Answer:
$298,206
Explanation:
The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor + salvage value - initial investment
where,
The Initial investment is $1,500,000
All yearly cash flows would be
= Annual net operating cash inflows × PVIFA for 20 years at 17%
= $319,522 × 5.6278
= $1,798,206
Refer to the PVIFA table
Now put these values to the above formula
So, the value would equal to
= $1,798,206 - $1,500,000
= $298,206
What caused the U.S. Congress, the OECD, the International Federation of Accountants, and other organizations to enact stricter rules on corporate governance in recent years?
A. Sudden increase in world trade
B. High-profile corporate scandals
C. Significant decline in world trade
D. Expansion of the European Union membership
Answer: The correct answer is "B. High-profile corporate scandals".
Explanation: High-profile corporate scandals caused the U.S Congress, the OECD, the International Federation of Accountants, and other organizations to enact stricter rules on corporate governance in recent years.
Scenario C At DoubleTalk, Inc., Joe, a supervisor, pushes his employees' performance by constantly checking their work and threatening them if they fail to keep their deadlines. After months of mistreatment, the employees get together and sign a letter to the human resources department to express their grievances. What form of influence are the employees using?
a. Impression management
b. Silent authority
c. Referent
d. Assetiveness
e. Persuasion
Answer:
in 4 days i will delete brainly warn to friends b btw
Explanation:
OJ's Orange Juice produces orange juice to sell in a perfectly competitive market. Given uncertainty in weather patterns, OJ has to determine how much juice to produce prior to knowing the competitive price. It is estimated that the competitive price will be $5 with 20 percent chance and an 80 percent chance the price will be $2. If the marginal cost of producing orange juice is MC = 2Q, then to maximize expected profits, OJ should produce A. 0.25 units. B. 0.90 units. C. 1.15 units. D. 1.30 units
Answer:
so firm will maximize profit produce is 1.30 units
so correct option is D. 1.30 units
Explanation:
given data
competitive price = $5
chance = 20%
chance the price = $2
marginal cost MC = 2Q
to find out
maximize expected profits, OJ should produce
solution
we get here maximum profit as that
E(P) = MC = 2Q ..............1
as we know competitive firm maximum profit as P = MC
and profit = 0 in long run
so put here value in equation 1
E(P) = 0.2 × 5 + 0.8 × 2
2Q = 2.6
Q = 1.3
so firm will maximize profit produce is 1.30 units
so correct option is D. 1.30 units
You would like to generate a number of potential ideas. What type of thinking would best facilitate this?a. Egocentric Tendencies b. Systems Thinking c. Critical Thinking
Answer:
The correct answer is letter "C": Critical Thinking.
Explanation:
Critical Thinking is the type of thinking that allows individuals to discriminate and have a particular judgment over a specific matter. It helps by determining accuracy and validity on that topic by gathering a certain quantity of information to then highlight the most relevant.
During formation of Beecky partnership, Sam contributed property with an adjusted basis of $130,000 in exchange for a 25% interest in Beecky. The fair market value of the contributed property was $170,000 and the property was encumbered by a mortgage with a balance of $120,000. What amount of gain should Sam recognize from contributing the property into Beecky partnership?
Answer:
Sam would not recognize any gain on the contribution.
Explanation:
A partner does not recognize a gain on the contribution from the appreciated property to a partnership unless it is subject to a liability that exceeds the contributing partner basis in the property. Sam is contributing property with a basis of $130,000, subject to a liability of $120,000, for a 25 % in partnership. As a result Sam would have a basis in the contributed property, minus the $120,000 liability assumed by the partnership, plus Sam's portion of the liability, 25% x $120,000 or $30,000.
Which of the following choices concerning the recognition of interest income for corporate bondare CORRECT?
a. If bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond.
b. If bonds were issued at a discount, special original issue discount rules apply
c. The actual interest payments received are included in gross income.
Answer:
The correct answers are letters "A", "B", and "C".
Explanation:
Corporate bonds are securities that firm issues to be sold to investors to raise funds that will be using to keep the company up and running. Investors profit from the interest rate dealt in the bond agreement or sometimes they obtain physical assets of the organization as collateral. If in the secondary market bonds are issued at a premium, the premium can be amortized or applied to the bond base but if the bonds were issued at a discount, discount bond rules take into place. The interest payment received thanks to the bonds are recorded in the gross income.
The Florida Real Estate Commission (FREC) was first organized in 1926. It is composed of 7 members who are appointed by the Governor and approved by the Senate. The purpose of the FREC is:__________.
Answer:
Protect the Public by Educating and Licensing Sales Associates and Brokers and creating real estate laws.
Explanation:
The Florida Real Estate Commission (FREC) was established primarily for the protection of the public by educating and reguating real estate licensees. The commission make real estate laws, creates licensing criteria for sales associates and brokers. All these are done primarily to protect the public.
Of the 7 members appointed by the Governor, one is a licensed sales associate or broker and must have held an active license for at least 2 years before the appointment. Four other members are licensed brokers with atleast 5 years active license. The final 2 members must be individuals who have never been sales associates or brokers.
What is a warranty?
Answer:
A warranty is a promise made to the buyer of a good by the seller or manufacturer of the good about the condition of the product. If the product is not in certain condition or does not work as promised than the party issuing the warranty have to repair or replace the product up to a certain period of time.
Explanation:
Two key structural enhancements should improve the coordination of multinational forces. They are a(n) _____ and coordination centers.
Answer:
The correct word for the blank space is: Liaison network.
Explanation:
A liaison network is formed when countries contact others to fulfill their needs. Those countries set up a communication network that allows them to be in touch efficiently to break the distance barriers and to allow information to be shared at the same peace they happen.
Consider the following account balances of Smiths Corp. at the end of the year:
Cash $12,000
Unearned Revenue $18,000
Interest Revenue $5,000
Supplies $3,500
Common Stock $25,000
Rent Expense $6,000
Accounts Receivable $11,700
Salaries Expense $7,500
1. How many of these accounts would be reported in the company’s income statement?
Answer:
Interest revenue, rent expense and salaries expense
Explanation:
In the income statement, the total revenues and the total expenses are recorded.
If the total revenues are more than the total expenditure then the company earns net income
And, If the total revenues are less than the total expenditure then the company have a net loss
This net income or net loss would reflect in the statement of the retained earning account.
So, the categorization is shown below:
Interest revenue, rent expense and salaries expense
Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $205,200 of raw materials on credit; issued materials to production of $201,000 of which $31,800 were indirect. Minstrel incurred a factory payroll of $153,600, paid in cash, of which $41,800 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. Minstrel's beginning and ending Work in Process Inventory are $16,100 and $28,200 respectively. Compute the cost of product transferred to Finished Goods Inventory: a. $453,800. b. $575,900. c. $436,600. d. $427,600. e. $425,600.
Answer:
c. $436,600
Explanation:
Direct materials to production = $201,000 - $31,800 = $169,200
Direct factory payroll = $153,600 - $41,800 = $111,800
Minstrel uses a predetermined overhead application rate of 150% of direct labor cost, then overhead = 150% * $111,800 = $167,700
Cost of product produced in one month = direct materials to production of $169,200 +a direct factory payroll of $111,800 + overhead $167,700 = $448,700
The cost of product transferred to Finished Goods Inventory = Cost of product produced in one month + Beginning WIP Inventory - Ending WIP Inventory
= $448,700 + $16,100 - $28,200 = $436,600
Lupe made a down payment of $2200 toward the purchase of a new car. To pay the balance of the purchase price, she has secured a loan from her bank at the rate of 11%/year compounded monthly. Under the terms of her finance agreement she is required to make payments of $200/month for 48 months. What is the cash price of the car? (Round your answer to the nearest cent.)
Answer:
Cash price of the car
= Down payment + A(1 - (1+r/m)-nm
r/m
= $2,200 + $200(1-(1+0.11/12)-4x12
0.11/12
= $2,200 + $200(1-(1+0.0091666667)-48
0.0091666667
= $2,200 + $200(1-(1.009166666667)-48
0.0091666667
= $2,200 + `$200(38.691421)
= $9,938
Explanation:
The cash price of the car is equal to the down payment plus the present value of the monthly installment. The present value of the monthly installment is obtained by using present value of annuity formula.
To find the cash price of the car, we need to calculate the total amount of money Lupe will pay over the course of the loan and subtract it from the purchase price. We can use the formula for compound interest to calculate the interest paid. By rearranging the equation, we can find the cash price of the car.
Explanation:To find the cash price of the car, we need to calculate the total amount of money Lupe will pay over the course of the loan. She is making monthly payments of $200 for 48 months, which amounts to a total of $200 x 48 = $9,600.
To calculate the cash price of the car, we need to subtract the down payment and the total amount paid over the loan from the purchase price. Let's denote the cash price as C. The purchase price minus the down payment is equal to C - $2200.
Since Lupe is paying 11% interest compounded monthly, we can calculate the total interest paid as follows:
Interest = Purchase Price x (1 + 0.11/12)^48 - Purchase Price
The total amount paid over the loan is the purchase price plus the interest paid:
Cash Price = Purchase Price - Down Payment + Interest
Substituting the given values, we have the equation:
C - $2200 = $200 - Purchase Price + Purchase Price x (1 + 0.11/12)^48 - Purchase Price
Simplifying the equation, we have:
C - $2200 = ($200 x 48) + Purchase Price x (1 + 0.11/12)^48
Now, we can solve for C:
C = ($200 x 48) + Purchase Price x (1 + 0.11/12)^48 + $2200
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Which of the following tools can the Fed use to contract the money supply? a. To expand the money supply? b. Increasing the discount rateselling short-term U.S. Treasury securities.c. Lowering the reserve requirement d. Buying short-term U.S. Treasury securities. e. Quantitative easing f. Decreasing the discount rate g. Raising the reserve requirement
The Federal Reserve can contract the money supply by increasing the discount rate or selling short-term U.S. Treasury securities. It can expand the money supply by lowering the reserve requirement, buying short-term U.S. Treasury securities, implementing quantitative easing, or decreasing the discount rate.
Explanation:There are several tools that the Federal Reserve (Fed) can use to contract or expand the money supply. To contract the money supply, the Fed can increase the discount rate or sell short-term U.S. Treasury securities. By increasing the discount rate, commercial banks will reduce their borrowing of reserves from the Fed, which decreases the money supply and raises market interest rates. Selling short-term U.S. Treasury securities also contracts the money supply as it takes money out of the economy.
On the other hand, the Fed can expand the money supply by lowering the reserve requirement, buying short-term U.S. Treasury securities, implementing quantitative easing, or decreasing the discount rate. Specifically, quantitative easing stimulates aggregate demand by purchasing long-term government and private mortgage-backed securities, thus making credit more available.
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The Fed can contract the money supply by raising the discount rate or selling short-term U.S. Treasury securities. Meanwhile, they can expand the money supply by lowering the discount rate, buying short-term U.S. Treasury securities or using quantitative easing.
Explanation:The Federal Reserve can contract or expand the money supply using several tools. To contract the money supply, the Fed can increase the discount rate or sell short-term U.S. Treasury securities. This reduces the amount of money banks can lend, thereby shrinking the money supply. Conversely, to expand the money supply, the Fed can lower the discount rate or buy short-term U.S. Treasury securities. They could also use a non-traditional method like quantitative easing, which involves purchasing long-term government and private mortgage-backed securities to stimulate aggregate demand.
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firm employs 100 workers and has 2 divisions, each in perfectly competitive markets. Division A produces tape measures and Division B produces saws. How should the firm allocate its workers to maximize efficiency?
Allocate workers between the divisions so the average cost of producing tape measures equals the average cost of producing saws.
Allocate workers to the division with the lowest marginal product of labor and divest from the other division.
Allocate workers so the marginal product of labor is the same in both divisions.
III only.
II and III only.
II only.
I only.
Answer:
Only III.
Explanation:
To begin with, we have to define the marginal product of labour. We can say that it is the change that occurs in output due to the use of one more unit of labor; thus, the marginal product of labour let us know when the labor force is more productive, which results in a higher income because it is cheaper to produce each item, and then is directly a measure of efficiency.
In this vein, if we want to maximize efficiency, we must maintain the marginal product of labour balanced in both divisions, thus , the answer is only III.
Option I is not a correct answer because the average cots of producing a product doesn't refer to the efficiency of the process. And option II does not specify to what extent workers should be moved.
Within an organizational structure, the person most likely to be evaluated in terms of controllable costs would be:
a. A payroll clerk.
b. A cost center manager.
c. A production line worker.
d. A maintenance worker.
e. A sales representative.
Answer: (B) A cost center manager
Explanation:
According to the given question, the cost center manager is basically responsible for evaluating the controllable cost in an organization structure.
They are also keeps the cost in the specific line of budget by taking the various types of investment decisions and also managing the revenue in an organization.
The main function of the cost center manager is that it managing all the department such as IT, human resource department more efficiently by keeping the given cost below the budget.
Therefore, option (B) is correct.
During the implementation phase of the systems development life cycle (SDLC), in _____, as each module of a new system is converted, the corresponding part of an old system is retired.a. Parallel Conversionb. Plunge Conversionc. Pilot Conversiond. Phased-iIn-Phased-Out Conversion
Answer:
The correct answer is letter "D": Phased-In-Phased-Out Conversion.
Explanation:
Systems Development Life Cycle or SDLC is the process of creating and changing systems. models and methodologies that people use to develop software. In the Phased-In-Phased-Out Conversion stage, the new information system is split into several modules so they can be easily introduced and gradually the previous system used is left behind.
Addai Company has provided the following comparative information:
20Y8 20Y7 20Y6 20Y5 20Y4
Net income $273,406 $367,976 $631,176 $884,000 $800,000
Interest expense 616,047 572,003 528,165 495,000 440,000
Income tax expense 31,749 53,560 106,720 160,000 200,000
Total assets (ending balance) 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000
Total stockholders’ equity (ending balance) 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000
Average total assets 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000
Average total stockholders' equity 3,569,855 3,249,164 2,749,588 1,992,000 1,150,000
You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years:
20Y4–20Y8
Return on total assets 28%
Return on stockholders’ equity 18%
Times interest earned 2.7
Ratio of liabilities to stockholders’ equity 0.4
Required:
Determine the folllowing:
a. Return on total assets:
b. Return on stockholders' equity:
c. Times interest earned:
Answer:
Return on total assets: (Net income + Interest expense)/ Average total assets
Return on stockholders’ equity : Net Income / Average Total stockholder
Explanation: I got the answer right
Final answer:
The answer explains how to calculate Return on Total Assets, Return on Stockholders' Equity, and Times Interest Earned using the provided financial data.
Explanation:
a. Return on total assets:
To calculate Return on Total Assets, divide Net Income by Average Total Assets for each year. This ratio measures how efficiently the company is using its assets to generate profit.
b. Return on stockholders' equity:
Return on Stockholders' Equity is calculated by dividing Net Income by Average Stockholders' Equity. It shows how well the company is generating profit from the shareholders' investments.
c. Times interest earned:
To find the Times Interest Earned ratio, divide Earnings Before Interest and Taxes (EBIT) by Interest Expense. This ratio indicates the company's ability to cover its interest payments.
Naomi knows she has to order her store's Christmas holiday merchandise in April to ensure delivery before the holiday season. Naomi is concerned with the supply chain management goal ofA. providing products at the right time.B. providing products at the right locations.C. providing the right quantities.D. satisfying the service levels supply chain participants expect.E. minimizing system-wide costs.
Answer:
A. providing products at the right time.
Explanation:
Naomi is concerned about the seasonality of Christmas products. She knows that Christmas products not sold in Christmas season are unlikely to be sold in other time of the year. She also knows that customers tend to spend more money in the Christmas season, so there is a high expectation about relative higher sales. The only way Naomy could take advantage of the season is having stock available at the right time when customers desire Christmas products and are willing to pay a relatively higher amount of money. In this case, having products at the right time is the biggest Naomi's concern.
A clothing store has ordered 100,000 swimsuits. It costs $22 to produce a swimsuit. They plan to sell them until August 31 at a price of $40 and then mark the price down to $30. Given values for demand through August 31 and after August 31, develop a worksheet to compute the profit from this order. (Hint: you select demand values. The point is to create a formula that will provide the correct profit for any demand level.)
Answer:
Total profit = $1800000 @ a given demand level of 100K units of swimsuit.
Explanation:
Lets first develop a formula representing the Total profit for any demand level, see as follows:
(Selling price per unit× d) - (cost per unit× d)= Total profit
We will be using the short forms of the components in this formula.
SP = selling price per unit
d= demand
cp= cost per unit
TP= Total profit.
Now lets substitute the values into the formula to compute profit at any demand level (in this case 100,000 units of swimsuits) as follows:
Total profit = ($40× 100000) - ($22× 100000)
Total profit = $4000,000 - $2200,000
Total profit = $1800000 @ a given demand level of 100K units of swimsuit.
(NOTE: The formula mentioned above can be used to compute the correct profit for any demand level, even though if there is a change in sp and/or cp, the formula can also be useful.)
Assume Mexico can produce 18 tons of coffee or 6 tons of rice and Costa Rica 6 tons of coffee ord 3 tons of rice. According to comparative advantage. Costra Rica therefore should produce a. only coffee b. both coffee and rice c. neither coffee or rice. d. only rice
Answer:
d. only rice
Explanation:
Please see attachment
A local marketing firm is considering launching a new and extensive social media marketing campaign. This investment of resources is being looked at through the length of the project since it is anticipated to last at least 5 years. What financial calculation should be used to compute the investment's value, taking into account the time value of money?'
Answer:
The marketing firm should use the Present Net Value calculation to see if the marketing campaign will add value to the company.
Explanation:
The Present Net Value is a calculation that brings to present time all the future cash flows of an investment. Seeing the campaign marketing strategy as a potential investment, the firm has to identify the revenue entirely caused by the marketing campaign. Doing this, the firm will identify inflows (sales) per year that have to be subtracted to the outflows (marketing expenses). The net value of every year is discounted at a discount rate, and if the Present Net Value is higher than 0, it means that the marketing strategy is expected to bring value to the firm
IE 9-3 ... AS/AD Model – Suppose this economy was temporarily at Year 4, but then experienced a large LEFT shifts of AS. If the Price Level rises to $2.54, then Real Production GDP will have fallen to $4500 b and employment will be only __________. In the Business Cycle the economy will have moved beyond Point _________ .
Answer:
115, M, Stagflation
The contact lens company, Here's Clear Eye, sold thousands of pairs of contact lenses in Kenya. The lenses were defective and resulted in severe eye infections, and in 156 cases, blindness. The purchasers of the lenses who bring suit in Kenya will be entitled to recover their purchase price, attorney fees and medical bills. Kenya does not permit recovery for pain and suffering nor for permanent injury. Several of the purchasers who are blind have brought suit in South Carolina, the home of Here's Clear Eye. South Carolina permits recovery for permanent injury as well as punitive damages. The average recovery in Kenya for the purchasers is $600. A lawyer for the purchasers from Columbia, South Carolina estimates the average verdict will be $600,000. Which of the following statements is true?
(A) The Kenya purchasers may use the South Carolina courts because their remedies in Kenya are inadequate.
(B) The South Carolina cases will be dismissed on the grounds of forum non conveniens.
(C) The Kenya purchasers can recover only punitive damages in South Carolina.
(D) The Kenya purchasers can recover only for permanent injuries in South Carolina.
Answer:
(B) The South Carolina cases will be dismissed on the grounds of forum non conveniens.
Explanation:
Forum non conveniens is a discretionary power that allows courts to dismiss a case where another court, or forum, is much better suited to hear the case. This dismissal does not prevent a plaintiff from re-filing his or her case in the more appropriate forum.
The main transfer programs of the U.S. government include each of the following, except:
a. Social Security payments to the elderly.
b. payments on interest of the government debt.
c. direct "welfare" payments to low-income households.
d. wage payments to government employees.
Answer:
d. wage payments to government employees.
Explanation:
Transfer payment is when income is received but neither good or service is exchanged.
Examples of transfer payments in the US include- Social Security, Medicaid, and unemployment insurance .
I hope my answer helps you
Answer:
d
Explanation:
just did test
In​ 1982-84 dollars, the real average hourly wage rate in 2003 was ​$8.28 and in 2004​, it was ​$8.24. In 2003​, the CPI was 184.0 and in 2004​, the CPI was 188.9. Calculate the nominal wage rate in 2003 and in 2004.
Answer:
The nominal wage in 2003 = $15.22
The nominal wage in 2004 = $15.565
Explanation:
Inflation = [ ( CPI of 2003 - CPI of base year ) ÷ CPI of Base year ] × 100
= [ ( 184 - 100 ) ÷ 100 ] × 100
= 84%
Therefore,
The wage will increase by this inflation to be nominal
= 8.28 × (1.84)
= $15.23
Similarly
Inflation = [ ( CPI of 2004 - CPI of base year ) ÷ CPI of Base year ] × 100
= [ ( 188.9 - 100 ) ÷ 100 ] × 100
= 88.9%
Therefore,
The wage will increase by this inflation to be nominal
= 8.24 × (1.889)
= $15.565
Hence,
The nominal wage in 2003 = $15.22
The nominal wage in 2004 = $15.565
Sally acquired an apartment building 15 years ago for $150,000 and sold it for $410,000 in the current year. At the time of the sale, there is $65,000 of accumulated straight-line depreciation on the apartment building. Assuming Sally is in the 32 percent tax bracket for ordinary income, how much of her gain is taxed at 15 percent?
Answer:
Capital gain taxed @ 15% = $260000
Explanation:
given data
Cost of Building = $150,000
sold = $410,000
accumulated depreciation = $65,000
tax bracket = 32 %
to find out
how much of her gain is taxed at 15 percent
solution
first we get here gain on sale that is express as
gain on sale = sold + Accumulated Depreciation - Cost of Building ..............1
gain on sale = $410,000 + $65,000 - $150,000
gain on sale = $325000
and
Unrecaptured depreciation of taxed @ 25% is = $65000
so Capital gain taxed @ 15% is = $325000 - $65000
Capital gain taxed @ 15% = $260000
Agile project management is superior to traditional project management in which of the following situations?
Select an answer:
a. when the project is relatively simple
b. when the project goal and solution are not clearly defined
c. when the team understands the work to be done
d. when you have a small, experienced team assigned to work on the project
Answer:
The correct answer is (d) when you have a small, experienced team assigned to work on the project .
Explanation:
Agile project management is a project management methodology that is defined by its signature iterative and incremental approach to achieving requirements throughout the project life cycle. Its particularly suited for small dynamic projects and relies heavily on teamwork.
Traditional project management is a project methodology that emphasizes on a sequential predetermined approach to the project life cycle. The procedures to be followed throughout every phase of the project's life is already laid out. Changes to the laid down plan are not anticipated.This project management style is preferred for larger projects.
In conclusion,when you have a small, experienced team assigned to work on the project then you should utilize the agile project management style. Since the team is small, they are more suited to handle a smaller or medium project and will have to rely more on their teamwork to ensure project success. A traditional project management approach would require a bigger team whose experience wouldn't add any substantial edge since the project plan is already laid out. Additionally, a traditional project management approach is inherently personnel intensive, whereas the available personnel is smaller.
The Agile project management is more superior than traditional project management in situations:
when you have a small, experienced team assigned to work on the projectWhat is the agile system of management?It is the system of project management that has to do with the break down of task into several phases.
This type of management has constant collaboration with all stakeholders.
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A firm has four branch offices throughout the state. Following are the operating results from last year. K City G City W City S City Branch office sales $300,000 $420,000 $ 540,000 $606,000 Branch office profit 120,000 294,000 318,000 104,000 Average total assets 805,000 914,000 1,650,000 745,000 Which branch had the highest return on investment?
A. K City.
B. G City.
C. W City.
D. S City.
Answer:
City K City G City W City S
$ $ $ $
ROI
= NP x 100 120.000 x 100 294,000 x 100 318,000 x 100 104,000 x 100
ATA 805,000 914,000 1,650,000 745,000
ROI 14.91% 32.17% 19.27% 13.96%
Where ROI refers to return on invetment, NP represents net profit and ATA denotes average total assets.
City G has the highest return on investment.
Explanation:
Return on investment is calculated as the ratio of net profit to average total assets multiplied by 100.
Laurel, Inc., has debt outstanding with a coupon rate of 5.9 % and a yield to maturity of 7.2 %. Its tax rate is 38 %. What is Laurel's effective (after-tax) cost of debt? NOTE: Assume that the debt has annual coupons. Note: Assume that the firm will always be able to utilize its full interest tax shield. The effective after-tax cost of debt is nothing%.
Answer:
effective (after-tax) cost of debt = 4.464 %
Explanation:
given data
coupon rate = 5.9 %
yield to maturity = 7.2 %
tax rate = 38 %
to find out
effective (after-tax) cost of debt
solution
we get here effective (after-tax) cost of debt that is express as
effective (after-tax) cost of debt = Yield to maturity × ( 1 - Tax rate) ..........1
put here value we get
effective (after-tax) cost of debt = 7.2% × ( 1 - 38 % )
effective (after-tax) cost of debt = 0.072 × ( 1 - 0.38 )
effective (after-tax) cost of debt = 0.072 × 0.62
effective (after-tax) cost of debt = 0.04464
effective (after-tax) cost of debt = 4.464 %
If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied______________.
a. there is a surplus and the interest rate is above the equilibrium level.
b. there is a surplus and the interest rate is below the equilibrium level.
c. there is a shortage and the interest rate is above the equilibrium level.
d. there is a shortage and the interest rate is below the equilibrium level.
When the demand for loanable funds exceeds the supply, there is a shortage and the interest rate rises above the equilibrium level. This situation persists until the demand and supply of loanable funds are once again balanced, restoring equilibrium in the market.
Explanation:If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, the correct choice would be c. there is a shortage and the interest rate is above the equilibrium level. This concept is under the subject of economics and specifically deals with the loanable funds market, which is a theoretical model used to explain interest rate determination. In this model, the quantity of loanable funds is determined by savers (supply) and borrowers (demand).
In the scenario where demand exceeds supply, there's a shortage of loanable funds. Applying the basic principle of economics, when there is a shortage, the price of the commodity typically increases. In this context, the price of the commodity is the interest rate, so it will increase above the equilibrium level until the quantity demanded and the quantity supplied become equal again, restoring equilibrium in the market.
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