Answer:
The correct answer will be Option b (unintended changes in tax liabilities).
Explanation:
Government should minimize the inevitable increases in tax liabilities, besides obvious reasons adjusted for inflation, earnings will increase, but mostly individuals will indeed be healthier and more productive income level and might have to pay more in taxes. The objective is to reduce this, thereby directly increasing the chances of inflation or unemployment.Some other alternatives offered are not in relation to the condition in question. So Choice b has been the appropriate one.
Using the method of your choice, calculate the Net Present Value of the following cash flows. Assume that the required return on this project is 15%
Project A
Initial Cost -$150
Year 1 $175
Year 2 $100
A. $15
B. $35
C. $55
D. $70
E. $78
Answer:
E. $78
Explanation:
The computation of the net present value is shown below:
Net present value is
= Initial investment + year cash inflows ÷ (1 + discount rate)^number of years + year cash inflows ÷ (1 + discount rate)^number of years
= -$150 + $175 ÷ 1.15 + $100 ÷ 1.15^2
= $77.78
= $78
Hence, the correct option is E. $78
Suppose the total deposits in the Last Bank of Commerce are $100,000, and $20,000 of the total deposit is set aside as reserves required by the Federal Reserve. Based on this information, the required reserve ratio is:
A. 20
B. $20,000
C.30
D.10
Answer:
A. 20
Explanation:
The reserve ratio= Reserve required / Total deposit × 100
= $20,000 / $100,000 * 100
= 1 / 5 *100
= 100 / 5
= 20%
The answer is A. 20
The reserve ratio also known as cash reserve is the portion of deposits that commercial banks must withhold or keep rather than lend out or invest as directed by the central bank of a country.
"A high-ranking officer of ABC Corporation owns 10,000 shares of ABC Corporation control stock that she wishes to sell under the provisions of Rule 144. The company has 900,000 shares outstanding. The average weekly trading volume over the preceding 4 weeks was 3,000 shares. The maximum permitted sale under Rule 144 is:"
Answer: $9,000
Explanation:
Rule 144 is a regulation that governs the trading of restricted, unregistered, and control securities and is enforceable by the SEC.
Under the rule, the person, as an officer of the ABC Corporation is limited to selling the higher of 1% of the Outstanding stock the company has or the average weekly trading volume over the preceding 4 weeks.
1% of the outstanding 900,000 shares is;
= 1% * 900,000
= 9,000 shares
This is higher than the average weekly trading volume over the preceding 4 weeks so this is the maximum permitted sales figure.
A customer has combined margin account that shows the following:Long: $20,000 of ABC stock Debit: $8,000Short: $30,000 of XYZ stock Credit: $48,000If no other activity occurs in the account, the account will show a current SMA balance of?A. 0B. $5,000C. $8,000D. $10,000
Answer: $5000
Explanation:
From the question, it is possible for the customer to borrow 50% of $20,000 which equals:
= 50% × $20,000
= 0.5 × $20,000
= $10,000
We can see that only $8000 was borrowed by the customer, this implies that the customer can still borrow:
= $10,000 - $8,000
= $2000 more.
The above is the SMA for the long account.
For the short account equity, 50% of $30,000 equals:
= 50% × $30,000
= 0.5 × $30,000
= $15,000
The equity in the account is $18,000. This means that there's an extra ($18,000 - $15,000) = $3000
Therefore, SMA will be:
= $3000 + $2000
= $5000
What is the plowback ratio for a firm that has earnings per share of $2.68 and pays out $1.75 per share in dividends
Answer:
34.70%
Explanation:
Calculation for the plowback ratio
Using this formula
Plowback ratio=(Earnings per share-Pays out per share)/Earnings per share
Let plug in the formula
Plowback ratio = ($2.68 - $1.75)/$2.68
Plowback ratio =$0.93/$2.68
Plowback ratio = .3470 ×100
Plowback ratio =34.70%
Therefore Plowback ratio will be 34.70%
On January 2, 2016, Jennings Company purchases machinery and equipment and borrows $200,000 on a 5-year non-interest-bearing note. The principal of $200,000 will be paid at the maturity date of December 31, 2020. To place a fair value on the transaction, the accountant will impute an interest rate and use that rate to compute the present value of the note.Required: Assuming that an 8% interest rate is applicable, record the journal entry for interest expense for the year ended December 31, 2016.
Answer:
December 21, 2016
DR Interest expense....................................................$10,889.33
CR Discount on notes payable.......................................................$10,889.33
Explanation:
The interest to be paid will be charged on the present value of the note in 2016.
Present value of $200,000 = 200,000 / ( 1 + 8%)^5
= 200,000/1.4693280768
= $136,116.64
Interest to be paid;
= 136,116.64 * 8%
= $10,889.33
can plagiarism be unintentional? Should the consequences be the same?
Answer:
yes it can be and no they shouldn't be.
Explanation:
yes, even though unlikely to happen it is possible to do something (write,play or invent etc) and not be aware that that already exsists. And it is not your fault for making something that you did not know is already made.
Given that Unilever is viewed as being highly innovative in Brazil, does the video confirm this reputation. Wy or why not
Explanation:
Unilever is considered highly innovative in Brazil due to the development of different product lines according to the potential audience. That is, in Brazil the company produces product lines to reach different audiences, including people from lower classes.
This occurs in Brazil due to the fact that the country has a very diverse consumer audience according to income and preferences, which makes the company develop strategies to capture a larger part of the market and satisfy the needs of Brazilian consumers.
It costs Homer's Manufacturing to produce baseballs and Homer sells them for a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays a month rent for his factory and store, and also pays a month to his staff in addition to the commissions. Homer sold baseballs in June. If Homer prepares a contribution margin income statement for the month of June, what would be his operating income?
Answer:
$105,075
Explanation:
The computation of the operating income is shown below:
Sales (4 × 69,500) $278,000
Less:Variable costs (0.95 × 69,500 + 5% × 278,000) $79,925
Contribution margin $198,075
Less: fixed cost (13,000 + 80,000) $93,000
Net operating income $105,075
We simply deduct the variable cost and the fixed cost from the sales to arrive at the net operating income
A method of allocating merchandise cost requiring each item sold and each item remaining in inventory to be separately identified with respect to its purchase cost is called the
Answer: Specific Identification
Explanation: When items in an inventory are valued singularly rather than being evaluated based on a grouped analysis. In the specific identification inventory valuation method, each singular item in an inventory is monitored and accounted for separately, each items is tagged with its own cost, amount left in inventory. The specific identification method seems quite tedious when dealing with relatively cheap items which is always numerous in units such as small items like shirts, pen and so on. However, it is very useful in the valuation of large, luxurious and expensive items.
A group of civic-minded merchants in Eldora organized the Committee of 100 for establishing the Community Sports Club, a not-for-profit sports organization for local youth. Each of the committee’s 100 members contributed $1,000 toward the club’s capital and, in turn, received a participation certificate. In addition, each participant agreed to pay dues of $200 a year for the club’s operations. All dues have been collected in full by the end of each fiscal year ending March 31. Members who have discontinued their participation have been replaced by an equal number of new members through transfer of the participation certificates from the former members to the new ones. Following is the club’s trial balance for April 1, 20X2:
Debit credit
Cash 90000
Investment 58000
Inventories 5000
Land 10000
Building 164000
Accumulated depreciation---building 130,000
Furniture and equipment 54000
Accumulated depreciation furniture and equipment 46000
Accounts payable 12000
Participation certificates 100000
Cumulative excess of revenue over expenses 12000
Toatal 300000 300000
Transactions for the year ended March 31, 20X3, follow:
Adjustment Data
1. Investments are valued at market, which totaled $65,000 on March 31, 20X3. There were no investment transactions during the year.
2. Depreciation for year: Building .......... $4,000 Furniture & equipment ..... 8,000
3. Allocation of depreciation: House expenses ...... $9,000 Snack bar & soda fountain ... 2,000 General and administrative ... 1,000
4. Actual physical inventory on March 31, 20X3, was $1,000 and pertains to the snack bar and soda fountain.
Required:
a. Record the transactions and adjustments in journal entry form for the year ended March 31, 20X3. Omit explanations.
b. Prepare the appropriate all-inclusive statement of activities for the year
Answer:
Community Sports Club
a. Adjusting Journal Entries on March 31, 20x3:
Description Debit Credit
Investment Account $7,000
Unrealized Investment Gains $7,000
Depreciation Expense $12,000
Accumulated Depreciation - Building $4,000
Acc. Depreciation - Furniture & Equipment 8,000
House Expenses $9,000
Snack bar & soda fountain 2,000
General and administrative 1,000
Depreciation Expenses $12,000
Cost of Inventory sold $4,000
Inventory $4,000
b. Financial Statement of Activities for the year ended March 31, 20x3:
Cumulative excess of revenue over expenses $12,000
Cost of Inventory Sold (4,000)
Depreciation Expenses:
House Expenses (9,000)
Snack bar & soda fountain (2,000)
General and administrative (1,000)
Cumulative excess of revenue over expenses ($4,000)
Explanation:
Data and Calculations:
1. Community Sports Club
Unadjusted Trial balance for April 1, 20X2:
Debit Credit
Cash $9,000
Investment 58,000
Inventories 5,000
Land 10,000
Building 164,000
Accumulated depreciation---building $130,000
Furniture and equipment 54,000
Accumulated depreciation furniture & equipment 46,000
Accounts payable 12,000
Participation certificates 100,000
Cumulative excess of revenue over expenses 12,000
Total $300,000 $300,000
2. Adjusted Trial Balance for March 31, 20x3:
Debit Credit
Cash $9,000
Investment 65,000
Inventories 1,000
Land 10,000
Building 164,000
Accumulated depreciation---building $134,000
Furniture and equipment 54,000
Accumulated depreciation furniture & equipment 54,000
Accounts payable 12,000
Participation certificates 100,000
Unrealized Investment Gain 7,000
Depreciation Expenses:
House 9,000
Snack bar & Soda Fountain 2,000
General and Administrative 1,000
Cost of Inventory Sold 4,000
Cumulative excess of revenue over expenses 12,000
Total $319,000 $319,000
3. The Club's Statement of Activities is like the income statement of a business entity. This statement reports the revenues and expenses of the club and the changes in the net assets of the company, like depreciation expenses and cost of inventory. Like the income statement it reports the excess of revenue over expenses or vice versa. The resulting figure (difference) is not called the net income or loss, but excess of revenue over expenses.
Stock in Cheezy-Poofs Manufacturing is currently priced at $80 per share. A call option with a $80 strike and 90 days to maturity is quoted at $3.20. Compare the percentage gains and losses from a $25,600 investment in the stock versus the option in 90 days for stock prices of $70, $80, and $90. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Leave no cells blank - be certain to enter "0" and select "None" wherever required. Input all amounts as positive values.)
Answer:
Price Stock Options
$70 -3200 -25600
$80 0 -25600
$90 3200 54400
Explanation:
Invested in stock
Number of units acquired = $25,600/80 = 320
Now if price goes down to $70 THEN loss will be
320 × (70-80) = - $3,200
percentage of loss will be 3,200/25,600 × 100 = 12.5%
If price stays at $80, then there will neither be a gain nor a loss
320 × (80-80) = 0
If price goes up to $90, then the gain will be
320 × (90-80) = $3,200
percentage of gain will be 3,200/25,600 × 100 = 12.5%
Invested in option
Number of options purchased = $25,600 / 3.20 = 8000
Now If price goes down to $70 then investor will not exercise option in which case loss will be equal to amount of premium paid which is - $25,600.
percentage of loss = 100%
If price stays at $80 even then investor will not exercise call option in which case loss will be equal to the amount of premium paid which is - $25,600
Percentage of loss = 100% loss
If price goes up to $90 then investor will exercise call option
Gain due to exercise of call option = 8000 × (100 - 90) = 80,000
Net gain = 80,000 - 25,600 = $54,400
Percentage gain = 54,400 / 25,600 = 212.5%
"A 55-year old individual has just retired after working for the same employer for 20 years. She will collect an annual pension benefit of $55,000, but is not yet ready to stop working.She has lined up a part-time job that will pay $4,000 this coming year. How much can she contribute to a Traditional Individual Retirement Account for her first year in retirement?"
Answer:
$4,000
Explanation:
Based on this scenario, this individual would be able to contribute a total of $4,000 to a Traditional Individual Retirement Account for this year. This is because a traditional IRA allows you to contribute 100% of your earned income up to a capped $5,500 per year but does not allow you for pension income contributions. Therefore this individual cannot contribute any of the $55,000 but can contribute all of the $4,000 she earned since she does not reach the limit.
Dividends paid to a company's own stockholders of $80,000 would be shown on the company's statement of cash flows prepared under the indirect method as: Select one: a. an addition of $80,000 under investing activities. b. a deduction of $80,000 under investing activities. c. an addition of $80,000 under financing activities. d. a deduction of $80,000 under financing activities.
Answer: d. a deduction of $80,000 under financing activities.
Explanation:
Under the indirect method of showing cashflows, there are 3 sections being the Operating section, the investing section and the financing section.
The relevant section is the financing section. Financing activities are those transactions that relate to the business raising capital to fund their operations. They do this through long term debt and equity.
Dividends is a payment to shareholders and so falls under equity so by extension falls under the financing section. As dividends reduce the amount of money the company has, it is also a deduction.
Before a check authorization is issued, the following documents must be in agreement, except for the
a. receiving report.
b. purchase order.
c. invoice.
d. remittance advice.
Before a check authorization is issued, documents must be in agreement, except for the remittance advice . The appropriate response is option D.
What is remittance advice?A letter known as a remittance advise is one that a client sends to a supplier to let them know that their invoice has been paid. The remittance advice frequently comes with the customer's check when they pay with a check. The letter-like instruction might also be a voucher taped to the side or top of the check.
Remittance advice is a letter that a client sends to a supplier to confirm that they have paid their invoice in full. Remittance advice might be a paper-based document or an electronic notification.
Customers include their remittance advice with their payment so that suppliers can keep track of it. Despite the widespread use of digital payments nowadays, remittances assist in organizing and matching open invoices with payments, which It is primarily beneficial if you handle numerous payments from your consumers each day.
To learn more about remittance advice
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When unit selling price remains the same and ________, then the contribution margin per unit decreases.
A: fixed costs increase
B: fixed costs decrease
C: variable costs per unit increase
D: variable cost per unit decrease
Answer:
C: variable costs per unit increase
Explanation:
When unit selling price remains the same and variable cost per unit increase, then the contribution margin per unit decreases.
An increase in variable costs when sales unit is same, will lead to decrease in contribution margin.
Contribution margin is calculated by subtracting variable costs from product's revenue and then dividing it by the product's revenue.
Mathematically,
Contribution Margin = (Sales Revenue - Variable Cost) / Sales Revenue.
When a taxpayer receives more EITC after adding a Schedule C to their return than they would have received without it, the Tax Professional must:
Answer:
Apply sound judgment to the information provided and document the questions asked and the taxpayer's responses.
Explanation:
Apply good judgment and discretion to the information presented, and have reports of questions and answers to demonstrate the queries raised and the taxpayer's answers.
It can be done in the following ways
1. Assess the data i.e collected from the client
2. Now apply the standard that are consistent
3. Additional enquires should be conducted in the case when there is incomplete information, data etc
In the past year at Carter’s Material Handling Equipment Manufacturing Company, eight employees experienced minor injuries (cuts) from handling metal parts. One employee lost 15 workdays after getting debris in his eye while grinding, six employees lost two days each due to back strains, and four welders were treated for minor burns. Select one of the injury types, and discuss the possible performance problems. Suggest one or more solutions for each performance problem.
Answer:
The performance problem to minor burns will be mainly psychological.
Explanation:
The staff involved will most likely exhibit a reduction in speed at which he or she executed the task which led to the burn.
If the personnel is in a chain of production where their own activity feeds others, it may translate to the increase in the time taken to achieve results.
One solution to this is to critically examine the production process and eliminate the cause of the accident if any.
If the cause of the incident was as a result of carelessness on the part of the staff, then he or she might have to be rescheduled to another department or unit where their current mindset will not stall the overall performance of the team/production line.
Cheers!
Pat has Been riding informal proposals for more than 20 years. At feels that many people forget the call for action and present the reader with the offer prior to signing a binding contract. What component is Pat focusing on. A. Request for authorization B. Budget C. Introduction D. Background
Answer:
D. Budget
Explanation:
Pat has Been riding informal proposals for more than 20 years. Pat feels that many people forget the call for action and present the reader with the offer prior to signing a binding contract.
This offer prior to signing a binding contract is a form of background work not an introduction neither is it request for authorization or budget.
It's not in the protocol of contract signing but it's a special way to have your contract signed.
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20 percent next year and then decreasing the growth rate to a constant 5 percent per year. The company just paid its annual dividend in the amount of $1 per share. What is the current value of a share if the required rate of return is 14 percent?
Answer:
The price of the stock today is $13.33
Explanation:
The two stage growth model of DDM can be used to calculate the price of the share today. The DDM values a stock based on the present value of the expected future dividends from the stock. The price of this stock under this model can be calculated as follows,
P0 = D0 * (1+g1) / (1+r) + [ (D0 * (1+g1) * (1+g2) / (r - g2)) / (1+r) ]
Where,
g1 is the initial growth rate which is 20%g2 is the constant growth rate which is 5%r is the required rate of returnP0 = 1 * (1+0.2) / (1+0.14) + [ (1 * (1+0.2) * (1+0.05) / (0.14 - 0.05)) / (1+0.14) ]
P0 = $13.33
Upon customer request, a dealer in a competitive municipal syndicate must disclose:__________.
A. the spread taken by the underwriters
B. order priority provisions
C. names of syndicate members
D. name(s) of the person(s) from whom orders have already been received
Answer:
B. order priority provisions
Explanation:
When investors want to purchase municipal bonds in the primary markets, it is important for the issuer to prioritise orders from investors in a bond offering.
The underwriter must follow the issuer's priority of orders in allocating purchase orders for municipal bonds.
So in a competitive municipal syndicate when a customer asks for order priority provisions, it must be provided by the dealer.
This shows transparency of the process to the investor as he now knows when each order will be filled.
Which of the following terms are associated with over-the-counter (OTC) trading?
1. Market maker.
2. Specialist.
3. Auction market.
4. Negotiated market.
A. 1 and 3.
B. 1 and 4.
C. 2 and 4.
D. 2 and 3.
Answer:
B. 1 and 4.
Explanation:
option 4) negotiated market
Since OTC trading involves stocks that generally come from companies that cannot trade in large stock exchanges, OTC traders usually negotiate directly with each other. In order for stocks to trade in large stock markets, they must fulfill certain requisites and many small companies cannot do it.
option 1) market maker
Traders that operate in secondary markets are called market makers. The two types of secondary markets are OTCs and exchange markets (large trading markets like NYSE, Nasdaq). Market makers also trade in primary markets. Traders that act on primary markets are the underwriters that carry out the IPOs.
Stocks that trade via OTC are typically smaller companies that cannot meet exchange listing requirements of formal exchanges. ... OTC securities trade by broker-dealers who negotiate directly with one another over computer networks and by phone using the OTCBB.
Sweeney pies has issued a zero-coupon 10-year bond that can be converted into 10 Sweeney shares. Comparable straight bonds are yielding 9%. Sweeney stock is priced at $63 a share. (Assume a face value of $1,000 and semi-annual compounding).
A. Suppose that you had to make a now-or-never decision on whether to convert or to stay with the bond. Which would you do?
1. Convert the bond
2. Stay with the bond
B. If the convertible bond is priced at $476, how much are investors paying for the option to buy Sweeney shares?
C. If, after one year, the value of the conversion option is unchanged, what is the value of the convertible bond?
Answer:
A.Convert the bond
B.$53.59
C. $514.01
Explanation:
a. Calculation for whether to convert or to stay with the bond.
First step
In a situation where the fair rate of return on a 10 year zero-coupon non-convertible bond is 9%, which means the price would be calculated as:
Using this formula
Price =(Face value/(1+Non-convertible bond)^Numbers of years
Let plug in the formula
Price =($1,000/1.09)^10
Price = $422.41
Second step is to calculate for the conversion value
Conversion value = 10×$63 shares
Conversion value= $630
If we convert the gain will be :
Gain=$630 - $422.41
Gain= $207.59
Based on the above calculation this mean you may convert and sell the $10 shares for the amount of $630 which will help you to buy a bond for the amount of $422.41
And in a situation were you decide not to convert, you will own a non-convertible bond of the amount of $422.41, based on this i will convert the bond.
b. Calculation for how much are investors paying for the option to buy Sweeney shares
Amount to be paid = ($476.00-$422.41)
Amount to be paid= $53.59
This means the Investors are paying the amount of $53.59
c. Calculation for the value of the convertible bond
First is to calculate for the value of a comparable non-convertible bon
Bond value = $1,000/1.09^9
Bond value = $460.42
Now let calculate for the value of the convertible bond
Value of the convertible bond = $460.42+ $53.59
Value of the convertible bond= $514.01
Therefore the Value of the convertible bond will be $514.01
Which of the following products probably accounted for by a company using a job order costing system? A) facial tissue B) Hershey Kisses C) Marshmallow Peeps D) A custom built house
Answer: D) A custom built house
Explanation:
Job Order Costing determines the cost of each specific good instead of grouping them all together. When making goods that vary in type, this is the best type of costing method to use as it will take into account the unique cost objects used.
Custom built houses will require cost objects that are different from standadized houses. A specific design will have to be used, non standard material and the like will be used as well. This means that when computing cost, it will have to be specific to the needs of the custom house so it is most probable that Job Order Costing was used.
________provide financing to new or emerging companies with high profit potential, for example, Uber Car Service. In return, these organizations expect a share of ownership in return for the financing they provide.
Answer:
Venture capital firms.
Explanation:
These are seen to be companies who are willing to risk up to about 50% of their equity in a business. A lot of venture capital companies are seen to be risk bearers in situations like this, thereby absorbing risks for their investments to push through. They are also seen in handling and pushing support for innovative and groundbreaking new companies. In as much as startup companies are creative thinkers, creating certain ideas, venture capital firms are seen as as vehicle by which those ideas make it to the marketplace and become integrated into everyday life.
Themarketpriceofasecurityis$50.Itsexpectedrateofreturnis14%.Therisk-freerateis6%, and the market risk premium is 8.5%. What will be the market price of the security if its correla- tion coefficient with the market portfolio doubles (and all other variables remain unchanged)? Assume that the stock is expected to pay a constant dividend in perpetuity.
Answer:
$31.82
Explanation:
market price $50
expected rate of return /Re) = 14%
Div = $50 x 14% = $7
risk free rate (Rf) = 6%
market premium (Rm - Rf) = 8.5%
beta = ?
14% = 6% + (beta x 8.5%)
beta x 8.5% = 14% - 6% = 8%
beta = 8% / 8.5 = 0.941
if beta doubles to 1.882, then Re will be:
Re = 6% + (1.882 x 8.5%) = 22%
new market price of the stocks = $7 / 22% = $31.818 = $31.82
If a foreign broker-dealer that does not have U.S. based operations wishes to solicit customers in the United States, the broker-dealer:I. must establish an SEC-registered U.S. subsidiaryII. is not required to establish an SEC-registered U.S. subsidiaryIII. can effect its business through another registered U.S. broker-dealerIV. cannot effect its business through another registered U.S. broker-dealer
Answer: I. must establish an SEC-registered U.S. subsidiary.
III. can effect its business through another registered U.S. broker-dealer.
Explanation:
If a foreign broker-dealer that does not have U.S. based operations wishes to solicit customers in the United States, the broker-dealer must establish an SEC-registered U.S. subsidiary and can also effect its business through another registered U.S. broker-dealer.
on march 1 shipley resources entered into an agreement with the state of alaska to obtain rights 6 million 100,000 tons of mineral how much accretion expense will the company record in its income statement
Answer:
Hello your question is incomplete below is the complete question:
On March 1, 2018, Shipley Resources entered into an agreement with the state of Alaska to obtain the rights to operate a mineral mine for $6 million. The mine is expected to produce 100,000 tons of mineral. As part of the agreement, Shipley agrees to restore the land to its original condition after mining operations are completed in approximately five years. Management has provided the following possible outflows for the restoration costs that will occur five years from now:
Cash Outflow Probability
$ 300,000 25 %
400,000 50 %
500,000 25%
Shipley's credit-adjusted risk-free interest rate is 10%. During 2018, Shipley extracted 18,000 tons of ore from the mine. How much accretion expense will the company record in its income statement for the 2018 fiscal year?
A) $30,326.
B) $20,697.
C) $24,837.
D) $27,294.
answer : $20697 (B)
Explanation:
Determine how much accretion expense the company will record in its income statement
from the table
cash flow : $300000 * 25% = $75000
$400000 * 50% = $200000
$500000 * 25% = $125000
At the present value of $1,
number of years (n) = 5
interest (i) = 10% = 0.1
2018 accretion expense will be calculated as
($400000 * 0.62092) * 0.10 * 10/12 = $20697
Your family business uses a secret recipe to produce salsa and distributes it through both smaller specialty stores and chain supermarkets. The chain supermarkets have been demanding sizable discounts, but you do not want to drop your prices to the specialty stores. True or False: In order to offer a lower price while defending yourself against antitrust lawsuits, you could simply offer a lower price to the chain stores but not the smaller stores. True False
Answer: False
Explanation:
Price discrimination refers to offering the same goods or services to people at a different price and it is illegal. By offering discounts to larger stores and not smaller stores, you would be practising price discrimination.
There are ways you could offer less prices to smaller stores such as through Volume discounts. This means that the more the stores purchase, the more discount they get. The larger stores buy more of the salsa and so for every additional batch purchased you could discount an extra 1%.
With the smaller stores unable to buy such large quantities they would not qualify for discounts.
Both Nadia and Samantha are applying to insure their car against theft. Nadia lives in a secure neighborhood, where the probability of theft is 10%. Samantha lives in a lesser secure neighborhood where the probability of theft is 25%. Both Nadia and Samantha own cars worth $10,000, and are willing to pay $100 over expected loss for insurance.
If the insurance company can successfully screen both Nadia and Samantha into appropriate contracts, it would earn:_______
a. $3500 loss.
b. Between zero and $200.
c. Between zero and $200 loss.
d. $3500 gain.
Answer:
Option B, between zero and $200, is the right answer.
Explanation:
The probability that the car of Nadia can be theft = 10%
The probability that the car of Samantha can be theft = 25%
Here, both Nadia and Samantha are agreed or willing to pay the premium for insurance = $100
Since both pay the $100 premium each then the total revenue of the company will be $200. This is the maximum amount that the company can make. However, if the minimum amount is zero when both don’t take insurance. Thus, option B, between zero and $200 is correct.