dollars.
Contribution margin per unit:
Contribution margin per unit = Selling price per unit - Variable cost per unit
Variable cost per unit is the difference between the selling price per unit and the wholesale cost per set:
Variable cost per unit = Selling price per unit - Wholesale cost per set
Variable cost per unit = $470 - $390 = $80
Break-even point in units:
Break-even point in units = Fixed costs / Contribution margin per unit
Break-even point in units = $5,600 / $80 = 70 units
Break-even point in sales dollars:
Break-even point in sales dollars = Break-even point in units * Selling price per unit
Break-even point in sales dollars = 70 units * $470 = $32,900
Therefore, Mr. Edwards must sell at least 70 sets of cookware at a trade show to break even.
B. To earn a profit of $6,400 per show, we need to calculate the sales volume in units and sales volume in dollars necessary to achieve the desired profit.
Sales volume in units:
Sales volume in units = (Fixed costs + Desired profit) / Contribution margin per unit
Sales volume in units = ($5,600 + $6,400) / $80 = 150 units
Sales volume in dollars:
Sales volume in dollars = Sales volume in units * Selling price per unit
Sales volume in dollars = 150 units * $470 = $70,500
Learn more about profit here:
https://brainly.com/question/15047315
#SPJ11
What creative tactic was used in the campaign "A Family Trip Home from bellairdirect and Uber"? silce of life humour comparison dramatization
The creative tactic used in the campaign "A Family Trip Home from bellairdirect and Uber" is dramatization. The campaign "A Family Trip Home from bellairdirect and Uber" is an advertising campaign that utilized dramatization to attract customers' attention and help them understand the services offered by Bellairdirect and Uber.
The campaign features a family trip that is dramatized in a humorous way, which helps the audience to understand the challenges of travelling and the benefits of Bellairdirect and Uber.
The humorous dramatization helps the audience to relate to the characters in the ad and encourages them to use the services offered by Bellairdirect and Uber. The creative tactic used in the campaign "A Family Trip Home from bellairdirect and Uber" is dramatization. The campaign is an advertising campaign that utilized dramatization to attract customers' attention and help them understand the services offered by Bellairdirect and Uber.
The campaign features a family trip that is dramatized in a humorous way, which helps the audience to understand the challenges of travelling and the benefits of Bellairdirect and Uber. The humorous dramatization is a creative tactic that has been used in advertising for decades. It helps the audience to relate to the characters in the ad and encourages them to use the services offered by Bellairdirect and Uber.
Dramatization involves the use of exaggerated situations or events that are designed to capture the audience's attention and create a memorable impression. It is an effective technique for advertisers because it helps them to create a strong emotional connection with their audience.
In the case of "A Family Trip Home from bellairdirect and Uber," the dramatization is used to highlight the challenges of travelling and the benefits of using Bellairdirect and Uber. By using humour to dramatize the situation, the audience is more likely to remember the ad and to associate it with positive feelings.
In conclusion, the creative tactic used in the campaign "A Family Trip Home from bellairdirect and Uber" is dramatization. The humorous dramatization is an effective technique for advertisers because it helps to create a strong emotional connection with the audience.
To learn more about advertising campaign
https://brainly.com/question/11698706
#SPJ11
Which of the following has NO effect on project schedule? Resource availability Task sequences Task constraints None of the above
All the factors listed - resource availability, task sequences, and task constraints - can have an effect on the project schedule.The correct answer is: None of the above.
All of the listed factors can have an effect on the project schedule. Here's an explanation of each:
1. Resource availability: The availability of resources, such as personnel, equipment, and materials, can significantly impact the project schedule. If key resources are not available as planned, it may result in delays or the need to reschedule tasks.
2. Task sequences: The order and sequence in which tasks are scheduled can directly influence the project schedule. Certain tasks may have dependencies on others, requiring them to be completed in a specific order. Any changes to task sequences can impact the overall project timeline.
3. Task constraints: Constraints refer to limitations or restrictions that affect the scheduling of tasks. Examples of constraints include fixed start or end dates, mandated deadlines, or specific requirements that must be met. Task constraints can impact the scheduling and duration of tasks, which in turn affect the project schedule.
Therefore, all the factors listed - resource availability, task sequences, and task constraints - can have an effect on the project schedule.
To learn more about project schedule click here: brainly.com/question/24280271
#SPJ11
All the factors listed - resource availability, task sequences, and task constraints - can have an effect on the project schedule.The correct answer is: None of the above.
All of the listed factors can have an effect on the project schedule. Here's an explanation of each:
1. Resource availability: The availability of resources, such as personnel, equipment, and materials, can significantly impact the project schedule. If key resources are not available as planned, it may result in delays or the need to reschedule tasks.
2. Task sequences: The order and sequence in which tasks are scheduled can directly influence the project schedule. Certain tasks may have dependencies on others, requiring them to be completed in a specific order. Any changes to task sequences can impact the overall project timeline.
3. Task constraints: Constraints refer to limitations or restrictions that affect the scheduling of tasks. Examples of constraints include fixed start or end dates, mandated deadlines, or specific requirements that must be met. Task constraints can impact the scheduling and duration of tasks, which in turn affect the project schedule.
Therefore, all the factors listed - resource availability, task sequences, and task constraints - can have an effect on the project schedule.
To learn more about project schedule click here: brainly.com/question/24280271
#SPJ11
BANK 3009 Corporate Valuation and Risk Management
**PLS provides the formulas and functions used in excel**
1) Consider the following two sets of project cash flows:
A) Assume that projects X and Y are mutually exclusive. The correct investment decision and the best rational for that decision is to:
i) invest in Project Y since IRRY > IRRX.
ii) invest in Project Y since NPVY > NPVX.
iii) neither of the above.
B) What are the incremental IRR and NPV of Project X?
C) Is the use of the incremental measures in B) appropriate to your evaluation of the preferred project? Explain.
D) Which is the preferred project? Explain and justify the basis for your choice.
Part A)I) IRRY > IRRX, hence invest in project Y because project Y has a higher internal rate of return. NPVY > NPVX, hence invest in project Y because project Y has a higher net present value.
Neither of the above is incorrect since the IRR rule and NPV rules conflict when the projects are mutually exclusive. Part B)NPVX = $16,235NPVY = $18,317 Incremental IRR = (IRRXY – IRRY) = [(NPVY/NPVXY) x (IRRX – IRRY)] = [(18,317/23,917) x (22.05% – 20.00%)] = 3.15%.
Yes, incremental measures are appropriate because of the mutually exclusive nature of the two projects. The incremental measures reflect the increase in expected cash flow that results from selecting one project over another. Project Y is preferred because it has the highest NPV of $18,317.
To know more about internal visit:
https://brainly.com/question/31799903
#SPJ11
Diversifieable (company-specific) risk is represented by beta in the CAPM equation. True False QUESTION 33 A contract that acts like an insurance policy against bond defaults (and other credit events) is called a(n): collateralized debt obligation. mortgage-backed security plain vanilla interest rate swap credit default swap
Diversifiable (company-specific) risk is not represented by beta in the CAPM equation, and a contract that acts like an insurance policy against bond defaults (and other credit events) is called a credit default swap.
Diversifiable (company-specific) risk, also known as unsystematic risk, is a type of risk that affects a particular corporation and is caused by factors that are unique to that corporation. This risk can be caused by various factors such as a decrease in demand for a product or service, management or employee difficulties, or the introduction of a new product by a competitor. Since diversifiable risk is restricted to a specific company, it can be reduced through diversification by investing in other companies and sectors.
Beta is a measure of the risk associated with an investment relative to the market as a whole. The capital asset pricing model (CAPM) equation includes beta as a measure of systematic risk, which represents the risk associated with investing in the market as a whole. As a result, beta does not represent diversifiable risk, which is company-specific and may be reduced through diversification.
As a result, the statement is False. What is a credit default swap (CDS)?A credit default swap (CDS) is a financial contract between two parties in which one party pays the other party a premium in exchange for protection against the risk of default on a specific debt instrument. The CDS provides the purchaser with protection against the risk of default, while the seller receives a premium for accepting that risk. CDSs are often used to hedge against the risk of default in corporate and sovereign bonds. As a result, the response is "credit default swap."
To know more about contract visit:
https://brainly.com/question/984979
#SPJ11
when a purely competitive firm is in long-run equilibrium, price is equal to: group of answer choices minimum average cost, but may be greater or less than marginal cost minimum average cost, and also to marginal cost marginal revenue, but may be greater or less than both average and marginal cost marginal cost, but may be greater or less than average cost
When a purely competitive firm is in long-run equilibrium, the price is equal to the minimum average cost, and also to the marginal cost. This means that the price that the firm receives for its product is equal to the cost of producing an additional unit.
In a perfectly competitive market, firms are price takers, meaning they have no control over the price of their product. The price is determined by the market forces of supply and demand.In long-run equilibrium, all firms in the market are earning zero economic profit. This means that they are covering all their costs, including opportunity costs, and are receiving a normal rate of return on their investment.
At the minimum average cost, a firm is producing at the most efficient scale, where it is minimizing its costs per unit of output.The marginal cost represents the additional cost of producing one more unit of output. In long-run equilibrium, the price equals the marginal cost, ensuring that the firm is maximizing its profits by producing the optimal quantity of output.
To know more about equilibrium visit:
https://brainly.com/question/29352362
#SPJ11
Identify" and "define" two leadership attributes and
two leadership behaviors? Select "one" of
the two leadership attributes and "one" of the two leadership
behaviors you listed and assess yourself in
Leadership attributes and behaviors are key factors that distinguish successful leaders from unsuccessful ones. They are the qualities and actions that define an individual's leadership style.
Two leadership attributes and two leadership behaviors are as follows:
Leadership Attributes:
1. Confidence: A leader should be confident in their abilities and have faith in their judgment. They must possess self-assurance and a clear sense of direction.
2. Accountability: A successful leader is accountable for their actions. They must be responsible and ready to take ownership of their decisions.
Leadership Behaviors:
1. Communication: A good leader must be able to communicate their vision and goals effectively. They must be able to listen actively and provide feedback when required.
2. Collaboration: A leader must promote a collaborative culture. They must establish a culture of mutual respect and cooperation among team members.
When it comes to assessing yourself, one can use a self-assessment tool to identify their leadership strengths and areas for improvement. This will help you to identify what your leadership strengths and weaknesses are. If you have selected "confidence" as a leadership attribute and "communication" as a leadership behavior, you can assess yourself on the following basis:
Confidence:How often do you feel confident in your leadership abilities?Do you take risks when necessary?Do you lead by example?
Communication:How effectively do you communicate with your team members?Do you encourage feedback from your team members?How often do you practice active listening?
learn more about leadership attributes
https://brainly.com/question/25996547
#SPJ11
Project risk is dealt with in different ways depending on the phase of the project. Using a risk management process will improve the operation of a program by improving overall visibility, facilitating communication and providing an excellent basis for capturing lessons learned.
Based on a sample project case, explain the four-phase approach to risk management.
The four-phase approach to risk management is used to mitigate or minimize risk exposure at various stages of a project's life cycle.
The four phases are risk assessment, risk mitigation planning, risk mitigation implementation, and risk monitoring and control. Below is a detailed explanation of each of the four phases:
1. Risk Assessment: This stage is intended to evaluate the overall risk profile of the project and to classify risks. This stage provides a clearer understanding of the potential risks that may arise during the project and categorizes them into high, medium, or low priority.
2. Risk Mitigation Planning: This phase is concerned with developing a strategy to mitigate or minimize risks based on the results of the risk assessment. The risk mitigation plan should provide a comprehensive approach to dealing with risks that include corrective measures, preventive measures, and contingency planning.
3. Risk Mitigation Implementation: After the risk mitigation plan has been created, it is time to put it into action. This involves following the mitigation plan and executing the necessary tasks to mitigate or minimize risks.
4. Risk Monitoring and Control: This stage of the process involves monitoring the progress of the risk mitigation plan. It is done to assess whether the implemented mitigation measures are working as planned, and to identify and address any issues or new risks that have arisen. If necessary, the risk mitigation plan is revised based on the new risk profile, and the cycle continues.
In conclusion, the four-phase approach to risk management enables project managers to minimize the impact of potential risks that may arise in the course of a project by identifying them early, developing an effective mitigation strategy, and monitoring progress continually.
To know more about the management, visit:
https://brainly.com/question/17640752
#SPJ11
A monopolist can maximize his profits when the MC is equal to the MR or when the slope of MC is greater than the slope of the MR at the point of intersection. However, what will be the profit of a monopolistic firm that operates at a total cost of 350+70x+20x 2
and produces quantity x=80−4.1p ?
Monopoly refers to the dominance of one seller in the market. The monopolistic firm has full control over the price of a good or service and determines the quantity supplied to maximize their profits. The monopolist can maximize his profits when the MC is equal to the MR or when the slope of MC is greater than the slope of the MR at the point of intersection.
However, what will be the profit of a monopolistic firm that operates at a
total cost of 350+70x+20x² and produces quantity x = 80 − 4.1p
We have given that
Total cost (TC) = 350 + 70x + 20x²
Quantity, x = 80 - 4.1p
The marginal cost (MC) is given as
d(TC) / dx = 70 + 40x
The marginal revenue (MR) is given as
d (TR) / dx = p + x (dp / dx)
The monopolistic firm's profit is given as follows:
π = TR - TC
We need to calculate the profit of a monopolistic firm at a total cost of 350+70x+20x² and produces quantity x = 80 − 4.1p.
Here, Total cost (TC) = 350 + 70x + 20x²
We know that the monopolist can maximize his profits when the MC is equal to the MR or when the slope of MC is greater than the slope of the MR at the point of intersection.
So, we need to find MC and MR:
MC = d(TC) / dx
MC = 70 + 40x=>
MC = 70 + 40(80 - 4.1p)=>
MC = 230 - 164p...[i]
MR = d(TR) / dx = p + x (dp / dx)=>
MR = p + x * (-4.1)......[ii]
Now, we need to find p using the demand function, which is given as:
x = 80 − 4.1p80 − 4.1p = x-4.1p
x= x / 80 - 1 / 20p
x= (80x - 4x) / 1600p
x= (20x - x) / 410p
x= 19x / 410
Substitute the value of p in equation [ii]
MR = p + x * (-4.1)=>
MR = 19x / 410 + x * (-4.1)=>
MR = 19x / 410 - 4.1x
The profit of a monopolistic firm that operates at a total cost of 350 + 70x + 20x² and produces quantity x = 80 − 4.1p
is given as
π = TR - TC
π = (19x / 410 - 4.1x) * x
π = 19x² / 410 - 4.1x² - 350 - 70x - 20x²
π = -3.7x² - 51.8x - 350π
π = -3.7(80 - 4.1p)² - 51.8(80 - 4.1p) - 350
Now, substitute the value of p from equation [i]
π = -3.7(80 - 4.1(19x / 410))² - 51.8(80 - 4.1(19x / 410)) - 350
π = -6.394x² + 172.5x - 758.79
The monopolistic firm's profit that operates at a total cost of 350+70x+20x² and produces quantity x = 80 − 4.1p is -6.394x² + 172.5x - 758.79.
To now more about monopolistic firm visit:
https://brainly.com/question/29525468
#SPJ11
if divideneds of 100800 were in arrers on preferred stock what would be the balance reported for retained earnings
The balance reported for retained earnings would be reduced by $100,800.
Dividends in arrears on preferred stock represent accumulated unpaid dividends that have not been distributed to the preferred stockholders. These dividends are typically cumulative, meaning they must be paid before any dividends can be paid to common stockholders.
To calculate the impact on retained earnings, we need to subtract the dividends in arrears from the accumulated retained earnings. The balance reported for retained earnings would be reduced by the amount of the dividends in arrears.
If the dividends in arrears on preferred stock amount to $100,800, the balance reported for retained earnings would decrease by that amount. Assuming there are no other adjustments or transactions impacting retained earnings, the calculation would be as follows:
Retained Earnings Balance = Retained Earnings - Dividends in Arrears
If we assume the retained earnings balance before considering the dividends in arrears is X, then:
X - $100,800 = New Retained Earnings Balance
Therefore, the balance reported for retained earnings would be reduced by $100,800.
Learn more about dividend here:
https://brainly.com/question/33428821
#SPJ4
Tucker, Inc.s net sales decreased from $90,000 in year
one to $45,000 in year two, and its cost of goods sold decreased
from $30,000 in year one to $20,000 in year two. The vertical
analysis based on
Vertical analysis reveals that net sales remained constant at 100%, while the cost of goods sold increased from 33.33% to 44.44%.
By expressing each line item as a percentage of a base amount, a technique called "vertical analysis" can be used to analyze financial statements. In this instance, we may use vertical analysis to examine the changes in net sales and cost of goods sold for Tucker, Inc. over the course of two years.
Net sales were $90,000 and cost of goods sold was $30,000 in the first year. When the vertical analysis was calculated, the cost of goods sold represented 33.33% ($30,000/$90,000 * 100) of the base amount and the net sales represented 100% ($90,000/$90,000 * 100).
In the second year, net sales fell to $45,000 while the cost of products sold fell to $20,000 as well. The vertical analysis was conducted, and net sales now represent 100% ($45,000/$45,000 * 100) and the cost of Goods sold make up 44.44% of the initial sum ($20,000/$45,000 * 100).
According to the vertical analysis, net sales as a percentage of the base amount were constant in both years at 100%. However, from 33.33% in year one to 44.44% in year two, the cost of goods sold increased. This shows that during the past two years, the cost of producing items has increased relative to net sales, which may point to production or price inefficiencies. To comprehend the underlying causes of these changes and take the necessary action, more study and investigation into the business's operations and financial performance would be required.
Learn more about Vertical analysis here:
https://brainly.com/question/29392869
#SPJ11
a driver knows more than his auto insurer about how cautiously he drives. this is an example of a. the condorcet paradox. b. a hidden characteristic. c. a hidden action. d. adverse selection.
The statement "a driver knows more than his auto insurer about how cautiously he drives" is an example of a hidden action.
In insurance contexts, a hidden action refers to a situation where one party possesses private information or has the ability to take actions that are not observable or known to the other party.
In this case, the driver's level of caution while driving is not directly observable by the auto insurer. The driver has more information about their driving behavior, such as their adherence to traffic rules, speed limits, and general cautiousness. The insurer, on the other hand, relies on observable factors such as the driver's age, driving record, and other relevant information to assess the risk associated with insuring the driver.
The presence of hidden actions can lead to issues of adverse selection, which is the tendency for individuals with higher risk profiles to seek or retain insurance coverage more than those with lower risk profiles. Adverse selection occurs when the party with private information (the driver in this case) uses that information to their advantage in securing insurance coverage, potentially leading to imbalances in the risk pool and higher costs for insurers.
While adverse selection is related to hidden actions, it is not the best choice for this specific example as the focus is on the driver's knowledge about their driving behavior rather than the selection of insurance coverage based on risk. Therefore, the most appropriate answer is c. a hidden action.
To learn more about, auto insurer, click here, https://brainly.com/question/29376319
#SPJ11
The Lyric carries a large inventory of guitars and other musical instruments. The store uses a perpetual inventory system. Company records indicate the following for a particular line of guitars. The sale price of each guitar was $1,600. (Click the icon to view the cost of goods sold calculation from the FIFO perpetual inventory record.) (Click the icon to view the cost of goods sold calculation from the moving-weighted-average-cost perpetual inventory record.) Required Calculate the gross margin for The Lyric Store under both the FIFO and the moving-weighted-average-cost methods. Explain why the gross margin is higher under the moving-weighted-average-cost method. FIFO Perpetual Inventory Record Moving-Weighted-Average Cost Perpetual Inventory Record Gross margin under FIFO is $ Gross margin under weighted-average-cost is \$ The moving-weighted-average-cost method produces a cost of goods sold (and therefore a higher gross margin) because unit inventory costs are in this scenario. While counts the earlier inventory first, the method uses all inventory on hand in determining the cost of goods sold.
The moving-weighted-average-cost method results in a higher gross margin compared to FIFO because it incorporates all inventory on hand in calculating the cost of goods sold.
In the FIFO method, the cost of goods sold is determined by assuming that the first units purchased are the first ones sold. This means that the older, potentially cheaper inventory is considered to be sold first, leading to a lower cost of goods sold and, subsequently, a lower gross margin.
On the other hand, the moving-weighted-average-cost method calculates the cost of goods sold by taking into account the average cost of all inventory on hand. This method considers both older and newer inventory at their respective average costs, resulting in a higher cost of goods sold and, therefore, a higher gross margin.
By including all inventory costs in the calculation, the moving-weighted-average-cost method better reflects the current market prices and the overall cost structure of the store. This approach can be advantageous when prices are rising because it accounts for the increased costs of newer inventory, leading to a higher gross margin.
In summary, the moving-weighted-average-cost method produces a higher gross margin for The Lyric Store compared to the FIFO method. This is because the moving-weighted-average-cost method includes the average cost of all inventory on hand, providing a more accurate representation of the current cost of goods sold and reflecting any price increases in newer inventory.
To know more about, click here-
brainly.com/question/26533444
#SPJ11
The gross margin for The Lyric Store is higher under the moving-weighted-average-cost method compared to FIFO. This is because the moving-weighted-average-cost method considers the average cost of all inventory, leading to lower cost of goods sold and higher profits for the store.
Explanation:The gross margin for The Lyric Store under the FIFO method is $700 per guitar, while under the moving-weighted-average-cost method it is $800 per guitar.
The gross margin is higher under the moving-weighted-average-cost method because it takes into account the average cost of all inventory, including the earlier purchases, instead of just the cost of the most recent purchases.
This results in a higher gross margin as the cost of goods sold is lower when using the average cost, leading to higher profits for the store.
Learn more about gross margin here:https://brainly.com/question/33119023
#SPJ2
Your organization produces and sell a single product and you are required to do a monthly cost-volume-profit analysis of this product. For October 2015, the company budgeted to produce 3,500 units of the product at a selling price of $350 each. The following cost information relating to the product was made available to you:
Cost per unit
$
Direct labour 80
Direct materials 70
Variable production overheads 60
210
Fixed production overheads 80
Total 290
Required:
(a) Determine the budgeted fixed cost associated with production for October 2015.
(b) Calculate the break-even point in units and sales revenue. (c) Express the break-even point as a percentage of the budgeted sales. (d) Determine the margin of safety and explain the result that you get. (e) Calculate the budgeted profit for October 2015. (f) If the company wanted to make a profit of $420,000.
What would the new selling price be?
(a) The budgeted fixed cost associated with production for October 2015 is $80 per unit. It means the total budgeted fixed cost is 3,500 × $80 = $280,000.
(b) Break-even point formula is expressed as follows:
Sales revenue - Variable cost - Fixed cost = 0Break-even point = Fixed cost / Contribution margin per unit
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin per unit = $350 - $210 = $140Break-even point = $280,000 / $140 = 2000 units
Therefore, the break-even point in units is 2000 and the break-even point in sales revenue is 2000 × $350 = $700,000.
(c) The percentage of the budgeted sales for the break-even point can be determined as follows:
Percentage of budgeted sales = (Break-even point / Budgeted production) × 100Percentage of budgeted sales = (2000 / 3,500) × 100 = 57.14%
Therefore, the break-even point is 57.14% of the budgeted sales.
(d) Margin of safety is expressed as the difference between actual sales and the break-even sales level. The formula for calculating the margin of safety is as follows:
Margin of safety = Actual sales - Break-even point in sales revenue Margin of safety = (4500 × $350) - $700,000 = $575,000 The margin of safety is $575,000.
It indicates that the company’s sales can decrease by $575,000 before the company incurs losses
.(e) The budgeted profit can be determined as follows:
Budgeted profit = Sales revenue - Total variable cost - Fixed cost
Budgeted profit = (3,500 × $350) - (3,500 × $210) - $280,000
Budgeted profit = $1,225,000 - $735,000 - $280,000 = $210,000
Therefore, the budgeted profit for October 2015 is $210,000.
(f) The formula for determining the new selling price can be expressed as follows:
Sales revenue = (Variable cost per unit × Number of units sold) + Fixed cost + Desired profit Sales revenue = ($210 × 3,500) + $280,000 + $420,000 Sales revenue = $1,575,000
Therefore, the new selling price is $1,575,000 / 3,500 = $450 per unit.
To know more about budget visit:
https://brainly.com/question/31952035
#SPJ11
Company on behalf of two key employees for the year ended December 31 st 2021:− a. SNIL b. $13070 c. d.
$10,000
$11,690
d. $11,690 ii. Which one of the following is deductible in computing income from a business or property? a. $6,000 of donations to a federal political party b. $6,000 of legal expenses related to the purchase of an investment in shares c. $5,000 of legal expenses for the purposes of obtaining a perit to sell Apple products d. Interest paid on a loan used exclusively to purchase investments in a tax free savings account. lii. Which of the following statements is true regarding the CRA;s right to reassess an income tax return? a. Retiring allowance; life insurance paid by the employer; legal fees incurred to collect unpaid salary. b. Tips and gratuities; dental insurance paid by the employer; exercise of options o purchase shares of the employer c. Employee contributions to a registered pension plan; signing bonus on accepting employmen; availability of an employer owned automobile d. Monthly automobile allowance; group disability insurance paid by the employer; promotional costs incurred in selling the employer's products. iv. Throughout 2021, X Ltd. provided Mary with a company-leased car for employment purposes but paid none of his car related operating costs. The manufacturer's list price of the car was $38,000, including HST. During the year Mary drove a total of 40,000 kilometres of which 30,000 were in the course of employment. X Ltd's monthly lease payments were $1,100 including HST. Which of the following is Mary's taxable benefits in relation to the car? a. b. c. d.
$4,399
$4,550
$2,200
$3,300.
v. A taxpayer has a Class 8 pool with three different office desks, originally costing $500 each, left in the class. Which of the following statements is true when it comes to calculating CCA for the current year? a. A terminal loss occurs when there is a balance in the pool just before the last asset is sold b. Recapture can occur even if there are still assets left in the pool. For example, a sale of an asset causes the pool's remaining UCC balance to become negative c. Each desk should be set up as a separate Class #8 asset d. When it comes to the sale of the Class #8 assets only the market value should be credited to the pool.
For the year ended December 31st, 2021, the company incurred expenses on behalf of two key employees. The total amount of expenses was $11,690.
In computing income from a business or property, the deductible expense would be interest paid on a loan used exclusively to purchase investments in a tax-free savings account. Regarding the Canada Revenue Agency's (CRA) right to reassess an income tax return, none of the options provided in the question seem to be accurate.
None of the given statements match the criteria for reassessment by the CRA.For Mary, who was provided with a company-leased car for employment purposes, the taxable benefit related to the car would be $4,550.
When calculating Capital Cost Allowance (CCA) for the current year, each office desk in the Class 8 pool should be set up as a separate asset, and the market value should be credited to the pool upon sale.The company's expenses incurred on behalf of the two key employees for the year ended December 31st, 2021, amounted to $11,690.
Learn more about investments click here:
brainly.com/question/14921083
#SPJ11
For the year ended December 31st, 2021, the company incurred expenses on behalf of two key employees. The total amount of expenses was $11,690.
In computing income from a business or property, the deductible expense would be interest paid on a loan used exclusively to purchase investments in a tax-free savings account. Regarding the Canada Revenue Agency's (CRA) right to reassess an income tax return, none of the options provided in the question seem to be accurate.
None of the given statements match the criteria for reassessment by the CRA. For Mary, who was provided with a company-leased car for employment purposes, the taxable benefit related to the car would be $4,550.
When calculating Capital Cost Allowance (CCA) for the current year, each office desk in the Class 8 pool should be set up as a separate asset, and the market value should be credited to the pool upon sale. The company's expenses incurred on behalf of the two key employees for the year ended December 31st, 2021, amounted to $11,690.
Learn more about investments click here:
brainly.com/question/14921083
#SPJ11
Jupiter Investments acquired $36,000 of Carlisle Corp., 7% bonds at their face amount on September 1, 2014. The bonds pay interest on September 1 and March 1. On March 1, 2015, Jupiter sold $9,000 of Carlisle Corp. bonds at 103.
Journalize the entries to record the following:
1. The initial acquisition of the Carlisle Corp. bonds was on September 1, 2014.
2. The adjusting entry for four months of accrued interest earned on the Carlisle Corp. bonds on December 31, 2014.
3. The receipt of semiannual interest on March 1, 2015.
4. The sale of $9,000 of Carlisle Corp. bonds on March 1, 2015, at 103.
Do not copy from Chegg and give complete answer with explanation
The initial acquisition of the Carlisle Corp. bonds on September 1, 2014.Journal entry to record the initial purchase of the bonds Date Account Title and Description Debit Credit Sep.
1Investments in Carlisle Corp. bonds36,000Cash36,0002.
The adjusting entry for four months of accrued interest earned on the Carlisle Corp. bonds on December 31, 2014. Since the bonds pay interest on September 1 and March 1, four months' interest (from September 1 to December 31) must be accrued as of December 31.
The calculation is: $36,000 x 7% x 4/12 = $840.
An adjusting entry is needed to record this interest earned and to increase the bond investment account and accrued interest account. Date Account Title and Description Debit Credit Dec.
31Interest receivable840Accrued interest8403.
The receipt of semiannual interest on March 1, 2015.
The semiannual interest of $1,260 ($36,000 x 7% x 6/12)
Date Account Title and Description Debit Credit Mar. 1Cash1,260Interest receivable1,2604. The sale of $9,000 of Carlisle Corp. bonds on March 1, 2015, at 103.
The bond investment is decreased by the sale proceeds of $9,270 ($9,000 x 103%).
The carrying amount of the bonds sold is $8,820 ($9,000 carrying amount - $180 unamortized premium). DateAccount Title and Description Debit Credit Mar. 1Cash9,270Investments in Carlisle Corp. bonds8,820Gain on sale of investments450 Thus, the journal entries to record the transactions have been provided.
To know more about bonds visit:
https://brainly.com/question/31388849
#SPJ11
Nova Corporation issued a discount bond to finance the acquisition of equipment. The proceeds received by Nova on the issue date were equal to: The face amount of the bond minus the present value of the coupon payments discounted at the coupon interest rate. the present value of the face amount plus the present value of the coupon payments discounted at the effective rate of interest. the face amount of the bond plus the present value of the coupon payments discounted at the coupon interest rate. the present value of the face amount minus the present value of the coupon payments discounted at the effective rate of interest. Accounting is Fun Corporation provided the following information about it's taxes. What is the amount of tax expense shown on the income statement? $8,500 $7,100 $15,600
Discount bond is the bond in which interest is paid to the bondholders upon the bond's maturity. The bond is initially sold at a price less than its face value or par value, of the bond and the amount paid by the purchaser is the amount of the discount.
This discount is reflected in the price of the bond. In finance, the term "discount rate" refers to the rate used to determine the present value of future cash flows, such as interest payments or dividends, in order to determine the value of an asset or liability.
Discount bonds are usually sold at a price less than their face value and are issued to finance the purchase of assets, such as equipment. The proceeds from the issuance of discount bonds are equal to the face amount of the bond minus the present value of the coupon payments discounted at the coupon interest rate.
Accounting is Fun Corporation provided the following information about it's taxes. Here's the given information: Income tax payable -
beginning of the year = $7,100Income tax expense = $15,600
Income tax payable - end of the year = $8,500
We are given the income tax expense, which is the amount of tax that Accounting is Fun Corporation will have to pay in the current year. Thus, the answer is: $15,600.
To know more about interest visit:
https://brainly.com/question/30393144
#SPJ11
GM stock is currently trading at $18.08 per share. What is the time value of a GM call option trading at $4.32 with a strike price of $15.00 ? $10.68 $4.32 $3.08 $1.24
A GM call option with a strike price of $15.00 and trading at $4.32 while the stock is currently trading at $18.08 will have a time value of $1.24. This is because the time value of an option is calculated as the difference between its premium and its intrinsic value.
What is an Option Options are financial derivatives that provide the buyer with the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (strike price) and date in the future. The option's seller receives a premium for providing this right to the buyer.
A call option is an option to buy an underlying asset, while a put option is an option to sell an underlying asset. What is Time Value of an Option An option's time value is the difference between its premium and its intrinsic value.
The intrinsic value of an option is the difference between the current price of the underlying asset and the option's strike price. The time value of an option, also known as its extrinsic value, is influenced by a variety of factors, including the time remaining until expiration, the underlying asset's volatility, and the level of interest rates.
The time value of an option declines as the option nears expiration because there is less time for the option to move in-the-money.Why is Time Value Important?Time value is essential because it reflects the market's expectation of the probability of an option finishing in-the-money before it expires.
To know more about currently visit:
https://brainly.com/question/31315986
#SPJ11
The required reserve ratio is 10%. Dollar Bank has $50,000 in deposits and $10,000 in reserves. Assume all other commercial banks are loaned up. (a) What is the value of this bank's excess reserves? (b) What is the value of the additional loans that can be made by the commercial banking system? (c) What is the money multiplier? (d) How much in total deposits will be supported by Dollar Bank's reserves, if this bar lends all its excess reserves and there is no leakage from the banking system?
The value of this bank's excess reserves is $5,000.The value of the additional loans that can be made by the commercial banking system is $45,000.The money multiplier is 10. Total deposits will be supported by Dollar Bank's reserves, if this bar lends all its excess reserves and there is no leakage from the banking system IS $450,000
Given that the required reserve ratio is 10%. Dollar Bank has $50,000 in deposits and $10,000 in reserves. Assume all other commercial banks are loaned up. (a) The value of this bank's excess reserves is $5,000.Excess reserves = Reserves - Required reserves reserves = $10,000Required reserves
= $50,000 × 10% = $5,000Excess reserves
= $10,000 - $5,000
= $5,000
(b) The value of the additional loans that can be made by the commercial banking system is $45,000.The lending capacity of Dollar Bank = Deposits - Required reserves
= $50,000 - $5,000
= $45,000
(c) The money multiplier is 10. The money multiplier is the reciprocal of the required reserve ratio or money multiplier = 1/required reserve ratio given that the required reserve ratio is 10% or 0.1, the money multiplier is 1/0.1 = 10
(d)Total deposits will be supported by Dollar Bank's reserves, if this bar lends all its excess reserves and there is no leakage from the banking system IS $450,000. The total amount of deposits that will be created by Dollar Bank's $5,000 excess reserve is $5,000 × 10 = $50,000. So, if the bank lends all its excess reserves and there is no leakage from the banking system, the total deposits that will be supported by Dollar Bank's reserves will be $50,000 × 9 = $450,000.
Learn more about Excess reserves
brainly.com/question/31956613
#SPJ11
15 per cent rise in the price of red wine increases the quantity of white wine demanded by 10 per cent. Calculate the Cross elasticity of demand (CED) for red wine and white wine. Are red wine and white wine complements or substitutes? Explain.
Cross elasticity of demand (CED)The cross elasticity of demand (CED) measures the percentage change in the demand for one good as a result of a percentage change in the price of a different good.
The cross-elasticity of demand formula is given as; CED = Percentage change in quantity demanded of good X / Percentage change in price of good Y Calculation For the given scenario, the 15% rise in the price of red wine increases the quantity of white wine demanded by 10%.
Thus the CED of red wine and white wine can be calculated as follows; CED = Percentage change in quantity demanded of good X / Percentage change in price of good YCED = 10 / 15CED = 0.67Red wine and white wine are substitutes because of the cross-elasticity of demand coefficient.
If the coefficient of cross-elasticity is positive, this indicates that the two products are substitutes. A higher CED reflects that the goods are highly substitutable.
In this case, since the CED for white wine is 0.67, this means that the two goods are substitutes, and thus an increase in the price of red wine will result in consumers buying white wine instead of red wine.
To know more about demand visit:
https://brainly.com/question/30402955
#SPJ11
Universal Travel Inc. borrowed $503,000 on November 1,2021 , and signed a 12-month note bearing Interest at 8%. Interest is payable in full at maturity on October 31,2022 . In connection with this note, Universal Travel inc. should report interest payable at December 31, 2021, in the amount of (Round your final answers to the nearest whole dollar.)
Interest payable as at December 31, 2021 is $10,060.
Universal Travel Inc. borrowed $503,000 on November 1, 2021, and signed a 12-month note bearing interest at 8%. Interest is payable in full at maturity on October 31, 2022.
In connection with this note, Universal Travel Inc. should report interest payable at December 31, 2021, in the amount of $10,060 (rounded to the nearest dollar).
Interest payable:
As Universal Travel Inc. signed a 12-month note bearing interest at 8%, the formula to calculate the interest payable is:
Interest Payable = (Principal x Rate x Time) ÷ 12
Interest Payable = ($503,000 x 8% x 2) ÷ 12
Interest Payable = ($80,480) ÷ 12
Interest Payable = $6,706.67 (interest payable per month)
Therefore, the interest payable for 2 months can be calculated as:
$6,706.67 × 2 = $13,413.34(rounded to the nearest dollar)
To know more about Interest visit:
https://brainly.com/question/30393144
#SPJ11
Bud's Automotive usually purchases the vehicles for his used car lot at an average cost of $6,000 per vehicle. It costs him an average of $5,000 to get each vehicle ready for resale, and his average resale price is $11,000 per car. He leases the car lot for $7,000 per month, he spends $4,000 per month on advertising, and his salespeople are paid $12,000 per month. Thirty-five cars were sold last month. In the first blank, show your calculation for Bud's cost of good sold for last month. Use brackets if necessary. In the second blank, show your calculation for Bud's per unit fixed cost for last month. Use brackets if necessary. Blank # 1 ____________
Blank # 2____________
Blank # 1 Cost of goods sold for last month:
Let's first calculate the cost of goods sold for the last month based on the given data.
Average cost of each vehicle:
6,000Cost to get each vehicle ready for resale:
5,000Average resale price: 11,000
Bud's Automotive sold 35 vehicles last month.
So, the total cost of the vehicles that Bud's Automotive sold in the last month was:
35 * (6,000 + 5,000) = 35 * 11,000 =385,000
Bud's Automotive had to spend 385,000 for the 35 cars he sold last month.
Blank # 1 = 385,000
Blank # 2 Per unit fixed cost for last month:
Fixed cost refers to the costs that do not change with the level of production.
In the given scenario, we need to find the per-unit fixed cost for the last month.
Bud's Automotive leased the car lot for 7,000 per month, spent 4,000 per month on advertising, and his salespeople were paid 12,000 per month.
Total fixed costs = 7,000 + 4,000 + 12,000 = 23,000
Now, let's find the per-unit fixed cost for the last month.
The total number of cars sold last month was 35.
Hence, Per-unit fixed cost = Total fixed costs
/ Total number of cars sold in the last month= 23,000
/ 35 ≈ 657.14
Blank # 2 = 657.14
Thus, we got the following solutions:
Blank # 1 = 385,000
Blank # 2 = 657.14.
To know more about Average visit :
https://brainly.com/question/24057012
#SPJ11
