Answer:
$14.4 million.
Explanation:
Since sales = $30.00 million
Operating costs excluding depreciation = $12.6 million
Depreciation = $3.0 million
Therefore; Operating income (EBIT) = Net earnings - Operating costs - Depreciation
= $30.00 - $12.6 - $3.0
= $14.4 million.
Haskell Corp. is comparing two different capital structures. Plan I would result in 12,000 shares of stock and $100,000 in debt. Plan II would result in 8,700 shares of stock and $155,000 in debt. The interest rate on the debt is 5 percent. Compare both of these plans to an all-equity plan assuming that EBIT will be $80,000. The all-equity plan would result in 18,000 shares of stock outstanding. Assuming that the corporate tax rate is 40 percent, what is the EPS for each of these plans
Answer:
Earnings per share (EPS) = (net income - preferred dividends) / average number of outstanding shares
EPS for all equity plan:
($80,000 x 60%) / 18,000 = $2.67 per share
EPS for Plan I:
[($80,000 - $5,000) x 60%] / 12,000 = $3.75 per share
EPS for Plan II:
[($80,000 - $7,750) x 60%] / 8,700 = $4.98 per share
Why have many nations chosen to use taxpayer dollars to subsidize primary, secondary, and higher education
Answer and Explanation:
This is because education has a positive rate of return. Investment in Education is an investment in new knowledge which is beneficial to any country. These countries have subsidized these forms of education because they recognize that an investment in education is an investment in human capital. Which would likely increase future productivity and ability to earn money.
Education is very beneficial to the individual who gets it, but a country where it's citizens have a good level of education benefits everyone positively.
1. Better health outcomes due to breakthroughs in research.
2. Reduction in Crime rates
3. Better environment
4. Also a better government
Are reasons for using taxpayers dollars to subsidize all these levels of education.
Other things remain unchanged, the market demand curve for a particular product is expected to shift leftwards when the price of that product declines.
a. True
b. False
Preferred stock is like long-term debt in that ___________. A. it promises to pay to its holder a fixed stream of income each year B. it gives the holder voting power regarding the firm's management C. the preferred dividend is a tax-deductible expense for the firm D. in the event of bankruptcy preferred stock has equal status with debt
Answer:
A. it promises to pay to its holder a fixed stream of income each year.
Explanation:
In Business, stock can be defined as having an equity or ownership by an individual in an organization. Generally, stocks are of two (2) types and these are;
1. Common stock.
2. Preferred stock.
Preferred stock refers to the securities which represents an individual's ownership or share in an organization and having a fixed claim over common stocks in earnings and assets.
Also, the preferred stock pay a fixed amount of interest regularly rather than being paid as a dividend only.
Hence, preferred stock is like long-term debt in that it promises to pay to its holder a fixed stream of income each year. This simply means that, the preferred stockholders are given more priority than the holders of common stocks. Therefore, in the event of liquidation of a firm the preferred stockholder can claim the assets belonging to a the firm.
There are four (4) types of preferred stocks and these are;
1. Perpetual preferred stock.
2. Exchangeable preferred stock.
3. Convertible preferred stock.
4. Cumulative preferred stock.
On January 2, 2017, the Matthews Band acquires sound equipment for concert performances at a cost of $66,200. The band estimates it will use this equipment for five years. It estimates that after five years it can sell the equipment for $2,000. Matthews Band uses straight-line depreciation but realizes at the start of the second year that due to concert bookings beyond expectations, this equipment will last only a total of three years. The salvage value remains unchanged. Compute the revised depreciation for both the second and third years.
Answer:
$25,680
Explanation:
For the computation of revised depreciation for both the second and third years first we need to follow some steps which are shown below:-
Depreciation cost = Cost - Salvage value
= $66,200 - $2,000
= $64,200
Annual depreciation under SLM method = Depreciable cost ÷ Useful life
= $64,200 ÷ 5
= $12,840
Book value of the equipment = Cost - Annual depreciation
= $66,200 - $12,840
= $53,360
Remaining depreciable cost = Book value at point of division - Salvage value
= $53,360 - $2,000
= $51,360
Annual depreciation for year 2 and year 3 = Remaining depriciable cost ÷ Remaining useful life
= $51,360 ÷ (3 - 1)
= $51,360 ÷ 2
= $25,680
Suppose Hoosiers, a specialty clothing store, rents space at a local mall for one year, paying $13,800 ($1,150/month) in advance on October 1.
Required:
1. Record the adjusting entries on December 31.
2. Record the payment of rent in advance of october 1.
3. Calculate the year-end adjusted balances of prepaid rent and rent expense (assuming the balance of Prepaid Rent at the beginning of the year is $0).
Answer:
1.
Dec 31 Rent expense $3450 Dr
Prepaid Rent $3450 Cr
2.
Oct 1 Prepaid Rent $13800 Dr
Cash $13800 Cr
3.
Year end balances at 31 December:
Rent Expense = $3450
Prepaid Rent = $10350
Explanation:
Assumption: The year end for the business in on 31 December.
1.
The rent is paid in advance thus it is an asset. On 31 December the adjusting entry will be made under the accrual principle to match the current period's rent expense and record it in the period to which it belongs to. Thus we will credit the rent expense for 3 months i.e. October, November and December. We will credit the asset account that is Prepaid Rent.
2.
The prepayment of rent is creating an asset account in the title of prepaid rent. The entry would be to record the asset prepaid rent by the full amount of the rent prepaid and credit the other asset account through which the payment is being made.
3.
The adjusted year end balance for rent expense will be the rent expense paid for this period that is $1150 * 3 = 3450
The balance in the prepaid rent account after adjusting the rent expense will be,
Prepaid rent = 13800 - 3450 = $10350
Held-to-maturity securities are equity securities a company intends and is able to hold until maturity true or false
Answer:
The answer is true
Explanation:
Held to maturity securities are securities that are bought to be held until they matures. It is being classified as non-current asset or long term investment. Example of Held-to-maturity security is a bond.
They are being reported on the balance sheet at an amortized cost(original cost - accumulated amortization). Held-to-maturity with less than a year are regarded as Curren asset while the ones above a year are regarded as non-current.
If a check correctly written and paid by the bank for $746 is incorrectly recorded in the company's books for $764, how should this error be treated on the bank reconciliation
Answer:
Add
Explanation:
Hope this helps :)
Add $18 to the book balance this error be treated on the bank reconciliation. Thus, option D is correct.
What is bank reconciliation?A bank reconciliation is a procedure using which the balances of a bank account recorded in an object's books of accounts and the balance listed by the bank within the most relevant bank statement are compared.
Any discrepancy between two numbers should be looked into and, if necessary, fixed. the accounting and finance account report that compares a company's savings account to its books. A summary of all payments, withdrawal, and other cash activity made.
In this, there is a difference in the amount that was to be entered in the given data.
The difference is 764 - 746 = 18
so reconcile the data $18 will added in the book balance
Therefore, option D is the correct option.
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The question is incomplete, the complete question is
Subtract $18 from the book balance.
Add $18 to the bank's balance.
Add $18 to the book balance.
Subtract $18 from the bank's balance.
Subtract $18 from the bank's balance and add $45 to the book's balance.
Digby's turnover rate for this year is 6.29%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Digby plans to spend an additional $500 beyond the extra amount above the $1000 recruiting base it spent this year. The goal of this additional investment is to improve the quality of applicants. What would the total recruiting cost be for Digby next year?
Answer:
$208,443
Explanation:
The computation of total recruiting cost be for Digby next year is shown below:-
[tex]R_1 = (B + R_o + A)\times N[/tex]
as
B indicates baseline spend = $1,000
[tex]R_o[/tex] indicates current year recruits spend = $5,000
A indicates additional next year spend = $500
N indicates the number of new employees for next year = Total employees × turnover rate
N = 510 × 0.0628787
= 32.0681538
now we will put the values into the above formula.
R1 = ($1,000 + 5000 + $500) × 32.0681538
= $208,443
The total recruiting cost for Digby next year will be $208443.
Based on the information given, the calculation for the total recruiting cost will be:
= (B + To + A) × N
where,
B = $1000
Ro = $5000
A = $500
N = 510 × 0.06288 = 32.068
Now, the total recruiting cost will be:
= (B + To + A) × N
= (1000 + 5000 + 500) × 32.068
= 6500 × 32.068
= 208433
Therefore, the total recruiting cost for Digby next year will be $208443.
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Supplier development is synonymous with ____. Group of answer choices materials management procurement reverse marketing supplier selection and evaluation
Answer:
The correct answer is: reverse marketing
Explanation:
Reverse marketing can be defined as the type of marketing in which the customer seeks the company, and not that traditional marketing model whose marketers are looking for customers.
Therefore, in this model, it is necessary to develop the variables that will bring the customer closer to the company, because reverse marketing can be considered an aggressive strategy to achieve objectives, where the buyer is the main decision maker of the purchase.
Supplier development is a technique widely used in business to business markets, where the company is the buyer who will approach the supplier in order to meet their needs.
A community council must decide which recreation facilities to construct in its community. Four new recreation facilities have been proposed—a swimming pool, a tennis center, an athletic field, and a gymnasium. The council wants to construct facilities that will maximize the expected daily usage by the residents of the community, subject to land and cost limitations. The expected daily usage and cost and land requirements for each facility follow:
The community has a $140,000 construction budget and 14 acres of land. The tennis center is conditional upon construction of the swimming pool. The council wants to know which of the recreation facilities to construct to maximize the expected daily usage.
Recreation Facility Expected Usage (People/day) Cost (9) Land requirements
Swimming pool 300 35,000 4
Tennis Center 90 10,000 2
Athletic field 400 25,000 7
Gymnasium 150 90,000 3
After you formulate and solve this problem, which one of the following options is not correct:________.
A. The tennis center will not be chosen.
B. The swimming pool will be chosen.
C. The athletic field will be chosen.
D. The gymnasium not will be chosen.
E. The total daily usage will be 790 people.
Orlando Builders Inc. issued a bond with a par value of $1,000, a coupon rate of 9.00% (semiannual coupon), and a yield to maturity of 5.80%. The bond has 19 years to maturity. What is the value of the bond?
Answer:
Price of bond = $1,365.54
Explanation:
The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond for Orlando Builders Inc. can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 9% × 1000 × 1/2 = 45
Semi-annual yield = 5.80%/2 = 2.9 % per six months
Total period to maturity (in months)
= (2 × 19) = 38 periods
PV of interest =
45 × (1- (1+0.029)^(-21)/0.029)= 1028.087
Step 2
PV of Redemption Value
= 1000 × (1.029)^(-19×2) =337.45
Price of bond
= 1028.08 + 337.45 =1365.54
Price of bond = $1,365.54
Bob has saved $315 each month for the last 6 years to make a down payment on a house. The account earned an interest rate of .41 percent per month. How much money is in Bob's account
Answer:
The amount in Bob's account is $26320.516
Explanation:
The total amount saved each month for the down payment (A ) = $315
The interest rate per month (r ) = 0.41 %
Number of years (n ) = 6 years
Below is the calculation to find the total amount in Bob’s account. Here, we will take the number of compounding period as 72 because the interest rate is monthly compounded and there are 72 months in 6 years.
[tex]= A\left [ \frac{\left ( 1+r \right )^{n\times 12}-1}{r} \right ] \\= 315 \left [ \frac{\left ( 1+ 0.0041 \right )^{6\times 12}-1}{0.0041} \right ] \\= 315\left [ \frac{\left ( 1+ 0.0041 \right )^{72}-1}{0.0041} \right ] \\= $ 26320.516[/tex]
What has the U.S. government done to create economic growth, stability, full employment, freedom, security, equity, and efficiency? Have these policies been successful in reaching the economic goals of the United States? Address how gross domestic product, inflation, and gross domestic product per capita were affected.
Answer:
The U.S. is a market oriented economy with moderate taxation and regulations.
The measures that the U.S. government has taken to create economic growth, stability, full employment, freedom, security, equity and efficiency are mostly market oriented: lower taxes for corporations and some individuals, less regulations, the signing of free trade agreements, the promotion of applied research with universities in alliances with the private sector, and so on.
These policies have been largely succesful. Gross domestic product has continued to grow at a steady pace ever since the 2007-2008 financial crisis was overcome. Inflation has been in the target that is set by the Federal Reserve, and as for GDP Per Capita, the U.S. has one of the highest GDP Per Capita in the world, with $62,000 USD per person in 2019.
Each of the following are types of__________allocation methods:
plantwide rate method, departmental overhead rate method and activity-based costing method.
Answer:
Each of the following are types of Overheads allocation methods.
Explanation:
Factory overheads such as rent, electricity or water can not be traced directly to a cost object.
When determining the cost of a cost object these overheads are apportioned to departments they pass through for processing or the actual job using an allocation method.
The common methods for allocating overheads are plant-wide rate method, departmental overhead rate method and activity-based costing method.
A company had a beginning balance in retained earnings of $44,300. It had net income of $7,300 and paid out cash dividends of $5,950 in the current period. The ending balance in retained earnings equals:
Answer:
$45,650
Explanation:
a) Calculations of Retained Earnings:
Beginning balance = $44,300
Net Income = 7,300
less Dividends -5,950
Ending balance = $45,650
b) A statement of changes in Retained Earnings is always prepared to include the net income available for distribution to stockholders and exclude the distributions already made to stockholders in the form of dividends before arriving at the ending balance of Retained Earnings. This later figure is reported in the Balance Sheet. This process is also part of the closing entries of temporary accounts to permanent accounts at the end of an accounting period.
Tracy Company, a manufacturer of air conditioners, sold 190 units to Thomas Company on November 17, 2021. The units have a list price of $300 each, but Thomas was given a 20% trade discount. The terms of the sale were 4/10, n/30. Thomas uses a perpetual inventory system. 3. Prepare the journal entries to record the purchase by Thomas on November 17 and payment on November 26, 2021 and December 15, 2021 using the net method of accounting for purchase discounts.
Answer:Please see explanation column for answer.
Explanation:
Net purchase per unit = List price per unit - Trade discount
$300 - ( 300 x 20 %) = 300- (300 x 0.2)= 300 -60= $240
Total purchase amount = Number of units x Net purchase per unit
190 x 240= $45,600
Discount from purchase = Total purchase amount x discount percentage/ 100
=45,600 x 4/100= $1,824
Cash = $45,600
Discount = $1,824
Accounts payable = $43,776
Using the net method of accounting for purchase discounts.
A)Journal entries to record the purchase by Thomas on November 17, 2021
Account Debit Credit
Purchases $43,776
Account Payable $43,776
B)Journal entries to record the payment by Thomas on November 26, 2021
Account Debit Credit
Account Payable $43,776
Cash $43,776
C)Journal entries to record the payment by Thomas on December 15, 2021
Account Debit Credit
Account Payable $43,776
Interest expense $ $1,824
Cash $45,600
The net account payable by Thomas on November 17, 2021, is $43,776. The journal entries to record the purchase by Thomas is attached in the image.
Net purchase per unit = List price per unit - Trade discount
$300 - ( 300 × 20 %) = 300- (300 × 0.2)
= 300 -60
= $240
Total purchase amount = Number of units x Net purchase per unit
190 × 240= $45,600
Discount from purchase = Total purchase amount x discount percentage/ 100
=45,600 × 4/100
= $1,824
Cash = $45,600
Discount = $1,824
Accounts payable = $43,776
The journal entries to record the purchase by Thomas on November 17 and payment on November 26, 2021 and December 15, 2021 attached below in the image.
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Now suppose that the demand for bell peppers is relatively inelastic. How will this change your answer to the previous question?
Answer:
D. Price will increase by a larger increment and the quantity will decrease by a smaller increment
Explanation:
here is the full question :
he market for bell peppers is competitive. For bell peppers to grow properly they need substantial rainfall. A very dry winter in California did not produce enough rain to grow bell peppers in California, one of the major bell pepper growing regions of the world.
Now suppose that the demand for bell peppers is relatively inelastic. How will this change your answer to the previous question?
A. Price will increase by a smaller increment and the quantity will decrease by a larger increment
B. Price will increase by a smaller increment and the quantity will decrease by a larger increment.
C. Price will increase by a larger increment and the quantity will decrease by a larger increment
D. Price will increase by a larger increment and the quantity will decrease by a smaller increment
Demand is inelastic if a small change in price has little or no effect on quantity demanded.
due to the low rainfall, less pepper would be produced. as a result the supply of pepper would rise. since the demand for pepper is inelastic, the rise in price would be greater than the change in quantity demanded.
Price will be increase by the larger increment of quantity that will decrease by the smaller increment. Thus the option D is correct.
What is relatively inelasticity ?The relatively inelastic demand is the one where the percentage changed in the demand than the percentage change of the price of the product. As the price may increase the demand get reduced. Most essential goods are inelastic.
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This question is incomplete.
The full question is
The market for bell peppers is competitive. For bell peppers to grow properly they need substantial rainfall. A very dry winter in California did not produce enough rain to grow bell peppers in California, one of the major bell pepper growing regions of the world.
Now suppose that the demand for bell peppers is relatively inelastic. How will this change your answer to the previous question?
A. Price will increase by a smaller increment and the quantity will decrease by a larger increment
B. Price will increase by a smaller increment and the quantity will decrease by a larger increment.
C. Price will increase by a larger increment and the quantity will decrease by a larger increment
D. Price will increase by a larger increment and the quantity will decrease by a smaller increment.
Pump prices slide as crude oil falls to six-year low The average price for regular gasoline at U.S. pumps fell almost 4 cents in March to $2.50 a gallon. The price of crude oil dropped to $43.46 per barrel on March 17, the lowest since March 2009. Source: Bloomberg Business, March 23, 2015 Explain the effect of a lower crude oil price on the supply of gasoline. A fall in the price of crude oil will ______.
Answer:
lower the cost of producing gasoline and increase the supply of gasoline
Explanation:
Crude oil is an input needed in the production of gasoline. If the price of crude oil falls, it would become cheaper to make gasoline and therefore the supply of gasoline would increase.
A car dealership spends $700,000 on cars to stock their lot. After a day of sales, they earn a total revenue of $1,500,000. What is the car dealership's profit? g
Answer:
$800,000
Explanation:
The computation of the car dealership profit is shown below:
Car dealership profit is
= Total revenue earned - total cost spent
where,
Total revenue earned is $1,500,000
And, the total cost spent is $700,000
So, the car dealership profit is
= $1,500,000 - $700,000
= $800,000
We simply deduct the total cost spent from the total revenue earned so that we get to know car dealership profit
The following information is available for Masun Company: Sales $550,000 Total fixed expenses $150,000 Cost of goods sold 390,000 Total variable expenses $370,000 A CVP income statement would report:
Answer:
$180,000
Explanation:
The computation of CVP income statement is shown below:-
CVP Income statement
Sales $550,000
Variable cost $370,000
Contribution margin $180,000
Fixed cost $150,000
Operating Profit $50,000
Therefore for computing the contribution margin we simply deduct the variable cost from sales and fixed cost to arrive the operating profit
The __________ is based on all the goods and services produced in the economy, which make it a current-weights index. eco203
Answer:
The __Paasche Index or Current-Weighted Index_______ is based on all the goods and services produced in the economy, which make it a current-weights index.
Explanation:
The Current-Weighted Index is an index that calculates the weighted average of prices or quantities or with the weights used proportionate to the quantities or prices of the goods. At regular intervals, the weights have to re-calculated in line with the current realities. This regular re-calculation of the weights, which is the basis for its name, makes it current.
Multiclient warehousing mixes attributes of ____ and ____ warehousing. Group of answer choices Public; contract Public; common Private; contract Common; private
Answer:
Public; contract
Explanation:
Multi-Client warehousing is the warehousing in which the outsourcing process could be performed with the multiple clients and it also added additional services like bulk packing of products, cross-docking, etc
Moreover, the multiclient warehousing mixes the combination of the public and contract attributed
Therefore the correct option is A.
Financial Statements of a Manufacturing Firm The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors:
a. Purchased $250,000 of materials.
b. Used $180,000 of direct materials in production.
c. Incurred $450,000 of direct labor wages.
d. Incurred $180,000 of factory overhead.
e. Transferred $760,000 of work in process to finished goods.
f. Sold goods for $1,200,000.
g. Sold goods with a cost of $675,000.
h. Incurred $215,000 of selling expense.
i. Incurred $125,000 of administrative expense.
Required:
a. Prepare the January income statement for Sorensen Manufacturing Company.
b. Determine the inventory balances at the end of the first month of operations.
Answer:
Required a.
January income statement for Sorensen Manufacturing Company
Sales $1,200,000
Less Cost of Sales ($675,000)
Gross Profit $525,000
Less Expenses :
Selling expense ($215,000)
Administrative expense ($125,000)
Net Income / (Loss) $185,000
Required b.
Work In Process Inventory = $120,000
Finished Goods Inventory = $85,000
Explanation:
Manufacturing Cost Schedule (Determination of Work In Process Inventory)
Direct Materials $180,000
Indirect Materials ($250,000 - $180,000) $70,000
Direct Labor $450,000
Factory Overheads $180,000
Total Cost of Goods Manufactured $880,000
Less Transferred to finished goods ($760,000)
Closing Work In Process Inventory $120,000
Finished Goods T- Account (Determination of Finished Goods Inventory)
Debit :
Transferred from Work In Process $760,000
Totals $760,000
Credit:
Trading Account $675,000
Ending Finished Goods Inventory $85,000
Totals $760,000
The CAL formed from the optimal risky portfolio will be __________ to the efficient frontier of risky assets.
Answer:
tangent
Explanation:
The Capital Allocation Line refers to a line that measures the assets profile with respect to risk plus reward and can be applied to determine the optimal portfolio.
The optimal portfolio involves both risk-free assets and an efficient portfolio of assets i.e to be riskier.
The optimal portfolio of risky assets should be at that point at which the capital allocation line is tangent to the efficient frontier.
This portfolio is desirable since CAL 's slope is the maximum, implying we get the maximum return for the additional unit added with respect to risk.
Mondale Winery depreciates its equipment using the group method. The cost of equipment purchased in 2021 totaled $565,000. The estimated residual value of the equipment was $54,000 and the group depreciation rate was determined to be 16%. What is the annual depreciation for the group
Answer:
$90,400
Explanation:
Mondale Winery depreciates it's equipment by making use of the group method.
The cost of equipment that was purchased in 2021 totaled $565,000
The residual value of the equipment was $54,000
The group depreciation rate is 16%
= 16/100
= 0.16
Therefore, the annual depreciation can be calculated as follows
Annual depreciation= Cost of equipment × Group depreciation rate
= $565,000×0.16
= $90,400
Hence the annual depreciation for the group is $90,400
Charley Inc is a large corporation that reported revenue of $80 million and expenses (other than interest) of $78 million in 2019. Included in the expenses is depreciation of $300,000. Charley Inc. paid business interest of $1,000,000 in 2019. What is the maximum amount of interest expense deduction this year
Answer:
The maximum amount of interest expense deduction this year is $690,000
Explanation:
In order to calculate the maximum amount of interest expense deduction this year we would have to calculate first the adjusted taxable income as follows:
adjusted taxable income=reported revenue-expenses+depreciation
According to the given data:
reported revenue=$80,000,000
expenses=$78,000,000
depreciation=$300,000
Therefore, adjusted taxable income=$80,000,000-$78,000,000+$300,000
adjusted taxable income=$2,300,000
maximum amount of interest expense deduction=$2,300,000*30%
maximum amount of interest expense deduction=$690,000
The maximum amount of interest expense deduction this year is $690,000
Which one of the following risks can be progressively eliminated by adding stocks to a portfolio?
a. Systematic risk.
b. Unique risk.
c. Market risk.
d. Inflation rate risk
Answer: The answer is "Unique Risk".
Explanation: Market risk can be eliminated in a stock portfolio through diversification. The risk that remains in a stock portfolio after efforts to diversify is known as a unique risk. Average returns on high-risk assets are higher than those on low-risk assets.
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“how does a change in supply affect the equilibrium price?”
Answer:
An increase in supply is illustrated by a rightward shift of the supply curve, and, all other things equal, this will cause the equilibrium price to fall. A decrease in supply is illustrated by a leftward shift of the supply curve - this will cause the equilibrium price to rise.
Explanation:
hi
Which of the following is a true statement based upon the principle of the time value of money?
A. It is always best to receive money at a later point in time rather than an earlier point in time.
B. Money loses value over time if not used.
C. Money increases in value as time passes so long as it is not invested
D. The value of money does not increase or decrease as time passes.
Answer:
D.The value of money does not increase or decrease as time passes.
The value of money does not increase or decrease as time passes is a true statement based upon the principle of the time value of money. Therefore, the option D holds true.
What is the significance of time value of money?The principle of time value of money can be referred to or considered as a principle, which states that the value of money at a later date is lesser than at a present date, as the money has an earning potential in the interval of the due time.
According to this principle, it can easily be concluded that the money does not increase or decrease in its value with the passage of time, rather it is worth more in the present than at a future date because of the earning potent that the money possesses.
Therefore, the option D holds true and states regarding the significance of the time value of money.
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