Answer and Explanation:
The adjusting entries are as follows:
a. Insurance expense $275
To Prepaid insurance $275
(To record the insurance expense)
b. Supplies expense $785 ($1,500 - $715)
To Supplies $785
(To record the supplies expense)
We assume the balance of supplies before adjustment is $1,500
c. Depreciation - office equipment $330
To Accumulated depreciation $330
( To record the depreciation expense)
d. Salary Dr $325
To Accrued salary $325
(To record the accrued salary)
e. Rent expense $1,600
To Prepaid rent $1,600
(To record the rent expense )
f. Unearned fees $790
To Fees revenue $790
(To record the unearned fees is recorded)
We assume the balance of unearned fees before adjustment is $4,000
Therefore, $790 is arrive from
= $4,000 - $3,210
= $790
Each of the following documents is used in the control of cash disbursements except a.cash register tapes. b.receiving reports. c.purchase orders. d.purchase requisitions. g
Answer: a. cash register tapes.
Explanation:
When you go to a shop and buy something at the till and the cashier prints a receipt and gives it to you, that paper is a cash register tape.
A cash register tape therefore shows the goods sold and the amount the goods were sold at. It is therefore not used as a method of control for cash disbursement which is cash going out of a business but rather for cash that is coming into the business.
Herman Company received proceeds of $188,500 on 10-year, 8% bonds issued on January 1, 2009. The bonds had a face value of $200,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Herman uses the straight-line method of amortization.
What is the carrying value of the bonds on January 1, 2011?
a) $200,000
b) $190,800
c) $197,700
d) $189,650
Sheridan Company used high-low data from June and July to determine its variable cost of $12 per unit. Additional information follows: Month Units produced Total costs June 2300 $37600 July 600 17200 If Sheridan’s produces 2900 units in August, how much is its total cost expected to be?
Answer:
See below
Explanation:
June 37,600 - 2,300 = 35,300
July 17,200 - 600 = 16,600
A company purchased a marketable security for $10,000 on 3/3/2013. On 3/30/2013, the company prepared its financial statements and marked the security to its market value, which was $17,500. The security was sold on 4/30/2013 for $15,000. The company used the Trading Securities method to account for the security. The statutory tax rate is 35%. What was the effect of the sale of the security on Income Tax Payable on 4/30/2013
Answer:10,000
Explanation: i got it in my classkick
On 1/29, General Electric bought supplies in the amount of $1,500. What account is debited and what account is credited in the required journal entry for General Electric on 1/29? (Select ALL that apply)
Answer: Debit Supplies
Credit Cash
Credit Accounts payable.
Explanation:
The journal entry is an act of making records of the transactions in an organization which shows the debit and credit balances of the company.
Based on the information given, since General Electric bought supplies in the amount of $1,500, the journal entry will be:
Debit Supply $1500
Credit Cash / Accounts Payable $1500
Given an actual demand this period of 61, a forecast for this period of 58, and an alpha of 0.3, what would the forecast for the next period be using exponential smoothing
Answer:
58.9
Explanation:
Calculation to determine what would the forecast for the next period be using exponential smoothing
Next period forecast= [ (1 - Alpha) × Current forecast]+Alpha*Actual demand
Let plug in the formula
Next period forecast= [ ( 1 - 0.3 ) × 58] +0.3*61
Next period forecast=40.6+18.3
Next period forecast=58.9
Therefore what would the forecast for the next period be using exponential smoothing is 58.9
Pace Corporation in Cookeville is considering an extended warranty on production equipment it bought recently. The extended warranty will cover repair year-end expenses of $2,000, $2,000, $4,000, and $5,000, respectively, for the next 4 years. If the interest rate is 6%, what is the worth of the extended warranty
Answer:
$10,985.73
Explanation:
The worth of the extended warranty in today's terms is the present value of all year-end repair expenses expected to be incurred in extending the warranty whereby the interest rate of 6% is the appropriate discount rate in this case as shown thus:
Present value of a future cash flow=cash flow/(1+discount rate)^n
n is the year in which the cash flow is expected, it is 1 for year 1 repair expenses , 2 for year 2 and so on.
PV of repair expenses=$2000/(1+6%)^1+$2000/(1+6%)^2+$4000/(1+6%)^3+$5000/(1+6%)^4
PV of repair expenses= $10,985.73
A company that maintains its books and records under IFRS is applying the revaluation model to a certain fixed asset. In previous years, the value of the asset had declined. In the current year, however, the asset has appreciated in value by an amount that is greater than the cumulative decrease that had occurred previously. How will the company report the asset on the year-end balance sheet for the current year
Answer: See explanation
Explanation:
The revaluation model is when the fixed asset of a business or an organization is carried at its revalued amount.
Based on the question asked, the asset will be valued based on the new fair value with regards to the increase. It should be noted that the remainder recognized will then be recognized in the other comprehensive income.
Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $5 trillion while raising only $4.5 trillion worth of taxes.
Instructions:
a. What will be the government's deficit?
b. If the government finances the deficit by issuing bonds, what amount of bonds will it issue?
c. At a 4 percent rate of interest, how much interest will the government pay each year?
d. Add the interest payment to the government $5 trillion expenditures for the next year, and assume that tax revenues remain at $4.5 trillion. In the second year, compute the
(i) Deficit: $____billion.
(ii) Amount of new debt (bonds) issued to finance the deficit in the second year: $____billion.
(iii) Total debt at the end of the second year: $___billion.
(iv) Debt service requirement: $____billion
Answer:
a. The government's deficit is $0.5 trillion or $500 billion.
b. The amount of bonds issued = $0.5 trillion or $500 billion.
c. At a 4 percent rate of interest, the interest the government will pay each year = $20 billion.
d. i) Deficit: $__520__billion.
(ii) Amount of new debt (bonds) issued to finance the deficit in the second year: $_520___billion.
(iii) Total debt at the end of the second year: $_1,020__billion.
(iv) Debt service requirement: $__40.8__billion
Explanation:
a) Data and Calculations:
Government spending = $5 trillion
Income from taxes = $4.5 trillion
Deficit = $0.5 trillion
Bonds issued = $0.5 trillion
Interest rate = 4%
Annual interest expense = $20 billion ($0.5 trillion * 4%)
Expenditure next year = $5 trillion
Interest payment = $0.02 trillion
Total governmental spending = $5.02 trillion
Tax revenue = 4.50 trillion
Deficit = $0.52 trillion
The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF):Spot............................................ $0.943230-day forward.......................... $0.948190-day forward.......................... $0.9531180-day forward........................ $0.9594a. Was the Swiss franc selling at a discount or premium in the forward market?b. What was the 30-day forward premium (or discount)?c. What was the 90-day forward premium (or discount)?d. Suppose you executed a 90-day forward contract to exchange 100,000 Swiss francs into U.S. dollars. How many dollars would you get 90 days hence?
Answer:
The Wall Street Journal Reports
a. The Swiss franc was selling at a premium in the forward market.
b. The 30-day forward premium was: $0.0049.
c. The 90-day forward premium was: $0.0099.
d. Dollars to receive from a 90-day forward contract is $95,310.
Explanation:
a) Data and Calculations:
Spot and forward rates for the Swiss franc ($/SF):
Spot............................................ $0.9432
30-day forward.......................... $0.9481
90-day forward.......................... $0.9531
180-day forward........................ $0.9594
Premium:
30-day forward.......................... $0.9481
Spot............................................ $0.9432
Premium = $0.0049
90-day forward.......................... $0.9531
Spot............................................ $0.9432
Premium = $0.0099
180-day forward........................ $0.9594
Spot............................................ $0.9432
Premium = $0.0162
Dollars to receive from a 90-day forward contract is $95,310 ($0.9531 * SF 100,000)
Assume that you invest 5 percent of your salary and receive the full 5 percent match from East Coast Yachts. What EAR do you earn from the match
Answer:
The EAR you earn from the match is 100%.
Explanation:
Since a full 5 percent match will be received if 5 percent of your salary is invested, this implies that 100% will be earned by you from the match up to 5%.
For example, if 5 percent of your salary that you put in is $200, the East Coast Yachts will match the $200. This indicates that effective annual return (EAR) earned by you from the match is 100%.
Therefore, the EAR you earn from the match is 100%.
P&R Company is an all-equity company. Its stock has a beta of .82. The market risk premium is 6.9 percent and the risk-free rate is 4.5 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 1.7 percent to the project's discount rate. What should the firm set as the required rate of return for the project?
Answer:
11.86%
Explanation:
Project's discount rate = Rf rate + Beta*risk premium
Project's discount rate = 4.5% + 0.82*6.9%
Project's discount rate = 4.5% + 5.658%
Project's discount rate = 10.158%
Required rate = Project's discount rate + Adjustment rate
Required rate = 10.158% + 1.7%
Required rate = 11.86%
Thus, the firm set 11.86% as the required rate of return for the project.
A corporation has issued $100 par, 8% convertible preferred stock, callable at par. The preferred is convertible into 1.4 shares of common stock. Currently, the preferred stock is trading at $105 while the common stock is trading at $72.75. The corporation calls the preferred stock at par. To realize the largest profit, a customer holding 100 shares of preferred stock should:
Answer:
The should sell short all the common stock and thereby convert the preferred stock for delivery in order to cover the short
Explanation:
Based on the information given in order to To realize the largest profit, a customer that purchased 100 shares at par should sell short all the COMMON STOCK and thereby convert the PREFERRED STOCK for delivery in order to cover the all short of the common stock.
Agreement and disagreement among economists
Suppose that Hubert, an economist from a university in Arizona, and Kate, an economist from a school of industrial relations, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:
Kate: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation.
Hubert: I believe that a cut In income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits.
Kate: I actually feel that raising the top Income tax rate would reduce the budget deficit more effectively.
The disagreement between these economists is most likely due to_____.
Despite their differences, with which proposition are two economists chosen at random most likely to agree?
A. Lawyers make up an excessive percentage of elected officials.
B. Tariffs and Import quotas generally reduce economic welfare.
C. Minimum wage laws do more to harm low-skilled workers than help them.
Answer and Explanation:
The disagreement arise between this economist is due to the differences in the scientific judgements as they disagree due to the various scientific judgements. And, despite their differences, the proposition of two economists should be chosen at random as the tariff and import quotas normally decreased the economic welfare as it always result in deadweight loss and in this both economist should be agree for the same
A business had an inventory cost of $40,000 the last time it was counted.
Since then, it made $80,000 in purchases and sales of $110,000. Its gross
profit was 25%. What is its estimated inventory at cost using the gross pront
method?
O A. $37,500
B. $42,500
C. $35,000
D. $40,000
Answer:
A. 37,500
Explanation:
Hope this helps :)
Rudd Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2020, 11,250 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used.
Cost Element Standard (per unit) Actual
Direct materials 8 yards at $4.40 per yard $375,575 for 90,500 yards ($4.15 per yard)
Direct labor 1.2 hours at $13.40 per hour $200,925 for 14,250 hours ($14.10 per hour)
Overhead 1.2 hours at $6.10 per hour (fixed $3.50; variable $2.60) $49,000 fixed overhead $37,000 variable overhead
Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $49,000, and budgeted variable overhead was $36,400.
Required:
Compute the total, price, and quantity variances for (1) materials and (2) labor.
Answer:
Results are below.
Explanation:
To calculate the total, price, and quantity variance for direct material, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (4.4 - 4.15)*90,500
Direct material price variance= $22,625 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (8*11,250 - 90,500)*4.4
Direct material quantity variance= $2,200 unfavorable
Total direct material variance= 22,625 - 2,200= $20,425 favorable
To calculate the total, rate, and efficiency variance for direct labor, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (1.2*11,250 - 14,250)*13.4
Direct labor time (efficiency) variance= $10,050 unfavorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (13.4 - 14.1)*14,250
Direct labor rate variance= $9,975 unfavorable
Total direct labor variance= -10,050 - 9,975= $20,025 unfavorable
There are two reasons that an industry prefers self-regulation to government regulation: cost and flexibility. True False
Answer:
True.
Explanation:
In general, the vast majority of industrial entrepreneurs prefer self-regulation over government regulation. This is so due to two fundamental factors: on the one hand, the maintenance costs of the government regulatory system are paid for through taxes, which means that the higher the regulations, the higher the taxes that each company must pay, while the self-regulation should not spend. more money than that of the control systems, without allocating sums of money to the government; and on the other, flexibility, that is, the possibility of adapting the processes, systems and needs of each company to the necessary regulations, being able to optimize costs and processes.
In Fontainebleau Hotel v. Eden Roc, the Eden Roc Hotel sued the Fontainebleau Hotel when Fontainebleau began erecting a 14-story addition to its premises that Eden Roc claimed blocked air and sunlight from its pool and sunbathing areas. The court determined that
Answer:
The answer is "The structure could be constructed when it is helpful and beneficial, even if it is partially constructed to deliberately damage the plaintiff ".
Explanation:
As court decided for Beau because although Eden Roc has incurred from the interruption of free air and daylight development, this does not do so because the building fulfills a useful or valued need, but because it is harmed by only a regulation. Whether Eden Roc had been decided by the Supreme, future property gains would've been impeded.
It is held throughout all places that, in which a framework encounters a useful and profit-giving need, there is no legal right to free advance of light and air from the bordering country, for neither damage nor even a guideline under the saying sics utere tuo ut extra - terrestrial non-leads, even though the structure damages by trying to remove fresh air and interfering to vi.
Economists Mark Blaug and Ruth Towse studied the market for economists in Britain and found that the quantity demanded was about 150 to 200 a year, and that the quantity supplied was about 300 a year. What likely to happen when there is a surplus of economists in Britain
Answer: See explanation
Explanation:
In this case, since the supply is more than the demand for Economists in the country, this will lead to a lower wage for the Economists that are employed. This is because there are surplus Economists which can be readily called if those employed aren't willing to collect the lower wages.
Also, the excess Economists can move to other countries where their services will be needed. In some cases, they may take jobs that are similar to their practice such as researchers, marketing roles etc.
On January 1, 2022, Concord Company issued $2,800,000 face value, 7%, 10-year bonds at $3,006,070. This price resulted in a 6% effective-interest rate on the bonds. Concord uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1.
(a) Prepare the journal entries to record the following transactions.
i. The issuance of the bonds on January 1, 2022.
ii. Accrual of interest and amortization of the premium on December 31, 2022.
iii. The payment of interest on January 1, 2023.
iv. Accrual of interest and amortization of the premium on December 31, 2023.
Answer:
Concord Company
Journal Entries:
i. The issuance of the bonds on January 1, 2022:
Debit Cash $3,006,070
Credit Bonds Payable $2,800,000
Credit Bonds Premium $206,070
To record the issuance of bonds at premium.
ii. Accrual of interest and amortization of the premium on December 31, 2022:
Debit Interest expense $180,364
Debit Premium Amortization $15,636
Credit Interest Payable $196,000
To accrue interest and record premium amortization.
iii. The payment of interest on January 1, 2023:
Debit Interest Payable $196,000
Credit Cash $196,000
To record payment of interest.
iv. Accrual of interest and amortization of the premium on December 31, 2023:
Debit Interest expense $179,426
Debit Premium Amortization $16,574
Credit Interest Payable $196,000
To accrue interest and record premium amortization.
Explanation:
a) Data and Calculations:
January 1, 2022:
Face value of bonds issued = $2,800,000
Proceeds from the bonds issue 3,006,070
Bonds Premium = $206,070
Coupon interest rate = 7%
Effective interest rate = 6%
Bonds maturity period = 10 years
Payment of annual interest = each January 1
December 31, 2022:
Interest expense = $180,364 ($3,006,070 * 6%)
Cash payment = $196,000 ($2,800,000 * 7%)
Amortization of premium $15,636 ($196,000 - $180,364)
Bonds' fair value = $2,990,434 ($3,006,070 - $15,636)
December 31, 2023:
Interest expense = $179,426 ($2,990,434 * 6%)
Cash payment = $196,000 ($2,800,000 * 7%)
Amortization of premium $16,574 ($196,000 - $179,426)
Bonds' fair value = $2,973,860 ($2,990,434 - $16,574)
Analysis:
i. The issuance of the bonds on January 1, 2022:
Cash $3,006,070 Bonds Payable $2,800,000 Bonds Premium $206,070
ii. Accrual of interest and amortization of the premium on December 31, 2022:
Interest expense $180,364 Premium Amortization $15,636 Interest Payable $196,000
iii. The payment of interest on January 1, 2023:
Interest Payable $196,000 Cash $196,000
iv. Accrual of interest and amortization of the premium on December 31, 2023:
Interest expense $179,426 Premium Amortization $16,574 Interest Payable $196,000
Owner Shan Lois considering franchising her Noodles for a restaurant concept. She believes people will pay $ 10.50 for a large bowl of noodles. Variable costs are $ 6.30 per bowl.Lo estimates monthly fixed costs for a franchise at $10,500.Requirements1. Use the contribution margin ratio approach to find afranchise's breakeven sales in dollars.2. Lo believes most locations could generate $63,000 in monthly sales. Is franchising a good idea for Lo if franchisees want a minimum monthly operating income of 13,500?
Answer:
Selling price = $10.50
Variable cost = $6.30
Fixed cost = $10,500
Contribution margin = Selling price - Variable cost = $10.50 - $6.30 = $4.20
Contribution margin ratio = Contribution margin/Selling price = $4.20/$10.50 = 0.4 = 40%
1. Break even sales = Fixed cost / Contribution margin ratio
Break even sales = $10,500 / 40%
Break even sales = $10,500 / 0.40
Break even sales = $26,250
2. Break even sales = (Fixed cost + Operating income) / Contribution margin ratio
Break even sales = ($10,500 + $13,500) / 40%
Break even sales = $24,000 / 0.40
Break even sales = $60,000
Lo believes most locations could generate $63,000 in monthly sales.
Observation: The monthly sales is greater than the breakeven, so the monthly sales is the best choice.
Profit Suppose that the daily profit (in dollars) from the production and sale of x units of a product is given byP180xx210002000At what rate per day is the profit changing when the number of units produced and sold is 100 and is increasing at a rate of 10 units per day
Answer:
The answer is "1798".
Explanation:
[tex]\to p=180x-\frac{x^{2}}{1000}-2000[/tex]
In order to find the rate of profit increase each day, we differentiate between the money demand function and the time t.
[tex]\to \frac{dp}{dt}=180\frac{dx}{dt}-\frac{2x}{1000}\frac{dx}{dt} \\\\\to \frac{dp}{dt}=\frac{dx}{dt}\left (180-\frac{2x}{1000} \right ).................(1)[/tex]
Calculate [tex]\frac{dp}{dt}[/tex] when [tex]x=100[/tex]
[tex]\frac{dx}{dt}=10[/tex] (Extension rate of produced and delivered units per day)
[tex]x=100 \ and\ \frac{dx}{dt}=10 ......... in \ \ eq(1)\\\\\frac{dp}{dt} = 10\left (180-\frac{2(100)}{1000} \right )\\\\[/tex]
[tex]=10\left (180-0.2\right ) \\\\=1798 \\\\[/tex]
The ________ paid for products and services goes by many names, like tuition for your education, rent for an apartment, interest on a bank credit card, and a premium for car insurance. Multiple Choice fee value cost price exchange rate
Answer:
price.
Explanation:
Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services. Thus, it refers to the amount of money a customer or consumer buying goods and services are willing to pay for the goods and services being offered. Also, the price of goods and services are primarily being set by the seller or service provider.
Generally, the price paid by consumers for products and services are referred to as by many names such as tuition for your education (school fee), rent for an apartment (house rent), interest on a bank credit card, and a premium for car insurance.
In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.
Additionally, one of the importance associated with the pricing of products is that, it improves the image of a business firm.
Singh, a consumer, leases sheet music from Tunes Inc. for a public performance. United Music Corporation, which holds a copyright on the music, sues Singh to stop the performance without a royalty payment. Singh fails to notify Tunes of the suit within a reasonable time. The lessee:_________
a. loses any remedy against the lessor for liability established in the suit.
b. can assert this failure to delay the litigation, but it is not a defense.
c. can raise the failure to notify as a defense in copyright holder’s suit.
d. can sue the lessor to recover the expenses of the suit.
Answer:
a. loses any remedy against the lessor for liability established in the suit.
Explanation:
This is because it was lessee's responsibility to inform the lessor in time.
A lessee is in contract with the lessor and is responsible for all the actions taken on behalf of the lessor with the lessor's permission.
If the lessee fails to inform the lessor in time or do any action without his permission then the lessor can sue the lessee or take any other legal action as may be required by the law against the lessee.
In breach of contract the lessee has to face the consequences and pay penalty.
Choice a is the best option.
The lessee can never sue the lessor for his illegal actions.
So option d is incorrect.
b) Delaying the litigation would do no good. It would add to his failures.
Choice c is also incorrect.
From 2009 to 2010, nominal gross domestic product (GDP) in the United States grew by 3.8%. Given that prices increased by 1% and the population grew by 1%, we know that per capita real GDP grew by: g
Answer:
the per capital real GDP would be grew by 2.8%
Explanation:
The computation of the per capital real GDP would be grew by
= Growth of gross domestic product - increase in prices = growth in population
= 3.8% - 1% - 1%
= 2.8%
Hence, the per capital real GDP would be grew by 2.8%
So , the same should be considered
The current monthly production volume of a company is 1,120 units. Workers are paid $19 per hour, and each worker can produce 4 units per hour. The fixed costs for a month are $4,200. Determine the selling price of the product that the company should charge in order to breakeven its monthly profit.
Answer:
The selling price of the product that the company should charge in order to breakeven its monthly profit is $8.50 per unit.
Explanation:
Number of hours worked by workers per month = Total monthly units / Units per hour = 1,120 / 4 = 280
Total monthly variable cost = Total monthly wages = Number of hours worked by workers per month * Hourly rate = 280 * $19 = $5,320
Total monthly cost = Total monthly variable cost + Fixed costs for a month = $5,320 + $4,200 = $9,520
Selling price to breakeven = Total monthly cost / Total monthly units = $9,520 / 1,120 = $8.50
Therefore, the selling price of the product that the company should charge in order to breakeven its monthly profit is $8.50 per unit.
How will you use the cloud to stay organized
Answer:
Explanation:
Develop a Folder Naming System. Decluttering your cloud space will mean developing a file system and then putting everything in its proper place. ...
Julius builds dining chairs that he sells for $200 a chair. His fixed costs are $1,000 (for workshop equipment). Each chair costs him $50 in materials to produce plus an extra $25 for each previous chair made that day, which reflects Julius's increasing exhaustion. (Thus, the first chair cost $50, the second costs $75, the third cost $100, etc.) Assume time requirements in producing a chair are not a factor. How many chairs should Julius produce each day?
Answer:
7 chairs
Explanation:
The computation of the no of chairs that produced each day is shown below:
We know that
The optimum production is Marginal revenue = Marginal Cost
the Marginal cost is increasing with output and Marginal revenue remains constant at $200
So,
Quantity MC
1 50
2 75
3 100
4 125
5 150
6 175
7 200
Therefore Julius produce 7 chairs
A comparable property sold 17 months ago for $115,000. If the appropriate adjustment for market conditions is 0.30% per month (without compounding), what would be the adjusted price of the comparable property
Answer and Explanation:
The computation is shown below:
Without compounding, the adjusted price of the comparable property is
= $115,000 × (1+ (0.003 × 17))
= $115,000 × 1.051
= $120,865
And,
With compounding:
= $115,000 × (1.003)^10
= $115,000 × 1.030408
= $118,496.92
In this way it should be calculated
Consider two firms producing smartphones. Firm A uses a highly automated robotics process, while Firm B uses human workers on an assembly line and pays overtime when there is heavy production demand. Firm A and B have a similar amount of financial leverage. Which firm will have a higher beta
Answer:
The firm that will have a higher beta is:
Firm B.
Explanation:
The question here is which firm is more volatile. Since they have a similar amount of financial leverage, Firm B which uses more human workers on its assembly line and pays overtime will appear to be more volatile than Firm A with a highly automated robotics process. Firm B faces risks of labor strikes and other vagaries associated with the use of more labor than the market.