Answer:
Debited Cash of $1,136,000
Debited Loss on Fluctuation of Foreign Currency for $35,500
Explanation:
Calculation for when the foreign receivable was collected, Barter Enterprises
We are going to first calculate for the date when Barter received the payment.
On the date when Barter received payment, they will received :
710,000 *$1.60 = $1,136,000
Therefore On the date when Barter received payment, they had debited Cash of $1,136,000
We are going to calculate for Loss on Fluctuation of Foreign Currency
= (710,000 *$1.60) - (710,000 *$1.65)
=$1,136,000-$1,171,500
= $35,500
Therefore they as well had Debited Loss on Fluctuation of Foreign Currency for $35,500
A nation's central bank auctions off a new issue of 10-year bonds. What is the short-run effect on the nation's economy
Answer: Aggregate Demand Decreases
Explanation:
When the Central Bank sells bonds, it is engaging in Open Market Operations to reduce the amount of money in the Economy by taking money out of people's hands ( the money they will use to buy the bonds).
When money supply in the economy decreases, it will have the opposite effect on Interest rates as they will increase because money is no longer readily available.
When this happens both businesses and Individuals will reduce the amount of money they borrow for investment and consumption respectively which are both components of Aggregate Demand.
Aggregate Demand therefore decreases and the AD curve shifts to the LEFT to depict this.
Segmented Income Statement Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The following information was provided for the coming year.
Poinsettias Fruit Trees
Sales $970,000 $3,100,000
Variable cost of goods sold 460,000 1,630,000
Direct fixed overhead 160,000 200,000
A sales commission of 4% of sales is paid for each of the two product lines. Direct fixed selling and administrative expense was estimated to be $146,000 for the poinsettia line and $87,000 for the fruit tree line. Common fixed overhead for the nursery operation was estimated to be $800,000; common selling and administrative expense was estimated to be $450,000.
Required:
Prepare a segmented income statement for Gorman Nurseries for the coming year, using variable costing.
Answer:
Poinsettias records a loss of $118,125
Fruit Trees records a profit of $92,325
The company therefore records an overall $25,800 loss
NB: See the workings below see the assumption mad to allocate common expenses since none is given in the question.
Explanation:
Variable costing income statement is a type of income statement that records variable cost separately first to determine the contribution margin and thereafter record the fixed cost which is further split into direct fixed expenses and common expenses.
The segmented income statement for Gorman Nurseries for the coming year can therefore be presented as follows:
Gorman Nurseries Inc.
Segmented Income Statement
For the coming year
Particulars Poinsettias ($) Fruit Trees ($) Total ($)
Sales 970,000 3,100,000 4,070,000
Variable COGS (460,000) (1,630,000) (2,090,000)
Variable selling exp. (w1.) (38,800) (124,000) (162,800)
Contribution margin 471,200 1,346,000 1,817,200
Direct fixed overhead (160,000) (200,000) (360,000)
Direct fixed S $ Admn exp. (146,000) (87,000) (233,000)
Segment margin 165,200 1,059,000 1,224,200
Common fixed overh. (w2a) (176,077) (623,923) (800,000)
Common S $ Admn ex (w2b) (107,248) (342,752) (450,000)
Segment Net Income (loss) (118,125) 92,325 (25,800)
Workings:
w1. Variable selling expenses = Sales * Commission percentage
Poinsettias = $970,000 * 4% = $38,8000
Fruit Trees = $3,100,000 * 4% = $124,000
w2. Allocation of common expenses using the following assuptions:
a) Use cost of goods sold (COGS) to allocate Common fixed overhead:
Poinsettias = (460,000 / 2,090,000) * $800,000 = $176,077
Fruit Trees = (1,630,000 / 2,090,000) * $800,000 = $623,923
b) Use common selling and administrative expense using Sales:
Poinsettias = (970,000 / 4,070,000) * $450,000 = $176,077
Fruit Trees = (3,100,000 / 4,070,000) * $450,000 = $623,923
Jay Seago is suing the manufacturer of his car for $3.5 million because of a defect that he believes caused him to have an accident. The accident kept him out of work for a year. The company has offered him a settlement of $700,000, of which Jay would receive $600,000 after attorneys’ fees. His attorney has advised him that he has a 50% chance of winning his case. If he loses, he will incur attorneys’ fees and court costs of $75,000. If he wins, he is not guaranteed his full requested settlement. His attorney believes that there is a 50% chance he could receive the full settlement, in which case Jay would realize $2 million after his attorney takes her cut, and a 50% chance that the jury will award him a lesser amount of $1 million, of which Jay would get $500,000. Using decision tree analysis, decide whether Jay should proceed with his lawsuit against the manufacturer.
Answer:
Since the expected value is higher for not suing ($600,000), then Jay should not sue. The expected value of the best case scenario in case of suing is only $500,000 and in the expected value of the worst case scenario is -$37,500.
Explanation:
he decides to not sue = expected value $600,000
he decides to sue:
50% chance of winning
expected value
$2,000,000 x 50% x 50% = $500,000$500,000 x 50% x 50% = $125,00050% chance of losing
expected value = -$75,000 x 50% = -$37,500A company incurs $2,700,000 of overhead each year in three departments: Ordering and Receiving, Mixing,?
and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available:
Department Expected use of Driver Cost
Ordering and Receiving 2,000 $800,000
Mixing 50,000 1,000,000
Testing 1,500 900,000
Production information for Slime is as follows:
Expected use of Driver
Ordering and Receiving 1,600
Mixing 30,000
Testing 1,000
Compute the amount of overhead assigned to Slime.
a) $1,350,000
b) $2,025,000
c) $1,645,234d) $1,840,000
Answer:
Total allocated overhead= $1,840,000
Explanation:
Giving the following information:
Department Expected use of Driver Cost
Ordering and Receiving 2,000 $800,000
Mixing 50,000 1,000,000
Testing 1,500 900,000
Production information for Slime is as follows:
Expected use of Driver
Ordering and Receiving 1,600
Mixing 30,000
Testing 1,000
First, we need to calculate the predetermined overhead rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Ordering and Receiving= 800,000/2,000= $400 per order
Mixing= 1,000,000/50,000= $20 per mixing hour
Testing= 900,000/1,500 = $600 per test
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Ordering and Receiving= 400*1,600= 640,000
Mixing=20*30,000= 600,000
Testing= 600*1,000= 600,000
Total allocated overhead= $1,840,000
Equipment was purchased for $78000 on January 1, 2018. Freight charges amounted to $4400 and there was a cost of $10400 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15100 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2019, if the straight-line method of depreciation is used
Answer:
The amount of accumulated depreciation at December 31, 2019 is $31,080
Explanation:
Straight line method, charges a fixed amount of depreciation over the use of an asset in the business.
Depreciation Expense Using Straight line method is calculated as :
Depreciation Expense = (Cost - Salvage Value) / Estimated useful life
First step is to determine the cost of the equipment.
Calculation of Cost of Equipment :
Purchase price $78,000
Freight charges $4,400
Installation costs $10,400
Total Costs $92,800
Then calculate the depreciation expense :
Depreciation Expense = ($92,800 - $15,100) / 5 years
= $15,540
Accumulated depreciation by December 31, 2019 is calculated as :
Accumulated depreciation = $15,540 × 2
= $31,080
Conclusion :
The amount of accumulated depreciation at December 31, 2019 is $31,080.
Patrick Inc. makes industrial solvents sold in 5-gallon drum containers. Planned production in units for the first 3 months of the coming year is: January43,800 February41,000 March50,250 Each drum requires 5.5 gallons of chemicals and one plastic drum container. Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60. Required: 1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January
Answer:
Ending inventory (December) = $72,270
Ending inventory (January) = $67,650
Ending inventory (February) = $82,912.50
Beginning Inventory (January ) = $72,270
Explanation:
The ending inventory of chemicals in gallons :
Note : Based on Company policy, this was determined as 15% of next month's production needs.
Ending inventory (December) = 43,800 × 15% × 5.5 gallons × $2.00
= $72,270
Ending inventory (January) = 41,000 × 15% × 5.5 gallons × $2.00
= $67,650
Ending inventory (February) = 50,250 × 15% × 5.5 gallons × $2.00
= $82,912.50
The beginning inventory of chemicals for January is equal to the Ending inventory for December that is $72,270
You are scheduled to receive $20,000 in two years. When you receive it, you will invest it for six more years at 6.8 percent per year. How much will you have in eight years?
Answer:
The amount you will have in eight years is $29,679.56
Explanation:
In order to calculate the amount you will have in eight years we would have to use the following formula:
amount you will have in eight years=PV*(1+r)∧n
According to the given data:
PV=$20,000
r=6.8%
n=6
Therefore, amount you will have in eight years=$20,000*(1+6.8%)∧6
amount you will have in eight years=$29,679.56
Which of the following markets has a barrier to entry? A. There are already many fast food restaurants in the City of Buffalo. B. Stan's Garbage Company runs the only trash collection service in town. C. Crystal develops a new product and patents it. D. Gold can only be mined in certain places in the world.
Answer: C. Crystal develops a new product and patents it.
Explanation:
A Patent is one of the ways that a monopoly can be formed in an industry. A Patent is a government issued guarantee that other entities should not tamper with the product that was patented unless they get permission from the patentee to do so.
Patents in the United States usually last for 20 years and in that time only the people who patented it may use it. This is a Government enforced barrier to entry as other companies cannot make the product in question thereby creating a monopoly for the people that did patent it.
In theory, Texas has a dual-budget system, meaning the budget authority is shared by the governor and the legislature; however, in practice, the primary player(s) in the budget is/are
Answer:
The legislature.
Explanation:
A budget can be defined as a financial plan of estimated revenues, resources and expenses over a specific period of time in a particular country. It is usually reevaluated based on future plans and objectives periodically, typically on an annual basis.
In theory, Texas has a dual-budget system, meaning the budget authority is shared by the governor and the legislature; however, in practice, the primary player in the budget is the legislature.
In accordance with the guidelines set by the Legislative Budget Board (LBB) in Texas, all agencies in the state prepares and send a Legislative Appropriations Request (LAR) to the Legislative Budget Board (LBB) and the Governor’s Office of Budget, Planning and Policy (GOBPP).
The legislature is the primary player in the budget process because it is responsible for reviewing the budget proposals through the House Finance Committees and the Senate.
The legislature being the primary player in the budget comprises of ten (10) members from the Texas House of Representatives and Texas Senate, it is chaired by the Lieutenant Governor. A single bill is then passed after the appropriation bill has been voted on by the respective chambers.
Additionally, the single bill is then sent to the Comptroller's office for verification and certification, and lastly it's signed by the Governor into law.
QS 18-9 CVP analysis and target income LO P2 SBD Phone Company sells its waterproof phone case for $107 per unit. Fixed costs total $197,000, and variable costs are $32 per unit. Compute the units of product that must be sold to earn pretax income of $224,500.
Answer:
Break-even point in units= 5,620 units
Explanation:
Giving the following information:
Selling price= $107 per unit.
Fixed costs total $197,000
Variable costs= $32 per unit.
Desired profit= $224,500
To calculate the number of units required to reach the objective, we need to use the following formula:
Break-even point in units= (fixed costs desired profit) / contribution margin per unit
Break-even point in units= (197,000 + 224,500) / (107 - 32)
Break-even point in units= 5,620 units
Mark and Joseph are junior photographers with Iclick Studios. Both of them are professional and sincere. However, Mark is recognized as the top performer among Iclick's entry-level employees. This was possible because he acquired the license to use the latest photo editing application, while Joseph did not. According to the performance formula, which of the following factors helped Mark achieve this feat?
1. Ability
2. Skills
3. Motivation
4. Resources
Answer:
4. Resources.
Explanation:
In this scenario, Mark and Joseph are junior photographers with Iclick Studios. Both of them are professional and sincere. However, Mark is recognized as the top performer among Iclick's entry-level employees. This was possible because he acquired the license to use the latest photo editing application, while Joseph did not. According to the performance formula, the resources acquired helped Mark achieve this feat.
Resources in economics can be defined as a set of tangible assets or materials that are used for the production of goods or used for the rendering of services that meets the insatiable needs of people at a specific period of time.
In Economics, resources can either be any of the four (4) factors of production and these are;
1. Land.
2. Entrepreneurship.
3. Labor.
4. Capital.
In this context, Mark is the top performer among Iclick's entry-level employees because he acquired the license to use the latest photo editing application (a scarce but desired resources), while his colleague, Joseph did not.
When labor productivity increases over time, generally A) it is due to increases in the number of workers b) so do average wages C) it results in higher prices for goods and services .
Answer:
b) so do average wages
Explanation:
In perfect competition's equilibrium, productive factors are paid according to their marginal productivity. This means that productive factors' payments will be directly explained by their productivity. This comes from the fact that a firm maximizes profits, subject to its budget constraint, in an optimal way. Equilibrium solution will result in the following condition: [tex]\frac{MP_L}{MP_K} =\frac{P_L}{P_K}=\frac{Wages}{P_K}[/tex], where [tex]MP_L[/tex] is the marginal productivity of labour and [tex]PM_K[/tex] is the marginal product of capital,[tex]P_L[/tex] is the price of labour (or wages) and [tex]P_K[/tex] is the price of capital. Then, because the price of labour is proportional to its productivity, if labour productivity rises, the price of labour will increase.Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $5,000 cash and $21,500 of photography equipment in the company in exchange for common stock. 2 The company paid $2,400 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $950 cash. 20 The company received $2,250 cash in photography fees earned. 31 The company paid $882 cash for August utilities. Prepare general journal entries for the above transactions.
Answer:
Pose-for-Pics
General Journal:
August 1:
Debit Cash Account $5,000
Debit Photograph Equipment $21,500
Credit Common Stock $26,500
To record the investment of cash and equipment by Madison Harris.
August 2:
Debit Insurance Prepaid $2,400
Credit Cash Account $2,400
To record the payment for insurance for 24 months.
August 5:
Debit Office Supplies $950
Credit CAsh Account $950
To record the purchase of office supplies.
August 20:
Debit Cash Account $2,250
Credit Photography Fees Earned $2,250
To record the receipt of cash for fees.
August 31:
Debit Utilities Expense $882
Credit Cash Account $882
To record the payment of cash for August utilities.
Explanation:
The general journal entries are used to initiate the recording of business transactions as they occur on a daily basis. While there other specialized journals, the general journal can be used to record any type of transaction. The journal shows the accounts that are debited and credited in the general ledger.
ABC Bank is offering 3.6 percent compounded quarterly on its savings accounts. You deposit some amount of cash in the saving account today. After 5 years, you have $89,719 in your account. How much did you deposit today
Answer:
PV= $74,999.97
Explanation:
Giving the following information:
Interest rate= 0.036/4= 0.009
Number of quarters= 5*4= 20
Future value= $89,719
We need to determine the initial inventment. We will use the following formula:
PV= FV/(1+i)^n
PV= 89,719/ (1.009^20)
PV= $74,999.97
Following are the transactions of a new company called Pose-for-Pics.
Aug. 1
Madison Harris, the owner, invested $6,500 cash and $33,500 of photography equipment in the company in exchange for common stock.
2 The company paid $2,100 cash for an insurance policy covering the next 24 months.
5 The company purchased office supplies for $880 cash.
20 The company received $3,331 cash in photography fees earned.
31 The company paid $675 cash for August utilities.
Prepare an August 31 trial balance for Pose-for-Pics.
Answer:
Pose-for-Pics
Trial balance
For the month ended August 31, 202x
debit credit
Cash $6,176
Prepaid insurance $2,012.50
Office supplies $880
Equipment $33,500
Madison Harris, capital $40,000
Service revenue $3,331
Insurance expense $87.50
Utilities expense $675
Total $43,331 $43,331
Explanation:
Dr Cash 6,500
Dr Equipment 33,500
Cr Madison Harris, capital 40,000
Dr Prepaid insurance 2,100
Cr Cash 2,100
Dr Insurance expense 87.50
Cr Prepaid insurance 87.50
Dr Office supplies 880
Cr Cash 880
Dr Cash 3,331
Cr Service revenue 3,331
Dr Utilities expense 675
Cr Cash 675
If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $6,000 of additional contribution margin from the expansion of other product lines. If Courtney discontinues the product line, the effect on overall income will be
Answer:
CourtneyDiscontinued Product Line:
The overall income will increase by $10,000 ($4,000 + 6,000).
Explanation:
In a decision to discontinue a product line, the relevant costs to consider are the avoidable costs. These are costs that will no longer be incurred when a line is discontinued. They are relevant to the decision, unlike costs that will not change as a result of the discontinued product line.
Incremental revenue that will be resulting from a discontinued product line is also relevant. For example, the additional contribution margin of $6,000 is relevant to the decision of whether to continue or discontinue the product line, all other things remaining equal.
Create a chart containing the three forms of business organizations: proprietorships, partnerships, and corporations. Include key users of financial information, and briefly explain their roles.
Answer:
a. Owner
b. Partners
c. Stakeholders
Explanation:
The key users of financial information of a proprietorship is the owner.
The key users of financial information of a partnership are partners.
The key users of financial information of a corporation are the stakeholders.
In a proprietorship the owner invests, manages and gains profit from the organization.
In a partnership the partners invest, manage and each partner gain profits from the organization.
While in a corporation the shareholders invest, the employees manage and the profits made are gained by the shareholders in the form of dividends.
Imitability of a resource can occur through _?
Answer:
economic depletion
Explanation:
In order to improve economic growth, a country should adopt which of the following exchange rate systems? A. Adopt a soft peg to the country that is growing the most. B. Fix their currency to the country that is growing the most. C. Allow their currency to float on the market. D. Adopt the country's currency that is growing the most; e.g., dollarize, or adopt the Chinese renminbi. E. There is no superior system; each country has to decide what is best.
Answer:
E. There is no superior system; each country has to decide what is best.
Explanation:
The exchange rate system refers to the method that is used to determine the exchange rate among the countries. The exchange rate helps in determining the rate of domestic currency in accordance with the other country's currencies. The exchange rate determines the rate that is used in the exchange of one currency with another. The foreign exchange market helps in determining the exchange rates of the countries.
Increasing real wages, reducing interest rates, and an increase in global growth are some of the factors that help in the improvement in economic growth. At the same time, there is no superior or inferior method of exchange rate systems that a country may adopt to improve economic growth.
Given the position of the 3D printer in the growth stage of its lifeâ cycle, which of the following OMâ Strategy/Issues should the makers of 3D printers be least concerned with at the currentâ time?A) forecasting B) cost cutting C) increasing capacity D) product and process reliability E) enhancing distribution
Answer: cost cutting
Explanation:
3D printing technology is a from of technological innovation which people not many people know about and is less understood by the people and therefore few people might see reason to buy it.
The increase in the competitors offering the product and a price reduction can actually help the product from from the introduction to the growth stage of its life cycle.
The makers of the 3D printers should be more conceened with enhancing distribution, increasing capacity, forecasting and product and process reliability. They should be less concerned about cost-cutting as there are bigger issues to solve.
The total system view of the marketing concept builds on the idea that
Multiple Choice
sales should be the firm's high-level objective.
a company should not have specialized departments.
each department in an organization should do what it does best.
all departments—not just marketing—should be guided by customer needs.
None of these answers is correct.
Answer: all departments—not just marketing—should be guided by customer needs.
Explanation:
The goal in marketing is for the needs of the customers to be identified. The customers have a vital role to play in every organization.
According to the marketing concept, every effort of a business should be directed towards satisfying customers which in turn brings about a profit.
Therefore, The total system view of the marketing concept builds on the idea that all departments and not just marketing should be guided by customer needs.
The objective of financial reporting include all of the following except to provide information that Group of answer choices is useful to the IRS in assessing taxes to business entities. is useful to those making investment decisions. is useful to those lending out money to business entities. is useful to creditors in making decisions about providing resources to business entities.
Answer:
is useful to the IRS in assessing taxes to business entities.
Explanation:
The financial accounting standards board (FASB) is a private, non-profit organization saddled with the responsibility of establishing and maintaining standard financial accounting and reporting for general guidance of individuals such as investors, issuers and auditors.
Financial reporting can be defined as the formal communication or disclosure of financial information and statements to present and potential users such as investors and creditors.
The objective of financial reporting include all of the following to provide information that:
1. Is useful to those making investment decisions. This information would help creditors to determine whether they should lend to a client or not; or assist investors in deciding whether they should invest in a business or not.
2. Is useful to those lending out money to business entities. When investors and creditors are well furnished with financial information about an organization, they would be able to assess the amounts of cash, timing, and uncertainty of cash flows from dividends or interest.
3. Is useful to creditors in making decisions about providing resources to business entities.
In conclusion, the financial report is not useful to the Internal Revenue Service (IRS) in assessing taxes to business entities.
What are the macroeconomic conditions affecting the IT industry?
Select "yes" for those statements that are accurate and choose "no" for those that are not.
From a social-cultural perspective, Ricoh is a strong brand name because of the strong privacy policies it has in place.Yes/No
Answer:
The answer is Yes.
Explanation:
Yes, the given statement is accurate because nowadays people are more concerned and insecure about privacy. Since it is given that Ricoh is a strong brand that means people are already believing in it and its privacy policy attracts more consumers. Therefore, it can be said that is will affect the IT industry at the macroeconomic level.
If increasing the number of goods produced is one way to increase productivity what is the other way to increase productivity?
A. Raise the price of the goods
B. Decrease the resources invested
C. Increase market share
D. Lower the quality of the materials used
Answer:
Explanation:
Start with D. You might be able to make a cheaper product and increase your profit margin, but eventually the word would would get around and it may lower your productivity because the sales would decrease.
The market determines whether or not you would be able increase the market share. I suppose this answer is possible, but it would mean that you would need to have capital to do it. The market need not cooperate. I wouldn't pick C unless I had to.
How can you reduce the resources invested? That should decrease the number of objects originally need for manufacturing the poduct in the first place. Not B.
Raise the price of the goods? How can that help? That increases the profit margin, not the number of goods produced.
I don't know what the best answer is out of these 4. None of them seem appropriate.
If I had to choose, I guess the best one is D
Answer:
im pretty its C
Explanation:
If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.
Answer:
rise, 1.0, rise
Explanation:
As we know that
Income elasticity of demand is
= Percentage change in quantity demanded ÷ Percentage change in income
So,
Percentage change income
= 2.12% ÷ 2.12
= 1%
Therefore if the income increased that also leads to increase in quantity demanded
We simply applied the Income elasticity of demand formula so that we can get to know the situation
At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible. Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a:
Answer:
debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts
Explanation:
Based on the information provided for this scenario it can be said that the entry to record this adjusting entry would include a debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts. Meaning that the bad debts expense is increasing while the same amount is being taken from the allowance for doubtful accounts. This is what the allowance method is used for, it provides an advance for uncollectible accounts, by setting aside money in a reserve account.
A company is planning to purchase a machine that will cost $45,000 with a six-year life and no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine? 6.00 years. 2.11 year. 5.59 years. 11.18 years. 2.89 years.
Answer:
2.89 years
Explanation:
The computation of the payback period is shown below:
As we know that
Payback period = Initial investment ÷ Annual cash inflow
where,
The Initial investment is $45,000
And, the annual cash inflow is
= Net income + depreciation expense
= $8,050 + $7,500
= $15,550
So , the payback period is
= $45,000 ÷ $15,550
= 2.89 years
We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that:___________
a. Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation.
b. Bond A was issued by the Exxon Mobil Corporation and Bond B was issued by the state of New York.
c. Bond A has a term of 1 year and Bond B has a term of 5 years.
d. All of the above are correct.
Answer:
The option (d) is correct
Explanation:
Solution
From the given question, option (d) is correct because Bond A has a lower term of maturity, issued by a financially weak corporation and compared to government security it is offering lower returns implies it has a lower interest rate than bond B having identical characteristics expect the above.
Parton owes $3 million that is due on February 28. The company borrows $2,400,000 on February 25 (5-year note) and uses the proceeds to pay down the $3 million note and uses other cash to pay the balance. How much of the $3 million note is classified as long-term in the December 31 financial statements
Answer:
$2,400,000
Explanation:
Based on the information given, How much of the $3 million note that is classified as long-term in the December 31 financial statements will be $2,400,000 because we were told that
Parton owes the amount of $3 million which is due on February 28 while the company borrows the amount of $2,400,000 on February 25 (5-year note) which means that the amount that the company borrowed on February 25 on a 5 year note will be classified as long-term in the December 31 financial statements.
"As interest rates rise, the ____________ curve shifts _____________ resulting in a(n) _________________ in the price level and a(n) ________________ in Real GDP"
Answer: AD; leftward; decrease; decrease
Explanation:
As interest rates rise, the AD curve shifts leftward resulting in a decrease in the price level and a decrease in Real GDP.
Higher interest rates increase the cost of borrowing for firms an individuals alike. As the rates rise therefore, less people and firms will use more debt funding for consumption and investment respectively which are 2 components of Aggregate Demand. This will lead to the AD reducing in quantity and therefore shifting to the Left. As it does so the new intersection with the Aggregate Supply curve will be at a lower price level and as the price level decreases, so will REAL GDP as deflation(lower price level) will lead to the Economy shrinking in real terms.