Answer:
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For each of the following cases, calculate the arc price elasticity of demand, and state whether demand is elastic, inelastic, or unit elastic.
a. When the price of milk increases from $2.25 to $2.50 per gallon, the quantity demanded falls from 100 gallons to 90 gallons.
b. When the price of paperback books falls from $7.00 to $6.50, the quantity demanded rises from 100 to 150.
c. When the rent on apartments rises from $500 to $550, the quantity demanded decreases from 1,000 to 950.
Answer:
a. Arc price elasticity of demand = - 1. The demand is unit elastic.
b. Arc price elasticity of demand = - 5.40. The demand is elastic.
b. Arc price elasticity of demand = - 0.54. The demand is inelastic.
Explanation:
The formula for calculating arc price elasticity of demand is as follows:
Arc price elasticity of demand = Percentage change in quantity demanded / Percentage change in price ................ (1)
Where, based on the arc price elasticity of demand, we have:
Percentage change in quantity demanded = {(New quantity demanded - Old quantity demanded) / [(New quantity demanded + Old quantity demanded) / 2]} * 100
Percentage change in price = {(New price - Old price) / [(New price + Old price) / 2]} * 100
Therefore, we have:
a. When the price of milk increases from $2.25 to $2.50 per gallon, the quantity demanded falls from 100 gallons to 90 gallons.
Percentage change in quantity demanded = {(90 - 100) / [(90 + 100) / 2]} * 100 = -10.5263157894737%
Percentage change in price = {(2.50 - 2.25) / [(2.50 + 2.25) / 2]} * 100 = 10.5263157894737%
Substituting the values into equation (1), we have:
Arc price elasticity of demand = -10.5263157894737% / 10.5263157894737% = - 1
Since the absolute value of the arc price elasticity of demand is equal to 1, it implies that the demand is unit elastic.
b. When the price of paperback books falls from $7.00 to $6.50, the quantity demanded rises from 100 to 150.
Percentage change in quantity demanded = {(150 - 100) / [(150 + 100) / 2]} * 100 = 40%
Percentage change in price = {(6.50 - 7.00) / [(6.50 + 7.00) / 2]} * 100 = -7.40740740740741%
Substituting the values into equation (1), we have:
Arc price elasticity of demand = 40% / -7.40740740740741 = - 5.40
Since the absolute value of the arc price elasticity of demand is equal to 5.40 which is greater than 1, it implies that the demand is elastic.
c. When the rent on apartments rises from $500 to $550, the quantity demanded decreases from 1,000 to 950.
Percentage change in quantity demanded = {(950 - 1000) / [(950 + 1000) / 2]} * 100 = -5.12820512820513%
Percentage change in price = {(550 - 500) / [(550 + 500) / 2]} * 100 = 9.52380952380952%
Substituting the values into equation (1), we have:
Arc price elasticity of demand = -5.12820512820513% / 9.52380952380952% = - 0.54
Since the absolute value of the arc price elasticity of demand is equal to 0.54 which is less than 1, it implies that the demand is inelastic.
On January 1, Year 1, Renquist Corp. borrowed $100,000 by signing a 5-year note payable with annual interest of 8%. The terms of the contract require Renquist to repay the principal over 5 years with a payment of $20,000 made at the end of each year. On December 31, Year Renquist made the first payment plus interest On January 1 Year 2. what portion of the note should be classified as noncurrent liabilities?
a. $60,000
b. $20,000
c. $80,000
d. $100,000
Answer: $60,000
Explanation:
The portion of the note that should be classified as noncurrent liabilities will be calculated thus:
Note payable balance on January 1, year 1 = $100,000
Since the terms of the contract require Renquist to repay the principal over 5 years with a payment of $20,000 made at the end of each year, the note payable repaid on December 31, year 1 will be $20,000
Therefore, the note payable balance on Jan 1, year 2 will then be:
= $100,000 - 20,000
= $80,000
Therefore, from the $80,000 note payable, $20,000 will represent current liabilities. Hence, the non current liabilities will be:
= $80000 - $20000
= $60000
Suppose that the U.S. government decides to charge beer producers a tax. Before the tax, 40 billion cases of beer were sold every year at a price of $7 per case. After the tax, 34 billion cases of beer are sold every year; consumers pay $8 per case, and producers receive $4 per case (after paying the tax), and producers receive $5 per case. The amount of the tax on a case of beer is $1 per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is $ per case.
True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True False
Answer:
$4
$1
$3
False
Explanation:
Tax is a compulsory sum levied by the government or an agency of the government on goods and services.
Taxes increases the price of products
Total amount of tax = new price of a case of beer - amount producers receive
$8 - $4 = $4
Burden of tax on consumers = new price of a case of beer - initial price
$8 - $7 = $1
Burden of tax on producers = Total amount of tax - Burden of tax on consumers
$4 - $1 = $3
the statement is false because if the tax has been imposed on producers, producers would not be able to share the burden of the tax with consumers. Thus, the whole burden of tax would have been borne by producers and the effect would be higher
Ted has been dollar cost averaging in a mutual fund by investing $1,500 at the beginning of every quarter for the past 5 years. He has been earning an average annual compound return of 9% compounded quarterly on this investment. How much is the fund worth today
Answer: $38,208.04
Explanation:
The amount is constant which means that it is an annuity.
It is based on the past so to find the value today, take the future value of the annuity from 5 years ago to find out the value today.
As this is paid at the beginning of the period, it is an annuity due.
Future value of annuity due = Annuity * (1 + r) * ( ( 1 + r)^n - 1 / r)
Rate = 9%/ 4 quarters = 2.25%
Periods = 5 * 4 quarters = 20 periods
Future value of annuity = 1,500 * (1 + 2.25%) * ( ( 1 + 2.25%)²⁰ - 1 / 2.25%)
= $38,208.04
XYZ plans to sell 28,000 units in April. If it has 6,000 units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the month, how many units must be purchased from the supplier during the month
Answer:
Purchases= 31,000
Explanation:
Giving the following information:
Sales= 28,000 units
Beginning inventory= 6,000 units
Desired ending inventory= 9,000 units
To calculate the purchases, we need to use the following formula:
Purchases= sales + desired ending inventory - beginning inventory
Purchases= 28,000 + 9,000 - 6,000
Purchases= 31,000
Indicate whether a debit or credit decreases the normal balance of each of the following accounts.
a. Land
b. Service revenue
c. Interest payable
d. Accounts receivable
e. Salaries expenses
f. Common stock
g. Prepaid insurance
h. Building
i. Interest revenue
j. Dividends
k. Unearned Revenue
l. Accounts payable
Answer:
Explanation:
A. Credit
b. Debit
c. Debit
d credit
e credit
f. Debit
g. Credit
h. Credit
i. Debit
j. Credit
k. Debit
l. Debit
A resource having economic worth that a person, business, or nation possesses or controls with the hope that it would someday be beneficial is referred to as an asset. They are acquired or produced in order to raise a company's value or improve the operations of the company. It can be tangible or intangible.
What is a liability?A liability is a debt that a firm owes that will cause it to forfeit future financial gains from dealing with other people or companies. A liability may be used in place of equity as a means of funding a business. Additionally, some liabilities are necessary for day-to-day corporate operations, such as trade payables or tax payments.
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Zhang Industries sells a product for $700 per unit. Unit sales for May were 400, and each month's unit sales are expected to grow by 3%. Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales. Compute the budgeted selling expense for the manager for the month ended June 30.
Answer:
Zhang Industries
The Budgeted selling expense for the manger for the month ended June 30 is:
= $8,768.
Explanation:
a) Data and Calculations:
Selling price per unit = $700
Unit sales for May = 400
Expected growth of unit sales each month = 3%
Unit sales for June = 412 (400 * 1.03)
Sales revenue for June = $288,400 ($700 * 412)
Monthly sales salary to the sales manager = $3,000
Monthly sales commission = 2% of sales
Budgeted selling expense for the manger for the month ended June 30:
Monthly sales salary to the sales manager = $3,000
Monthly sales commission = 2% of sales 5,768 ($288,400 * 2%)
Total selling expense for the month = $8,768
In order to produce a new product, a firm must lease equipment at a cost of $100,000 per year. The managers feel that they can sell 50,000 units per year at a price of $75. What is the highest variable cost that will allow the firm to at least break even on this project
Answer:
$73 = unitary variable cost
Explanation:
To calculate the unitary variable cost that will yield the break-even point, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
50,000= 100,000 / (75 - unitary variable cost)
3,750,000 - 50,000unitary variable cost= 100,000
3,650,000 = 50,000unitary variable cost
$73 = unitary variable cost
Process Costing Tempe Manufacturing Company makes a single product that is produced on a continuous basis in one department. All materials are added at the beginning of production. The total cost per equivalent unit in process in March 2009 was $4.60, consisting of $3.00 for materials and $1.60 for conversion. During the month, 9,300 units of product were transferred to finished goods inventory; on March 31, 2,500 units were in process, 10 percent converted. The company uses weighted average costing.
(a) Determine the cost of goods transferred to finished goods inventory.
(b) Determine the cost of the ending work-in-process inventory.
(c) What was the total cost of the beginning work-in-process inventory plus the current manufacturing costs?
Answer:
a. $42,780
b. $7,900
c. $50,680
Explanation:
Cost of goods transferred to finished goods inventory.
Total Cost = Total unit Cost x Units Transferred
= $4.60 x 9,300 units
= $42,780
Cost of the ending work-in-process inventory
Total Cost = Material Cost + Conversion Cost
= ($3.00 x 2,500) + ($1.60 x 2,500 x 0.10)
= $7,500 + $400
= $7,900
Total cost of the beginning work-in-process inventory plus the current manufacturing costs
This amount equals the sum of Cost of goods transferred to finished goods inventory and Cost of the ending work-in-process inventory.
Thus,
Total Cost = $42,780 + $7,900
= $50,680
What is the meaning of assessment
Answer:
the meaning of assessment is the evaluation or estimation of the nature, quality, or ability of someone or something. like your being tested on you knowledge of something, so you have a test.
Explanation:
Answer:
the act of judging or deciding the amount, value, quality, or importance of something, or the judgment or decision that is made.the evaluation or estimation of the nature, quality, or ability of someone or something.
The following discussion focuses on the change in production and selling strategies of Timken Co., the Canton, Ohio, firm that is a major producer of bearings:
To counter the low prices of imports, Timken Co. in 2003 began bundling its bearings with other parts to provide industrial business customers with products specifically designed for their needs. Timken had begun bundling prelubricated, preassembled bearing packages for automobile manufacturers in the early 1990s. Evidence indicated that companies that sold integrated systems rather than discrete parts to the automobile manufacturers increased their sales. Other industrial customers put the same pressure on Timken in the late 1990s to lower prices, customize, or lose their business to lower-priced foreign suppliers. Manufacturers are increasingly combining a standard part with casings, pins, lubrication, and electronic sensors. Installation, maintenance, and engineering services may also be included. Suppliers, such as Timken, saw this as a means of increasing profits and making themselves more indispensable to the manufacturers. The strategy also required suppliers to remain in proximity with their customers, another advantage over foreign imports. This type of bundling does require significant research and development and flexible factories to devise new methods of transforming core parts into smart assemblies. The repackaging is more difficult for industrial than automobile customers because the volumes of production are smaller for the former. Timken also had to educate its customers on the variety of new products available.
Timken has an 11 percent share of the world market for bearings. However, imports into the United States doubled to $1.4 billion in 2002 compared with $660 million in 1997. Timken believes that the uniqueness of its product helps protect it from foreign competition. However, the company still lobbied the Bush administration to stop what it calls the dumping of bearings at low prices by foreign producers in Japan, Romania, and Hungary.
Required:
a. What factors in the economic environment, in addition to foreign imports, contributed to Timken’s new strategy in 2002 and 2003?
b. How does this strategy relate to the discussion of bundling presented in the chapter? What additional factors are presented in this case?
Answer:
Timken Co.
a. Factors in the Economic Environment that contributed to Timken;s new strategy in 2002 and 2003 in addition to foreign imports at cheaper prices:
1. The needs of industrial business customers for integrated systems
2. Lowering of prices resulting from bundling
3. Addition of installation, maintenance, and engineering services, leading to increasing profits
b. The relationship of this strategy to bundling
1. Remaining in proximity with customers
2. Significant research and development
3. Flexible factories
4. Education of customers on product variety
c. Additional factors presented in this case are:
1. Customization
2. Means of making entity more indispensable to manufacturers
3. Uniqueness of products
4. Lobbying to stop dumping
Explanation:
a) Data and Calculations:
Share of the world market for bearings = 11%
Value of bearing imports in 2002 = $1.4 billion
Value of bearing imports in 1997 = $660 million
b) Companies engage in bundling by offering their main products together with several others together with services as a single combined unit. This strategy always lowers the bundled price when compared with the prices of the separate products and services. Thus, companies that sell bundled products and services often achieve more sales at the expense of profits.
What happens to the percentage of
business liability divided equally among
partners as more partners are added to
the ownership group?
A. It increases per partner.
B. It decreases per partner.
C. It remains the same for every partner.
Answer:
B
Explanation:
A new partner inherits debts prior to the partnership. However it doesn't touch on personal assets of the new partner entering the partnership.
Otto invests $ 600 in an account that pays 7.3 % interest compounded annually. How much is in Otto's account after 3 years
Answer:
$741.23
Explanation:
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
600(1.073)^3 = $741.23
The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows:
Dividend Stock price
Boom $3.00 $60
Normal economy 1.20 58
Recession .75 49
Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely.
Solution :
Holding Period return is given by :
Holding period return [tex]$=\frac{\text{ending value - beginning value + dividend income}}{\text{beginning value}}$[/tex]
Now the holding the period return for the various cases :
Boom
Ending stock price = $ 60
Beginning stock price = $ 50
Dividend income = $ 3
Hence, holding period return is [tex]$=\frac{60-50+30}{50}$[/tex]
= 0.26
So, the holding period return = 26%
Normal economy
Ending stock price = $ 58
Beginning stock price = $ 50
Dividend income = $ 1.2
Hence the holding period return [tex]$=\frac{58-50+1.2}{50}$[/tex]
= 0.184
So, the holding period return = 18.4%
Recession
Ending stock price = $ 49
Beginning stock price = $ 50
Dividend income = $ 0.75
Hence the holding period return [tex]$=\frac{49-50+0.75}{50}$[/tex]
= -0.005
So, the holding period return = -0.5%
As all the cases, the probability is same = 0.333
Therefore, the expected holding period return is :
The expected holding period return = (0.333 x 0.26) + (0.333 x 0.184) + (0.333 x -0.005)
= 0.8658 + 0.06127 - 0.00166
= 0.149515
Therefore, the expected holding period return = 14.95%
If a corporation is found guilty of committing a crime and assessed a fine, who typically ends up being punished?
A) the owners of the corporation, the shareholders
B) the judicial system, the court
C) taxpayers
D) local government officials
Answer:
Option (A)
Explanation:
If a corporation is found guilty of committed a crime. Then the corporation likely to face a hefty fines for committing a crime. This means the owners of the corporation and its stake holders are responsible for this crime if any of the employee of the corporation commits a crime. Hence at last the owners of the corporation and the stake holders are end up being punished.
Determine whether each of the following goods is a private good, a public good, a common resource, or a club good. Private Good Public Good Common Resource Club Good A stationary bike in a fitness room that is open to the public A large, beautiful clock in a town square A new drum set for you to play in your friend's band
Answer:
Common Resource
public good
private good
Explanation:
A club good is a type of public good. It is excludable but non-rivalrous. For example paid streaming services are an example of a club good. Those who do not subscribe are excluded from using the service. But all subscribers have equal assess to the service
A public good is a good that is non excludable and non rivalrous. Everyone has assess to the statue and because one person is enjoying the view of the clock does not means another person cannot enjoy the view of the clock
A private good is a good that is excludable and rivalrous. They are usually exchanged in the market by private sector businesses. It is only you who purchased the drum set and those you allow that can use the drum set.
A common resource is a good that is non excludable but rivalrous. The bike in the fitness room is an example. Because the gym is open to anyone, it is non excludable. Only one person can use it at a time, thus it is rivalrous
For years, Luke has had the idea of making his own business. As Luke will realize, he will face three basic economic questions. What are these questions?
a. When, How, For whom
b. Who, when, why
c. What, How, for whom
d. What, When, How
A closed economy has full employment level of output (Y) of 7000 (we got this from chapter 3 - the interaction of labor supply and demand). Government purchases, G, are 1600, taxes (T) are 1600 (G and T are our exogenous variables). Desired consumption (Cd) and investment (Id) are:
C^d= 3200+ 0.2(Y-T)- 200r
I^d= 1200- 3000r
Required:
Solve for the desired savings function in intercept -slope form
Answer:
sd = 2720-200r
Explanation:
we have savings function to be this eqiuaton
Sd = Y - C^d
from the question we have here:
Y = 7000
T = 1600
C^d = 3200+ 0.2(Y-T)- 200r
we put these values in the savings function
Sd = 7000 - [3200 + 0.2(7000-1600)-200r
Sd = 7000 - [3200 + 1400 - 320] -200r
Sd = 7000 - 3200 - 1400 + 320 - 200r
Sd = 2720 - 200r
The number of shares of a class of stock that are outstanding is: Multiple Choice the number of shares authorized minus the number of shares issued. the number of shares authorized minus the number of shares held as treasury stock. the number of shares issued minus the number of shares held as treasury stock. the number of shares issued minus the number of shares owned by directors.
Answer:
The number of shares of a class of stock that are outstanding is:
the number of shares issued minus the number of shares held as treasury stock.
Explanation:
A company's outstanding shares include the total shares issued minus the treasury stock shares. Treasury stock shares are shares that the company has repurchased from their former stockholders. They can be held for resale, to pay for stock options to employees, or they are retired completely. The number of outstanding shares is an ingredient used in computing the earnings per share (EPS), an important financial metric for investors.
When using email to request action, the subject line should be as vague as possible.
Question 7 options:
True
False
Answer:
False
Explanation:
When using an email to request an action the subject line should be brief but specific. Leaving a vague subject line can often confuse another, however, making the subject line too lengthy and specific defeats the purpose. The best subject lines are brief but give a general idea of what the email contains.
Answer:
False
Explanation:
To email someone to request action, you can't be vague or you might not get what you exactly want from that person.
g The process of gathering information and forecasting relevant trends, competitive actions, and circumstances that will affect operations in geographic areas of potential interest is called ________. A. cultural analysis B. sustainable development C. environmental scanning D. internal analysis
Answer:
C. environmental scanning
Explanation:
Environmental scanning is a management strategy that focuses on systematically acquiring informations about occasions, trends, events or patterns through surveys and analysis of these information in an organisation's external and internal environment.
Basically, the informations acquired through environmental scanning are used by the executive (top) management in strategically planning the organisation's future and exploitation of available opportunities for the success of the organization.
Furthermore, the internal environmental scanning offers an organization strength and weakness while the external environmental scanning provides information about opportunities and threats.
On the other hand, the external environmental scanning gives an overview of the opportunities in the market as well as potential threats to an organization.
In conclusion, environmental scanning is a process which typically deals with gathering external and internal informations, forecasting relevant trends to an organization, competitive actions, and circumstances that will affect business operations in geographic areas of potential interest to an organization.
Diane Corporation is preparing its year-end balance sheet. The company records show the following selected amounts at the end of the year: Total assets $ 550,000 Total noncurrent assets 352,000 Liabilities: Notes payable (8%, due in 5 years) 21,000 Accounts payable 51,000 Income taxes payable 14,000 Liability for withholding taxes 4,000 Rent revenue collected in advance 9,000 Bonds payable (due in 15 years) 100,000 Wages payable 9,000 Property taxes payable 5,000 Note payable (10%, due in 6 months) 14,000 Interest payable 600 Common stock 250,000 Required: 1-a. What is the amount of current liabilities
Answer:
Diane Corporation
The amount of current liabilities is:
= $106,600.
Explanation:
a) Data and Calculations:
Total assets $ 550,000
Total noncurrent assets 352,000
Liabilities: Notes payable (8%, due in 5 years) 21,000
Accounts payable 51,000
Income taxes payable 14,000
Liability for withholding taxes 4,000
Rent revenue collected in advance 9,000
Bonds payable (due in 15 years) 100,000
Wages payable 9,000
Property taxes payable 5,000
Note payable (10%, due in 6 months) 14,000
Interest payable 600
Common stock 250,000
Current liabilities:
Accounts payable $51,000
Income taxes payable 14,000
Liability for withholding taxes 4,000
Rent revenue collected in advance 9,000
Wages payable 9,000
Property taxes payable 5,000
Note payable (10%, due in 6 months) 14,000
Interest payable 600
Total current liabilities = $106,600
b) Current liabilities represent the debts that Diane owes creditors within the current accounting period. They have short-term duration or are due to be repaid within the next 12 months.
issues new bonds to fund an acquisition. The face value of the bond is $100 and annual coupon is 6.5%. Further, this bond matures in 20 years and is issued at a price of $105. Assuming KJ Pharma's tax rate is 30%, what is its After-Tax Cost of Debt
Answer:
KJ Pharma Corporation
KJ Pharma's after-tax cost of debt is:
= 4.55%.
Explanation:
a) Data and Calculations:
Face value of the bond = $100
Annual coupon rate (cost of debt) = 6.5%
Maturity period of bond = 20 years
Tax rate = 30%
After-Tax Cost of Debt = 6.5 (1 - 0.3)
= 4.55%
b) KJ Pharma's after-tax cost of debt is the interest paid on the bond less any income tax savings accounted for as deductible interest expenses. To calculate the after-tax cost of debt, KJ subtracts the company's effective tax rate from 1 and multiplies the difference by its cost of debt.
Manufacturing overhead was estimated to be $200,000 for the year along with 5,000 direct labor hours. Actual manufacturing overhead was $240,000, and actual labor hours were 5,500. The amount debited (left-side) to the Manufacturing Overhead account would be:
Answer:
the amount debited (left-side) to the Manufacturing Overhead account would be is $220,000
Explanation:
The computation of the amount debited (left-side) to the Manufacturing Overhead account would be is shown below:
= $200,000 ÷ 5,000 direct labor hours × 5,500 direct labor hours
= $220,000
Hence, the amount debited (left-side) to the Manufacturing Overhead account would be is $220,000
The same should be considered
Consider the following argument from analogy. According our rules for appraising analogical reasoning, if a subsequent consideration strengthens the argument, answer a. Answer b if a consideration weakens the argument. Answer c if a consideration does not affect the argument.
Bill has taken three history courses and found them very stimulating and valuable. So he signs up for another one, confidently expecting that it too will be worthwhile.
25. Suppose that his previous history courses were in ancient history, modern European history, and American history.
26. Suppose that his previous history courses had all been taught by the same professor that is scheduled to teach the present one.
27. Suppose that his previous history courses all had been taught by Professor Smith, and the present one is taught by professor Jones.
28. Suppose that Bill had found his three previous history courses to be the most exciting intellectual experiences of his life.
29. Suppose that his previous history courses had all met at 9:00am, and the present one is scheduled to meet at 9:00am also.
30. Suppose that, in addition to the three history courses previously taken, Bill also had taken and enjoyed courses in anthropology, economics, political science, and sociology.
Answer:
Bill has taken three history courses and found them very stimulating and valuable. So he signs up for another one, confidently expecting that it too will be worthwhile.
25. Suppose that his previous history courses were in ancient history, modern European history, and American history.
Answer A
26. Suppose that his previous history courses had all been taught by the same professor that is scheduled to teach the present one.
Answer A
27. Suppose that his previous history courses all had been taught by Professor Smith, and the present one is taught by professor Jones.
Answer B
28. Suppose that Bill had found his three previous history courses to be the most exciting intellectual experiences of his life.
Answer A
29. Suppose that his previous history courses had all met at 9:00am, and the present one is scheduled to meet at 9:00am also.
Answer C
30. Suppose that, in addition to the three history courses previously taken, Bill also had taken and enjoyed courses in anthropology, economics, political science, and sociology.
Answer B
Explanation:
Capri Industries is considering an investment that has an initial cost of $26,500 and the following expected cash inflows: Year Cash Inflow 1 $6,000 2 $8,000 3 $10,000 4 $5,000 5 $3,000 The expected payback period is
Answer:
It will take 3.5 years to cover the initial investment.
Explanation:
Giving the following information:
Initial investment= $26,500
Cash flows:
1 6,000
2 8,000
3 10,000
4 5,000
5 3,000
The payback period is the time required to cover the initial investment:
Year 1= 6,000 - 26,500= -20,500
Year 2= 8,000 - 20,500= -12,500
Year 3= 10,000 - 12,500= -2,500
Year 4= 5,000 - 2,500= 2,500
To be more accurate:
(2,500/5,000)= 0.5
It will take 3.5 years to cover the initial investment.
The expected payback period is 3.19 years.
Expected payback period is the amount of time it take to recover the amount invested from the cumulative cash flows.
Amount invested = $26,500
Cumulative cash flow in year 1 = $6000
Cumulative cash flow in year 2 = $14, 000
Cumulative cash flow in year 3 = $24,000
Cumulative cash flow in year 4 = $29,000
Cumulative cash flow in year 5 = $32,000
The amount invested would be recovered in the third year.
3 + [tex]\frac{29,000 - 24,000}{26,500}[/tex] = 3.19 years
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Everything else equal, if the United States runs a large foreign trade deficit, the financing of the deficit will: a. increase government subsidies. b. increase interest rates. c. decrease sales of Treasury securities. d. increase the money supply. e. decrease tax revenue.
Answer: decrease tax revenue
Explanation:
A trade deficit occurs when the import of a country's is more than the export of the country for a given period of time period. The main cause is when there's an imbalance between the savings of a country and the investment rates.
In this case, financing the deficit will lead to the reduction in the tax revenue. When part of the tax revenue gotten from economic agents are used in the finance of the deficit, there'll be a reduction in the tax revenue.
The time required to collect information about the current state of the economy is known as A. the effect lag. B. the recognition lag. C. the fiscal lag. D. the action lag.
Answer:
B. the recognition lag.
Explanation:
Recognition lag means the delay that lies between the economic shock arise and when it should be seen by the economist, government etc. Here the delays could be arise as the data that documented the economy state should not be available on the instant basis and after this it takes the time to analyze it correctly
Therefore as per the given situation, the option b is correct
The difference between new classical theory and new Keynesian theory is that Question 2 options: in new classical theory wages are assumed to be flexible, and in new Keynesian theory wages are assumed to be somewhat inflexible.
Group of answer choices.
A. in new classical theory wages are assumed to be flexible, and in new Keynesian theory wages are assumed to be somewhat inflexible.
B. in new classical theory wages are assumed to be somewhat inflexible, and in new Keynesian theory wages are assumed to be flexible.
C. adaptive expectations is the dominant expectations theory in new classical theory, and rational expectations is the dominant expectations theory in new Keynesian theory.
D. in new Keynesian theory the short-run aggregate supply curve is vertical, and in new classical theory the short-run aggregate supply curve is upward sloping.
Answer:
A. in new classical theory wages are assumed to be flexible, and in new Keynesian theory wages are assumed to be somewhat inflexible.
Explanation:
The new classical theory (neoclassical view) posits that long-term expansion of potential Gross Domestic Products (GDP) due to economic growth will determine the size of a country's economy but the economy cannot sustain production above its potential Gross Domestic Products (GDP) in the long run.
John Maynard Keynes was a British economist born on the 5th of June, 1883 in Cambridge, England. He was famous for his brilliant ideas on government economic policy and macroeconomics which is known as the Keynesian theory. He later died on the 23rd of April, 1946 in Sussex, England.
According to the new Keynesian theory, government spending or expenditures should be increased and taxes should be lowered when faced with a recession, in order to create employment and boost the buying power of consumers.
Hence, the difference between the new classical theory (neoclassical view) and new Keynesian theory is that, in new classical theory wages are assumed to be flexible by economists while in new Keynesian theory wages are assumed to be somewhat inflexible.
Equestrain Roads sold $120,000 of goods and accepted the customer's $120,000 10%, 1-year note in exchange. Assuming 10% approximates the market rate of return, how much interest revenue would be recorded for the year ending December 31 if the sale was made on June 30
Answer:
$6,000
Explanation:
Interest calculation : June 30 - December 31
Time frame between the two dates is 6 months, thus charge half year`s interest.
Interest calculation = $120,000 x 10 % x 1/2 = $6,000
therefore,
The interest revenue that would be recorded for the year ending December 31 if the sale was made on June 30 is $6,000.