Answer: d. more coffee and fewer football tickets
Explanation:
MU/P refers to the marginal utility gained per dollar of an alternative and rationale consumers are always expected to maximise their utility by picking alternatives that give them more utility as opposed to less.
The MU/P for coffee is 20 whilst that of football tickets in 10. This means that more utility is gained from getting more coffee as opposed to football tickets. The action that would maximise utility would therefore be one where the consumer gets more coffee and fewer football tickets.
Categorize each transaction according to the U.S. account to which it belongs and the direction the money flows.AccountDirection of flowAn Australian company buys steel from a U.S. firm.The Federal Reserve buys $2 billion worth of euros.Profits are earned by a U.S. based mining company operatingin Mexico.An English company purchases a U.S.confectionary manufacturer.Financial accountPayment from foreignersFactor incomePayment to foreignersPayment from foreignersCurrent accountFinancial accountCurrent account
Answer:
Financial account transactions are those that involve capital goods or purchases.
The Current account is for goods and services.
1. Australian company buys steel from a U.S. firm. - Current Account. Payment from foreigners.
This is a purchase of a good being steel and the payment was made by foreigners to a U.S. firm.
2. The Federal Reserve buys $2 billion worth of euros. Financial Account. Payment to foreigners.
This is a capital flow involving the purchase of another currency. It was done by paying foreigners.
3. Profits are earned by a U.S. based mining company operating in Mexico. Current Account. Payment from foreigners.
These profits were made from business operations offering goods and services so is for the current account. The profits was made from Mexico so is a Payment from foreigners.
4. An English company purchases a U.S. confectionery manufacturer. Financial Account. Payment from Foreigners.
The English company invested in owing the confectionery manufacturer so this is a capital transaction. It involved a foreign company paying a U.S. company so is a payment from foreigners.
Answer:
a. If an English company purchases a U.S. confectionary manufacturer, payments from foreigners flow into the U.S. financial account.
b. If profits are earned by a U.S.-based mining company operating in Mexico, payments from foreigners flow into the U.S. current account.
c. If the Federal Reserve buys $2 billion worth of euros, payments to foreigners flow into the U.S. financial account.
d. If an Australian company buys steel from a U.S. firm, payments from foreigners flow into the U.S. current account.
Explanation:
Factor income includes wages, corporate profits, or any payment to owners of capital. An example of this is the profits earned in Mexico by the U.S. mining company. These profits are a payment from foreigners. This transaction is accepted for in the current account.
Sales and purchases of goods and services are often the biggest line item in the current account. The payment from Australia to the United States for steel falls into this account.
Private sales and purchases of assets include the exchange of any assets that create a future liability, such as the purchase of stocks or the purchase of a corporate entity. The English company's purchase of a U.S. confectionary manufacturer falls into the financial account.
Official asset sales and purchases are those purchases of assets, such as currency reserves, made by central banks. The Federal Reserve's purchase of $2 billion worth of euros falls into the financial account.
International transfers include direct monetary transfers into or out of the United States. This includes money sent by immigrants to family members in their native country. This question does not include an example of transfers.
Prepare journal entries for Iron City’s general fund for the following, including any adjusting and closing entries on December 31, 20X1 (the end of the fiscal year):
a. Acquired a three-year fire insurance policy for $5,400 on September 1,
b. Ordered new furniture for the city council meeting room on September 17, 20X1, at an estimated cost of $15,600. The furniture was delivered on October 1, its actual cost was $15,200, its estimated life is 10 years, and it has no residual value.
c. Acquired supplies on November 4, 20X1, for $1,800. Iron City uses the consumption method of accounting. Supplies on hand on December 31, 20X1, were $1,120.
Answer:
Journal entries are given below
Explanation:
Journal entries for Iron City’s general fund are given below
A)
September 1, 20x1: (To record the acquisition of fire Insurance policy)
DEBIT CREDIT
Expenditures $5,400
Vouchers Payable $5,400
B)
September 17, 20x1 (To record the Encumbrances for the purchase order of new furniture)
DEBIT CREDIT
Encumbrances $15,600
Budgetary Fund Balance $15,600
October 01, 20x1 (To record the receipt of the furniture)
DEBIT CREDIT
Expenditures $15,200
Vouchers Payable $15,200
C)
November 4,20x1 (To record the acquisition of Supplies)
DEBIT CREDIT
Expenditures $1,800
Vouchers Payable $1,800
December 31,20x1 (To record the recognition of ending inventory of Supplies)
DEBIT CREDIT
Inventory of Supplies $1,120
Expenditures $1,120
Wallace, Simpson, and Prince are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Wallace, $68,000; Simpson, $90,000; and Prince, $42,000. Royal is admitted to the partnership on July 1 with a 20% equity and invests $50,000. The partnership would record the admission of Royal into the partnership as:
a. Debit Wallace, Capital $15,000; debit Simpson, Capital, $20,000; debit Prince, Capital $15,000; credit Royal, Capital $50,000.
b. Debit Cash $20,000; credit Prince, Capital $20,000.
c. Debit Cash $40,000; debit Wallace, Capital $3,000; debit Simpson, Capital, $4,000; debit Prince, Capital $3,000; credit Royal, Capital $50,000.
d. Debit Cash $50,000; credit Royal, Capital $50,000.
e. Debit Cash $50,000; credit Simpson, Capital $10,000, credit Royal, Capital $40,000.
Answer:
d. Debit Cash $50,000; Credit Royal, Capital $50,000
Explanation:
Date Description Debit Credit
Cash $50,000
Capital $50,000
Workings
Total capital after admission of Royal = $68,000 + $90,000 + $42,000 + $50,000 = $200,000
Royal’s capital contribution for 20% equity = 20% x $200,000 = $50,000
Since Royal’s contribution is equal to 20% of the total equity, there is no bonus.
The ending bank statement balance at November 30 is . The bank statement shows a service charge of , electronic funds receipts of $500, and a NSF check for $350. Deposits in transit total and outstanding checks are . The balance per books at November 30 is . What is the adjusted bank balance at November 30?
Answer: $8,365
Explanation:
The Adjusted Bank balance will be = Ending bank balance + deposits in transit (these have not yet cleared and will be reflected in the account when they do) - Outstanding checks ( these have cleared the bank either but have been recorded in the companies books as payments outwards)
= 7,550 + 2,550 - 1,735
= $8,365
The condensed income statement for a business for the past year is as follows: Product T U Sales $660,000 $320,000 Less variable costs 540,000 220,000 Contribution margin $ 120,000 $100,000 Less fixed costs 145,000 40,000 Income (loss) from operations $ (25,000) $ 60,000 Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of chang
Answer:
$120,000 Decrease
Explanation:
Calculation for the amount of change in net income resulting from the discontinuance of Product T.
PRODUCT T
Sales $660,000
Less Variable costs $540,000
Contribution margin $120,000 decrease
Therefore the amount of change in net income resulting from the discontinuance of Product T will be $120,000 decrease
An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $4,731. If Allowance for Doubtful Accounts has a $810 credit balance, the adjustment to record the bad debt expense for the period will require a:________.
a. debit to Allowance for Doubtful Accounts for $3,921.
b. debit to Bad Debt Expense for $3,921.
c. credit to Allowance for Doubtful for $4,731.
d. debit to Allowance for Doubtful Accounts for $4,731
Answer:
b. debit to bad debt expense for $3,921
Explanation:
Bad debt are debts owed to a business and which cannot be collected. Theses debts occurs during the course of business transaction and are caused by fraud, a company avoiding its obligation to pay or trade disagreements.
With regards to the above, the adjustment to bad debts expense will be the difference between accounts receivable and doubtful accounts.
Bad debts expense = $4,731 - $810 = $3,921
1. A Letter of Credit (or LC) is one of the major pillars on which International Trade stands.
a) What is a Letter of Credit?
b) With the aid of a diagram, explain the LC procedure.
c) Explain to the CEO of Mbo Limited (a company in Ghana) which wants to buy large quantities of White Refined Granulated Sugar from Tiffany Anderson Group Ltd (a company in Brazil) why the LC is the most acceptable method to both the exporter and importer in a transaction such as he is about to undertake.
Answer:
Letter of Credit (LC)
a) Mbo Limited's bank can issue a letter of credit to Tiffany Anderson Group Ltd.'s bank a credit guarantee by which Mbo's bank guarantees that Mbo Limited will settle Tiffany Anderson Group Ltd in full for the amount involved in their trade relationship. It is usually used by importers and exporters to settle trade credit. It is the most acceptable means of settling debts across national boundaries.
b) A diagram is attached. The procedures are detailed below:
A. A Sales Contract is established between the seller (exporter) and the buyer(importer).
B. The importer makes a request to its bank for issuance of letter of credit.
C. The importer’s bank issues a letter of credit to the exporter’s bank.
D. The exporter’s bank advises on the letter of credit to the exporter.
E. The exporter presents export documents (bill of lading and invoice) to its bank.
F. The exporter’s bank delivers the documents to the importer’s bank.
G. The importer’s bank debits the account of the importer for the stated amount after confirming that the documents are in order.
H. The importer’s bank pays the purchase price to the exporter’s bank.
I. The exporter’s bank credits the exporter’s bank to show payment. This ends the transaction.
c. The letter of credit guarantees both the Mbo Limited and Tiffany Anderson Group Ltd. It guarantees and ensures that payment for goods are not paid to Tiffany Anderson Group Ltd until there is evidence that the correct goods and quantity have been shipped by Tiffany Anderson Group Ltd (through the bill of lading). It also assures Tiffany Anderson Group Ltd of payment for shipped goods since the documents cannot be released to Mbo Limited unless Mbo Limited's account had been debited and the money transmitted to Tiffany Anderson Group Ltd through its bank.
Explanation:
As above.
June Smith, a process engineer, has sold her 15-year patent for a new etching process to Silica Labs, Inc. In return, she has received $500,000 in cash and, based on its value on the sale date, $200,000 in common stock in Silica Labs. The stock is forecasted to double in market value over the next two months. Assuming that Silica Labs holds some long-term debt, which of the following describes the effect of the transaction on Silica Labs?
A. Current ratio will decrease and total debt to equity ratio will increase.
B. Current ratio will increase and total debt to equity ratio will decrease.
C. Current ratio will increase and total debt to equity ratio will increase.
D. Current ratio will decrease and total debt to equity ratio will decrease.
Answer: D. Current ratio will decrease and total debt to equity ratio will decrease.
Explanation:
The Current ratio is calculated by dividing the firm's current assets by it current liabilities. This transaction will have the effect of reducing the cash account of Silica Labs by $500,000 which means the numerator will be less in the equation which would lead to a lesser Current ratio.
The total debt to equity ratio is calculated by dividing the firms's total debt by its equity. Silica offered equity to June thereby increasing their equity account. This will mean that the denominator has increased in the equation which will lead to a lesser total debt to equity ratio.
Andre, Beau, and Caroline share profits and losses of their partnership in a :: ratio respectively. If the net income is , calculate Caroline's share of the profits. (Do not round any intermediate calculations.)
Answer: $545,454.55
Explanation:
Caroline's share of the profit would be her sharing ratio over the total ratio time the net income.
= (6 / ( 6 + 2 + 3)) * 1,000,000
= 6/11 * 1,000,000
= $545,454.545
= $545,454.55
A dearborn company has earning per share of $2.30, it paid a dividend of $1.60 per share, and the market price of the company's stock is $64 per share. The price/earnings ratio is closest to:_______
a. 1.29
b. 91.43
c. 20.65
d. 9.60
Answer:
Price -earnings ratio= 27.83 times
Explanation:
The price-earning ratio is the ratio of the market price of a share to its earnings per share .
It helps investors to place a value on the shares of a company.The ratio gives an idea of how much a dollar of earning is worth in a company.
It is calculate as follows:
Price-Earnings ratio = Market price per share(MPS)/Earnings per share(EPS)
Price-earnings ratio = 64/2.30=27.83
Price -earnings ratio= 27.83 times
An airline sells 120 tickets for a flight that seats 100. Each ticket is non-refundable and costs $200. The unit cost of flying a passenger (fuel, food, etc.) is $80. If the flight is overbooked, each person who does not find a seat is given $300 in cash. Assume it is equally likely that any number of people between 91 and 120 show up for the flight. Rounded to the nearest thousand (e.g., 18500 rounds to 19000), on the average how much expected profit (ignoring fixed cost) will the flight generate
Answer:
14019.999
Explanation:
Capacity(n) = 100
Ticket sold (t) = 120
Cost pet ticket (c) = $200
Unit cost (u) = $80 per passenger
Refund amount (r) = $300
Number of people who show up for the flight falls between 91 and 120
Total Revenue = t * c = (120 * $200) = $24,000
Total cost of operating flight per trip:
(u * n) = ($80 * 100) = $8,000
Profit = Revenue - cost
Since number of passengers who show up falls between 91 and 120
Take number who show up as 'p'
Case 1:
If 91 <= P <= 100, then the airline won't pay any refund, hence, profit = 24000 - 80p
Case 2:
If 100 < p <= 120, then refund will be made
Refund = 300 * (p - 100)
Profit = 24000 - 80p - (300p - 30000)
24000 - 8000 - 300p + 30000
Profit = 46000 - 300p
Expected profit :
n = (120 - 90)
Case 1
P= summation (91 to 0) = 955
(100 - 90) * (24000) - 80(955)
(20 * 24000) - 76400 = 163,600
163,600 / 30 = 5453.3333
Case 2:
P = summation (101 - 120) = 2210
(120 - 100) * (46000) - 300(2210))
(920,000 - 663,000) / 30
= 257,000 / 30 = 8566.6666
Case 1 + case 2
(8566.6666 + 5453.333= 14019.999
Eurocurrency markets are a source of attractively priced working capital loans for multinational firms because
Answer:
it offers softer interest rates of borrowers and greater interest rates for lenders depending on the situation
Explanation:
Due to the lack of firm or strong regulatory provisions or controls, such as tax law, interest caps, etc. Eurocurrency markets are commonly selected as attractively priced working capital loans for multinational firms because when compared with domestic banks, it offers softer interest rates of borrowers and greater interest rates for lenders accordingly.
Which of the following budgets is prepared before the preparation of the production budget? a. Sales budget b. Cash budget c. Direct labor budget d. Capital expenditure budget
Answer:
a. Sales budget
Explanation:
Sales Budget is the starting point for the Budgetary process. The sales budget projects the number of units to be sold to meet the firms targets.
These units will then need to be used to populate the production required by the firm to meet its sales needs plus any inventory balances.
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $ 52,000 Accounts payable decreased by 18,000 Accounts receivable increased by 25,000 Inventories increased by 5,000 Depreciation expense 30,000 Net cash provided by operating activities was:
Answer:
Cash flows from operating activities:
Net income $52,000
Adjustments to net income:
Depreciation expense $30,000Accounts receivable increased by ($25,000)Inventories increased by ($5,000) Accounts payable decreased by ($18,000) ($18,000)Net cash flow provided by operating activities $34,000
When the world price of some good is above the domestic price (before trade), then after trade, that nation will likely be:
Answer:
EXPORT
Explanation:
If the domestic price of a country for a good is lower than world price before trade, it mean that the country is producing that good efficiently - at a cheaper cost. After trade, the country would export the good, so that the world can produce more of the goods it produces efficiently.
If the world price is below domestic price of a country before trade, after trade, the country would import
Assume the following amounts: Total fixed costs Selling price per unit Variable costs per unit If sales revenue per unit increases to and units are sold, what is the operating income?
Answer:
The correct option is c. 129,000.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Assume the following amounts:
Total fixed costs. $15,000
selling price per unit. $19
variable costs per unit. $12
if sales revenue per unit increases to $21 and 16,000 units are sold what is the operating income?
a 159,000
b. 336,000
c. 129,000
d. 144,000
The explanation to the answer is now provided as follows:
Since sales revenue per unit increases to $21, we use it as the selling price and proceed as follows:
Computation of Operating Income
Particular Amount ($)
Sales revenue (16,000 * $21) 336,000
Variable cost (16,000 * $12) (195,000)
Contribution 144,000
Fixed cost (15,000)
Operating income 129,000
Therefore, the correct option is c. 129,000. That is, operatin income is $129,000.
Modigliani and Miller's world of taxes. Roxy Broadcasting was originally an all-equity firm with a before-tax value of . Roxy now pays taxes at a % rate. What is the value of Roxy under the / debt-to-equity capital structure? Under the / capital structure? What is the value of Roxy under the / debt-to-equity capital structure?
Complete Question:
Modigliani and Miller's world of taxes. Roxy Broadcasting was originally an all-equity firm with a before-tax value of $20,000,000. Roxy now pays taxes at a 30% rate.
A. What is the value of Roxy under the 30/70 debt-to-equity capital structure?
B. Under the 70/30 capital structure?
Answer:
Requirement 1: $15,384,615
Requirement 2: $17,721,519
Explanation:
The value of the firm at zero percent debt is $20,000,000 then this means:
Value of Equity After Tax = Value of Firm * (1 - 30% Tax rate)
Value of Equity After Tax = $20,000,000 * 0.7 = $14,000,000
Now
Value of Levered Firm = Value of Unlevered Firm + (Debt percentage * Value of Levered Firm * Tax rate
Requirement 1: The value of levered company at 30/70 debt to equity ratio would be:
Here
Value of Levered Firm is X
Debt percentage is 30%
Tax rate is 30%
By putting values, we have:
X = $14,000,000 + (30% debt percentage * X * 30% Tax rate)
X = $14,000,000 + (0.3 * X * 0.3)
X = $14,000,000 + (0.09X)
X - 0.09X = $14,000,000
0.91X = $14,000,000
X = $14,000,000 / 0.91 = $15,384,615
Requirement 2: The value of levered company at 70/30 debt to equity ratio would be:
Here
Value of Levered Firm is X
Debt percentage is 70%
Tax rate is 30%
By putting values, we have:
X = $14,000,000 + (70% debt percentage * X * 30% Tax rate)
X = $14,000,000 + (0.7 * X * 0.3)
X = $14,000,000 + (0.21X)
X - 0.21X = $14,000,000
0.79X = $14,000,000
X = $14,000,000 / 0.79 = $17,721,519
Outstanding debt of Home Depot trades with a yield to maturity of 5%. The tax rate of Home Depot is 35%. What is the effective cost of debt of Home Depot?
Answer:
the effective cost of debt of Home Depot is 3.25 %.
Explanation:
Effective Cost of debt is the cost of debt after the tax shield.
In terms of the Tax Act, interest expense attract a deduction known as tax shield from income tax and this lowers the cost of debt financing as compared to equity financing.
Effective cost of debt = interest × ( 1 - tax shield)
= 5.00 % × (1 - 0.35)
= 3.25 %
What can you say about the value of a stock with constant dividend growth where the growth rate is larger than the discount rate
Answer:
Assuming that the growth rate of Company A' stock is larger than the discount rate this means that the stock price will be a negative value.
The implication is that the stock price is higher in comparison to the earnings. Perhaps, the entity is a newly launched organization that has not accumulated enough in earnings.
Explanation:
A stock that has a negative price should be investigated as the company may have liabilities that are in excess of the assets.
The sales process at Xerox typically follows the six stages of the personal selling process. During the second stage, the salesforce prepares for a presentation by
Answer:
Explanation:
During the second stage, the salesforce prepares for a presentation by researching the market and collecting all relevant information regarding your product or service. Doing so allows the salesforce to have all the information ready and tailored specifically to the potential client's particular needs in order to drastically increase the chances of convincing the potential client on buying the product that is being presented to them.
The price at which a monopolistically competitive firm sells its product:___________a. exceeds the marginal cost of production.b. produces economic profits in both the long run and the short run.c. equals the marginal cost of production.d. is less than the marginal cost of production.
Answer: b. produces economic profits in both the long run and the short run.
Explanation:
Monopolies sell at a price that results from the quantity where marginal revenue equals marginal costs as this maximises profits.
Monopolies have their marginal revenue lower than their demand curve so the point where the profit maximising quantity intersects with the demand curve will result in a price above the marginal cost of the good which means that they are able to make economic profits in the short run.
Monopolies are able to maintain this trend in the long run as well because there will be barriers to entry dissuading other competitors from coming in.
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:Unit SalesApril 82,000May 90,000June 122,000July 96,000The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month's unit sales. The inventory at the end of March was 12,300 units.Required:Prepare a production budget by month and in total, for the second quarter.
Answer:
Results are below.
Explanation:
Giving the following information:
Sales:
April 82,000
May 90,000
June 122,000
July 96,000
Desired ending inventory= 15% of the following month's unit sales.
The inventory at the end of March was 12,300 units
To calculate the production required, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
April:
Sales= 82,000
Desired ending inventory= 90,000*0.15= 13,500
Beginning inventory= (12,300)
Total production= 83,200
May:
Sales= 90,000
Desired ending inventory= 122,000*0.15= 18,300
Beginning inventory= (13,500)
Total production= 94,800
June:
Sales= 122,000
Desired ending inventory= 96,000*0.15= 14,400
Beginning inventory= (18,300)
Total production= 118,100
A property management company hit its corporate goals for the year by increasing profits by 5%, two points higher than its 3% goal. Management was very pleased with the results and decided to celebrate with an extravagant meal for all managers. The following year, the company set the same goal, 3%, but fell very short. When digging into the cause, management found out that the associates were not as productive or as motivated as they were the year before. What should the company do to ensure it hits its goals for years to come
Available Options Are:
A. Continue training to improve its employees' skills
B. Promote the best associates to managers
C. Threaten lay-offs if goals are not hit
D. Provide positive reinforcement for hitting goals
Answer:
Option D. Provide positive reinforcement for hitting goals
Explanation:
The training program is not required as the managers are already trained which means their is not skills deficit which has resulted in not achieving the business goals. Hence Option A is incorrect.
Option B is also incorrect because previously the same managers had achieved the goals hence promoting best associates to managers will not be impact making.
Option C is incorrect because threatening may result in further demotivating employees and it will also increase employee turnover. Hence it is also not a solution.
Option D is correct because the employees are demotivated and all they need is motivation which can be developed by developing a system of reward. This can be achieved by linking their interests with the company's interest. If they achieve their target then they must be awarded a certain portion of the target say 1%. This will increase their motivation to earn more by making additional sales.
When asking questions during criticism, it is best to be _______. a. understated b. defensive c. open minded d. annoyed Please select the best answer from the choices provided A B C D
Answer:
c. open minded
Explanation:
One should be open-minded when someone asks questions during criticisms. The correct option is c here.
Why is it important to be open-minded?An individual should practice being open-minded because it helps to look at things and understand from everyone's perspective. The world is a place filled with people of different cultures having different social values, languages, mannerisms etc.
If we keep ourselves limited to a certain aspect then we will not gain any knowledge in our life. When we start practising being open-minded we tend to understand things from everyone's perspective and start to respect everyone's opinion.
Once we develop the habit of being open-minded then we start to have harmonious relationships with everyone. We start to handle criticisms maturely and never have any negative thoughts towards ourselves.
An open-minded person is happier in their life than a person who is not.
Learn more about open-minded, here:
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A perfectly competitive firm: A) will budget money to advertise its product. B) can adjust the price of the product so that it sells, in order to make more money.
Answer:
D) has output that is so small, relative to market supply, that it cannot influence the market price
Explanation:
The Perfect competition is that market condition in which it have various characteristics like
1. Large number of buyers and sellers
2. Same or similar products
3. Perfect knowledge
4. Free entry and exist
In this market competition, the output is very small also it is related to the market supply and the market supply does not affect the market price
Hence, the correct option is d.
You are the CEO of Company A and you are using an industry leader (Leader Company) for benchmarking. Company A is much smaller than Company B in terms of total assets and total sales revenue. You should compare the:
Answer:
net income to net sales ratio of Company A to net income to net sales ratio of Leader Company
Explanation:
Benchmarking is defined as the practice of measuring a business's services, sales, and operations to another company's that is considered to be one of the best in the industry.
The purpose of benchmarking is to find out the reason for superior performance of top companies and using the knowledge to improve performance of one's own company.
In the given scenario company A is much smaller than company B so the benchmarking method must consider difference in scale of operations.
The best way will be to use ratio of net income to net sales of each is the companies.
An initial license is issued in October of 2015. When must the license be renewed in order to prevent expiration?
Answer: September 2017
Explanation:
From the question, we are informed that an initial license is issued in October of 2015. One thing that we need to understand is that the license will only be effective for two years.
So, before it expires it is logical to renew it. In this scenario, since the initial license is issued in October 2015, this means that it'll be renewed in 2 years which will be September 2017.
In order to improve your chances of matching with someone, you decide to update your online dating profile. Specifically, you decide that to impress potential partners you will show off what you know about monopolies and marginal revenue. Draft out an explanation as to what marginal revenue is for the monopolist so that you can have them all wanting to swipe right!
Answer:
A Monopolist has a downward sloping Demand curve which means that they will sell more goods if they charge lower prices.
Now Marginal Revenue is the change in the additional revenue that a company gets when it sells an extra unit. For this reason, the Marginal Revenue of a Monopoly is downward sloping as well because if the monopoly has to reduce their price to sell an additional unit, the additional unit will bring in less than the last unit.
The Marginal Revenue curve for a Monopoly is below the Demand Curve which gives them the opportunity to make an economic profit.
The point where the Marginal Revenue is equal to the Marginal Cost is the quantity where the Monopoly can maximise their profits as producing past this level will cost more than they are gaining per additional unit.
Suppose the average return on Asset A is 6.9 percent and the standard deviation is 8.1 percent and the average return and standard deviation on Asset B are 4.0 percent and 3.5 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to answer the following questions.
a. What is the probability that in any given year, the return on Asset A will be greater than 10 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))
Greater than 10 percent %
Less than 0 percent %
b. What is the probability that in any given year, the return on Asset B will be greater than 10 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))
Greater than 10 percent %
Less than 0 percent %
c-1 In 1979, the return on Asset A was -4.36 percent. How likely is it that such a low return will recur at some point in the future? (Round your answer to 2 decimal places. (e.g., 32.16))
Probability %
c-2 Asset B had a return of 10.70 percent in this same year. How likely is it that such a high return on T -bills will recur at some point in the future?(Round your answer to 2 decimal places. (e.g., 32.16)
Answer:
Explanation:
Let us follow this accordingly
a. We have that ;
Z is given as = (X-mean)/standard deviation
where X = 10, mean = 6.9 and standard deviation is 8.1 ------- for A
inputting values we have;
Z = (10-6.9)/8.1 = 0.3827
Using the NORMDIST function in excel, [NORMDIST(0.3827)] = 0.649. This is the probability of earning less than 10%.
Hence the probability of earning more than 10% = 1-0.649 = 0.351 or 35.1%
b. At less than 0%;
X = 0, mean = 6.9 and standard deviation is 8.1
Thus Z = (0-6.9)/8.1 = - 0.8519. Using the NORMDIST function in excel, [NORMDIST(-0.8519)] = 0.1971 or 19.71%.
From this, the probability of earning less than 0% = 19.71%
c. Also For B;
X = 10%, mean = 4% and standard deviation = 3.5%
inputting values gives us ;
Z = (10-4)/3.5 = 1.7143.
Using the NORMDIST function in excel, [NORMDIST(1.7143)] = 0.9568. This is the probability of earning less than 10%.
Which makes the probability of earning more than 10% = 1-0.9568 = 0.0432 i.e 4.32%
d. Als, X = 0.
Giving us;
Z = (0-4)/3.5 = -1.1429.
Using the NORMDIST function in excel, [NORMDIST(-1.1429)] = 0.1265 or 12.65%
Thus the probability of earning less than 0% = 12.65%
e. Return on A = -4.36%
Thus z = (-4.36 - 6.9)/8.1 = -1.39. NORMDIST of -1.39 = 0.0822 or 8.22%
f. Return of B = 10.7%
Thus z = (10.7% - 4)/3.5 = 1.9143.
Its NORMDIST = 0.9722
This makes the probability of earning less than 10.7%.
Thus required probability gives us = 1-0.9722 = 2.78%
If you put up $21,000 today in exchange for a 8.25 percent, 14-year annuity, what will the annual cash flow be
Answer:
$2,584.34
Explanation:
we can use the present value of an ordinary formula to calculate this:
present value = annual payment x annuity factor
present value = $21,000PV annuity factor, 8.25%, 14 periods = 8.12586annual payment = present value / annuity factor = $21,000 / 8.12586 = $2,584.34
When the interest rates are not whole number, e.g. 4%, instead of trying to use a present value annuity table, you should look online for annuity calculators that will calculate the annuity factors for you.