Answer:
$14,880
Explanation:
The formula to compute EVA is shown below:
= Net operating income or earnings after taxes - (Total capital employed × cost)
= $45,360 - ($381,000 × 8%)
= $45,360 - $30,480
= $14,880
We simply applied the economic value added formula so that the accurate value can come.
All other information which is given is not relevant. Hence, ignored it
"Alan Meer inherits a hotel from his grandmother, Mary, on February 11 of the current year. Mary bought the hotel for $730,000 three years ago. Mary deducted $27,000 of cost recovery on the hotel before her death. The fair market value of the hotel in February is $725,000. (Assume that the alternative valuation date is not used.)"
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Beta of common stock = "1.7" Treasury bill rate = 4% Market risk premium = 7.0% Yield to maturity on long-term debt = 7% Book value of equity = $390 million Market value of equity = $780 million Long-term debt outstanding = $780 million Corporate tax rate = 21%
What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Answer:
10.72%
Explanation:
Firstly, we need to calculate cost of equity using capital pricing model (CAPM):
Cost of equity = Risk-free rate + Beta x Market risk premium
= 4% + 1.7 x 7% = 15.9%
Note: Treasury bill rate is used as a proxy for risk-free rate in this case.
Then, we will calculate weighted average cost of capital (WACC) as below:
Weighted average cost of capital = Debt weight in capital structure x Pre-tax cost of debt x (1 - tax rate) + Equity weight in capital structure x Cost of equity
= [780/(780 + 780)] x 7% x (1 - 21%) + [780/(780 + 780)] x 15.9%
= 10.72%
Note: Yield to maturity on long-term debt is used as a proxy for pre-tax cost of debt in this case. Weights used in WACC calculation have to be based on market value.
So, the company WACC is 10.72%.
Payback period computation; even cash flows LO P1 Compute the payback period for each of these two separate investments:
a. A new operating system for an existing machine is expected to cost $260,000 and have a useful life of six years. The system yields an incremental after-tax income of $75,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000.
b. A machine costs $210,000, has a $14,000 salvage value, is expected to last eleven years, and will generate an after-tax income of $41,000 per year after straight-line depreciation.
Answer:
Please see attachment
Explanation:
Please see attachment
You know that the return of Sandhill Cyclicals common shares is 1.6 times as sensitive to macroeconomic information as the return of the market. If the risk-free rate of return is 4.10 percent and market risk premium is 5.71 percent, what is Sandhill Cyclicals’ cost of common equity capital?
Answer
The answer and procedures of the exercise are attached in the image below.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
The 2008 credit crunch occurred when banks reduced lending in response toa the loss of asset value for mortgage-backed securities and mortgage loans.b having too little capital to satisfy capital requirements.c an excess of bank capital.d an increase in the required reserve ratio.
Answer:
The correct answer is option a.
Explanation:
In 2007-2009 financial crisis occurred globally which originated in the US. It was triggered in the US because of the collapse of the housing bubble which caused the price of houses to decline.
The housing bubble was backed by mortgages securities. The percentage of lower quality or subprime mortgages increase around 2004-06.
This reduction in the asset value for mortgage securities caused the banks to reduce their lending as the debts on consumers and businesses were increasing.
This caused the credit crunch in the year 2008.
the origin of life broadly conforms to the Oparin-Haldane model, then early in life's origin there was not a distinction between genotype and phenotype. Describe at least two features that distinguish genotype from phenotype (2). At what stage in the evolution of life would it have been possible to make this distinction (1)? Explain your answer. (2)
Answer:
Phenotypes are the visible characteristics of an organism. In the case of humans, phenotypes are determined by things like eye color, hair color, hair texture, or skin color.
Genotype is the total genes, or genome, of an organism, whether they are expressed or not, visibile or not.
For example, a brown-eyed person can have both a dominant gene encoding for brown eye color, and a recessive gene encoding for blue eye color. Phenotypically, this person has brown eyes, but his genotype includes both brown eyes genes and blue eyes genes.
Phenotype could have been distinguished from genotype when the firs multicellular organisms emerged.
Hsu Company issued $100,000 of 8% bonds on January 1, 20Y8, at face value. The bonds pay interest semiannually on June 30 and December 31, 20Y8. The total interest expense related to these bonds for the year ended December 31, 20Y8, is
Answer:
$8,000
Explanation:
The computation of the total interest expense is shown below:
On June 30
= Face value × rate of interest × number of months ÷ (total number of months in a year)
= $100,000 × 8% × (6 months ÷ 12 months)
= $4,000
The 6 months is calculated from January 1 to June 30
On December 31
= Face value × rate of interest × number of months ÷ (total number of months in a year)
= $100,000 × 8% × (6 months ÷ 12 months)
= $4,000
The 6 months is calculated from June 30 to December 31
So, the total interest expense would be
= $4,000 + $4,000
= $8,000
Final answer:
The total interest expense related to Hsu Company's $100,000 of 8% bonds for the year ended December 31, 20Y8, is $8,000, as they pay semiannual interest payments of $4,000 each.
Explanation:
The question asks for the calculation of the total interest expense related to the bonds issued by Hsu Company for the year ended December 31, 20Y8. Since these are 8% bonds issued at face value, the interest expense is straightforward to calculate. The annual interest rate is 8%, but since these bonds pay interest semiannually, each payment will be 4% of the face value. Therefore, the interest payments for each period (June 30 and December 31) will be $100,000 imes 4% = $4,000. Since there are two payments per year, the total interest expense for the year is $4,000 imes 2 = $8,000.
Billy's is currently an all equity firm that has 115000 shares of stock outstanding at a market price of $36.22 a share. The firm has decided to leverage its operations by issuing $100000 of debt at an interest rate of 9.6 percent. This new debt will be used to repurchase shares of the outstanding stock. The restructuring is expected to increase the earnings per share. What is the minimum level of earnings before interest and taxes that the firm is expecting? Ignore taxes.
Answer:
So, Break-even EBIT is $265,643.45
Explanation:
Let Break-even EBIT be $x
Number of shares outstanding = 150,000
Current Price of share = $39.36
EPS = EBIT / Number of shares outstanding
EPS = $x / 150,000
Levered Plan:
Value of Debt = $100,000
Interest Rate = 9.6%
Interest Expense = 9.6% *$100,000 = $9600
Number of shares repurchased = $100,000 / $39.36
Number of shares repurchased = $2,541
Number of shares outstanding = 150,000 - 2,541
Number of shares outstanding = 147,459
EPS = (EBIT - Interest Expense) / Number of shares outstanding
EPS = ($x - $9600) / 147,459
EPS under All equity plan = EPS under levered plan
$x / 150,000 = ($x - $9600) / 147,459
147,459 * $x = 150,000 * $x - $675,000,000
$675,000,000 = 2,541 * $x
$x = $265,643.45
So, Break-even EBIT is $265,643.45
Marina Corp. applied overhead to jobs during the period as follows: Jobs finished and sold $ 46,000 Jobs started and in process 54,000 Jobs finished and unsold 100,000 The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account. The entry to dispose of this remaining factory overhead balance is:
A) No entry is needed.
B) Debit Factory Overhead $5,600; credit Cost of Goods Sold ss,600.
C) Debit Factory Overhead $5,600; credit Work in Process Inventory $5,600.
D) Debit Work in Process Inventory $5,600; credit Factory Overhead $5,600.
E) Debit Cost of Goods Sold $5,600; credit Factory Overhead $5,600
Answer:
Explanation:
The journal entry is shown below:
Factory Overhead A/c Dr $5,600
To Cost of Goods Sold A/c Dr $5,600
(Being the over applied overhead balance is recorded)
For recording the remaining balance we debited the factory overhead account and credited the cost of goods sold account.
All other information which is given is not relevant. Hence, ignored it
Emily purchased a building to store inventory for her business. The purchase price was $760,000. Emily also paid legal fees of $300 to acquire the building.
In March, Emily incurred $2,000 to repair minor leaks in the roof (from storm damage earlier in the month) and $5,000 to make the interior suitable for her finished goods.
What is Emily’s cost basis in the new building?
Answer:
Please see attachment
Explanation:
Please see attachment
Acme Manufacturing makes their preliminary economic studies using a before-tax MARR of 17%.More detailed studies are performed on an after-tax basis. If their effective tax rate is 22%, what is the after-tax MARR?
Answer:
The after-tax MARR is 13.26%
Explanation:
After - tax MARR = Before tax MARR*(1 - tax rate)
= 17%*(1 - 22%)
= 13.26%
Therefore, The after-tax MARR is 13.26%
Suppose Columbia Sportswear Company had accounts receivable of $206,090,000 at the beginning of a recent year, and $267,085,000 at year-end. Sales revenue was $1,093,860,000 for the year. What is the amount of cash receipts from customers?
Answer:
The amount of cash receipts from customers: $1,032,865,000
Explanation:
Assuming that all Sales revenue was on credit sales.
In Suppose Columbia Sportswear, Sales revenue was $1,093,860,000, accounts receivable in the year increased $1,093,860,000. Basing on formula:
Accounts receivable at year-end = Accounts receivable at the beginning of the year + Accounts receivable increasing in the year - Accounts receivable decreasing in the year
Thefore:
Accounts receivable decreasing in the year = Accounts receivable at the beginning of the year + Accounts receivable increasing in the year - Accounts receivable at year-end = $206,090,000 + $1,093,860,000 - $267,085,000 = $1,032,865,000
This is also the amount of cash receipts from customers.
Conversion privileges, offered by many mutual fund families, refer to the ability to:_________________.
A. automatically convert dividends and capital gains into more shares in the fund.
B. switch from one fund to another within the same family, often without paying a commission.
C. redeem mutual fund shares for cash.
D. switch from one fund to another in the same family without incurring any tax liability.
Answer:
The correct answer is letter "B": switch from one fund to another within the same family, often without paying a commission.
Explanation:
Conversion privileges or exchange privileges are opportunities for mutual fund investors to change from one fund to another fund in the same family. Most fund companies will charge investors a reasonably low fee or in some cases, there are no charges at all.
Golden Enterprises started the year with the following: Assets $111,000; Liabilities $39,000;Common Stock $69,000; Retained Earnings $3,000.During the year, the company earned revenue of $5,900, all of which was received in cash, and incurred expenses of $3,450, all of which were unpaid as of the end of the year. In addition, the company paid dividends of $1,900 to owners. Assume no other activities occurred during the year.What was the amount of net income for the year?A. $2,450B. $5,900C. $3,450D. $1,900
Answer:
Option A.
Explanation:
Given information:
Assets = $111,000
Liabilities = $39,000
Common Stock = $69,000
Retained Earnings = $3,000
Revenue = $5,900
Incurred expenses = $3,450
Dividends = $1,900
We need to find the amount of net income for the year.
Formula for net income is
Net income = Total revenue - Total expenses
= $5,900 - $3,450
= $2,450
The amount of Golden's net income for the year is $2,450.
Therefore, the correct option is A.
Answer: The answer is C $3,450
Explanation:
Journal entry
Dr Cr
$ $
Asset. 111,000
Common Stock. 69,000
Revenue 5,000
Less: Expenses (3,450)
----------------
1,550
Retained earning 3,000
Liabilities 39,000
Dividend 1,900
Balance c/d 3,450
------------------ ---------------------
114,450 114,450
--------------------- -------------------------
Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $2,700 dress. Lisa returns to Virginia a few weeks later to pick up the dress and drive it back to her Maryland residence where she will use the property. Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 6 percent, what is Roxy's sales tax liability?
A. $0.
B. $135 to Virginia.
C. $135 sales tax to Virginia and $27 use tax to Maryland.
D. $162 to Maryland.
E. $135 sales tax to Virginia and $27 use tax to Maryland is Incorrect
Answer:
B. $135 to Virginia
Explanation:
The computation of the Roxy tax liability is shown below:
Roxy tax liability = Purchase value of tax rate × Virginia's sales tax rate
= $2,700 × 5%
= $135
The tax is paid by the individual and not the company. So, so company owes only sales tax
All other information which is given is not relevant. Hence, ignored it
In our aggregate expenditure model we assume that:
O individual firms’ prices are flexible but the price level is fixed.
O both individual firms’ prices and the price level are flexible.
O both individual firms’ prices and the price level are fixed.
O individual firms’ prices are fixed but the price level is flexible
Answer:
The correct answer is regarding the model, is that an individual firms prices are flexible but the level of the price is fixed.
Explanation:
The aggregate expenditure model is the model in which the sum or total of all the expenditures are undertaken in the economy with the factors during the particular time period.
The equation is:
AE = C (Consumption) + I (Investment) + G (Government) + NX (Net Exports)
In this model, it is assumed that the prices of the individual firm are flexible whereas the price level is fixed.
In our aggregate expenditure model, we assume that individual firms' prices are flexible but the price level is fixed. The correct option is O individual firms’ prices are flexible but the price level is fixed.
Focus on Total Spending: The aggregate expenditure model analyzes fluctuations in economic activity by focusing on the total amount of spending in the economy.
Fixed Price Level: It assumes that the overall price level in the economy is relatively stable or fixed in the short run.
Changes in Real Output: With a fixed price level, changes in nominal spending primarily lead to changes in real output rather than changes in the price level.
Flexibility of Individual Firm Prices: Despite the fixed price level assumption, individual firms can adjust their prices in response to changes in demand for their specific goods or services.
Relative Price Adjustments: This flexibility allows for relative price adjustments, aiding in market clearing for individual goods.
Limited Impact on Aggregate Price Level: Although individual firms can adjust prices, the aggregate price level is not significantly affected in the short run due to nominal rigidities and the assumption of a fixed price level. Therefore, the correct option is O individual firms’ prices are flexible but the price level is fixed.
Sheffield Corp. is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock. Feb. 1 Issued 51,500 shares for cash at $54 per share. July 1 Issued 67,000 shares for cash at $58 per share. Journalize the transactions.
Final answer:
To journalize the transactions related to Sheffield Corp.'s preferred stock, you need to record the issuance of shares for cash at different times and prices. Here are the journal entries for the given events:
Explanation:
To journalize the transactions related to Sheffield Corp.'s preferred stock, we need to record the issuance of shares for cash at different times and prices. Here are the journal entries for the given events:
February 1:
Debit: Cash ($54 x 51,500 shares)
Credit: Preferred Stock ($50 x 51,500 shares)
Credit: Additional Paid-in Capital on Preferred Stock (Difference)
July 1:
Debit: Cash ($58 x 67,000 shares)
Credit: Preferred Stock ($50 x 67,000 shares)
Credit: Additional Paid-in Capital on Preferred Stock (Difference)
Expected purchases for June and July are $ 78 comma 000 and $ 92 comma 000, respectively. Purchases for May were $ 59 comma 000. All purchases are paid 40% in the month of purchase and 60% the following month. At what amount are June payments for purchases budgeted?
Answer:
$66,200
Explanation:
Given,
Purchases in May = $59,000
Purchases in June = $78,000
Purchases in July = $92,000
All purchases are paid 40% in the month of purchase and 60% the following month.
Therefore,
Amount paid in June = 60% purchases in May + 40% Purchases in June
= 60% × $59000 + 40% × $78000
= $35000 + $31200
= $66,200
Electric, Inc. was incorporated on January 1, 2016. Electric issued 4,000 shares of common stock and 1,200 shares of preferred stock on that date. The preferred stock is cumulative, $100 par, with an 12% dividend rate. Electric has not paid any dividends yet. In 2019, Electric had its first profitable year, and on November 1, 2019, Electric declared a total dividend of $63,000. What is the total amount that will be paid to preferred shareholders?
Answer:
$57,600
Explanation:
The computation of the total amount paid to preferred shareholders are shown below:
= Number of shares for preferred stock × par value × dividend rate × number of years
= 1,200 shares × $100 × 12% × 4 years
= $57,600
In case of cumulative, the number of years would be four years for dividend paid
All other information which is given is not relevant. Hence, ignored it
Monsanto just came out with a new genetically modified seed that it believes will increase crop yields. The seed has been modified to withstand drought, and it kills insects that frequently feed on it. This is important especially because insects have begun developing a tolerance for many of Monsanto's genetically modified seeds already out on the market.
Because these seeds are new to the market, Monsanto wants to engage in a major integrated marketing communications campaign. It knows that it will have to convince farmers about the advantages of its new seeds and invites some of its major customers to its laboratory to see how the seeds are created. The scientists inform the farmers during the visit about how the seeds will increase their crop yields. This is most likely an example of__________.
If Monsanto just came out with a new genetically modified seed that it believes will increase crop yields. Is most likely an example of a sales promotion activity.
What is sales promotion activity?
The goal of sales promotion campaigns is to persuade consumers to buy a good or service. In this instance, Monsanto is trying to convince farmers of the advantages of its new genetically modified seeds by utilizing the laboratory visit as a marketing tool.
The farmers and Monsanto's experts can directly communicate during the lab visit, which allows them to talk about the benefits of the seeds and answer any queries or worries. Using a customized strategy can be a good method to gain credibility, inspire trust, and sway farmers' purchasing decisions.
Therefore this is an example of a sales promotion activity.
An investment project provides cash inflows of $1,175 per year for eight years. a. What is the project payback period if the initial cost is $3,900? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What is the project payback period if the initial cost is $4,950? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the project payback period if the initial cost is $10,400?
Answer:
A. 3.32 years
B. 4.21 years
C. No payback period
Explanation:
The payback period calculates the amount of time it takes the cumulative cash flows to equal the amount invested .
The attached tables, calculates how the pay back periods are calculated.
For the project with an investment of $3900, the payback period = 3 years + 375 / 1175 Years = 3.32 years
For the project with an investment of $4950, the payback period = 4 years +250 / 1175 Years = 4.21 years
For the project with an investment of $10,400, there is no payback.
An increase in the minimum wage:
a. increases both the quantity demanded and the quantity supplied of labor.
b. decreases both the quantity demanded and the quantity supplied of labor.
c. increases the quantity of labor demanded but decreases the quantity of labor supplied.
d. decreases the quantity of labor demanded but increases the quantity of labor supplied.
Answer:
An increase in the minimum wage:
d. decreases the quantity of labor demanded but increases the quantity of labor supplied.
Explanation:
An increase in the minimum wage impact negativly in the demand of labor because each hour it's now more expensive than before, it means that company will looks to reduce their number of headcont due to an increase in each hour of labor existing, all of these just to keep the company cost at the same level.
The increase in the quantity of labor supplied it's favorable because a lot of people will be motivated to look for a job because the company will have to pay better salaries than before, on this escenario more people will go to the market labor looking for a job.
This increase in the labor supply is for those who were not willing to work under the previous salary conditions.
alifornia Surf Clothing Company issues 1,000 shares of $1 par value common stock at $32 per share. Later in the year, the company decides to purchase 100 shares at a cost of $35 per share. Record the purchase of treasury stock.
Answer:
Record the purchase of treasury stock.Treasury Stock $3,500 - CREDIT
Cash $3,500 - DEBIT
Explanation:
If the company purchase the shares and keep it in the company the journal entry it's as detailled, in this case the company keep the shares in the accounting and the shares could be reissued in the future.
The total shares purchases are 100 * $35 = $3,500.
Schedule M–1 of Form 1120 is used to reconcile financial accounting net income with taxable income reported on the corporation’s income tax return as follows: Net income per books + Additions - Subtractions = Taxable income. Classify the following items as additions or subtractions in the Schedule M–1 reconciliation.
A. Life insurance proceeds received upon death of covered executive.
B. Tax depreciation in excess of book depreciation.
C. Federal income tax per books.
D. Capital loss in excess of capital gain.
E. Charitable contributions in excess of taxable income limitation.
F. Premiums paid on life insurance policies covering executives (corporation is beneficiary).
G. Domestic production activities deduction.
Answer:
Explanation:
The following items were deducted and added in the Schedule M–1 reconciliation
Additions:
C. Federal income tax per books.
D. Capital loss in excess of capital gain.
F. Premiums paid on life insurance policies covering executives (corporation is beneficiary).
Subtractions:
A. Life insurance proceeds received upon death of covered executive.
B. Tax depreciation in excess of book depreciation.
E. Charitable contributions in excess of taxable income limitation.
G. Domestic production activities deduction.
Final answer:
Schedule M-1 of Form 1120 is used to reconcile financial accounting net income with taxable income reported on the corporation's income tax return.
Explanation:
Schedule M-1 of Form 1120 is a tax form used by corporations in the United States to reconcile the differences between financial accounting income and taxable income. It provides a detailed breakdown of adjustments made to align these two income figures. The given items can be classified as follows:
Addition: Life insurance proceeds received upon death of covered executive.Subtraction: Tax depreciation in excess of book depreciation.Addition: Federal income tax per books.Addition: Charitable contributions in excess of taxable income limitation.Subtraction: Capital loss in excess of capital gain.Addition: Premiums paid on life insurance policies covering executives (corporation is beneficiary).Addition: Domestic production activities deduction.a. Paid $40,000 cash to replace a compressor on a refrigeration system that extends its useful life by four years.b. Paid $200 cash per truck for the cost of their annual tune-ups.c. Paid $175 for the monthly cost of replacement filters on an air-conditioning system.d. Completed an addition to an office building for $225,000 cash.1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record transactions a and d.
Transactions (a) and (d) are capital expenditures while (b) and (c) are revenue expenditures. The journal entries for transactions (a) and (d) deduct the cash while crediting the respective equipment and building accounts.
Explanation:The transactions mentioned are classified as either capital expenditure or revenue expenditure.
Transaction (a) relates to the replacement of a major component of a refrigeration system which extends its useful life by four years; thus it is a capital expenditure.
Transaction (b) is a regular maintenance cost, therefore it is a revenue expenditure.
Transaction (c), involving the replacement filters of an air-conditioning system, is also a revenue expenditure as it pertains to a regular operational expense.
Transaction (d) is a capital expenditure because it results in an improvement to an office building.
The journal entries to record transactions (a) and (d) will be:
Journal Entry for Transaction (a):https://brainly.com/question/33066738
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When a firm has international operations, choosing the most appropriate structure depends upon the extent of international expansion, the type of strategy, and the degree of market diversity. True False
Answer:
False.
Explanation:
In deciding which structure is most appropriate for a company with international operations to adopt, some factors must be considered, namely: The extent of international expansion, whether the strategy used by the company will be global, transnational or multi-domestic, and the degree of product diversity, which directly influences the decision of which structure will suit the effective management of the organization's existing product chain.
Walters manufactures a specialty food product that can currently be sold for $22.90 per unit and has 20,900 units on hand. Alternatively, it can be further processed at a cost of $12,900 and converted into 12,900 units of Deluxe and 6,900 units of Super. The selling price of Deluxe and Super are $30.90 and $20.90, respectively. The incremental net income of processing further would be:
Answer:
Increamental net income = $529,920-$478.610 = $51310
Explanation:
Total sales revenue before the further processing = $22.9 * 20,900 =
$478.610
Total net sales revenue after the further processing = ($30.9 *12900)+($20,9*6900)-$12,900 = $529,920
Increamental net income = $529,920-$478.610 = $51310
Which of the following statements are consistent with how inflation affects the three functions of money? Check all that apply.
a. As a medium of exchange, money will be less in demand as prices rise because more money will be required to function from day to day.
b. As a unit of account, money might become less useful as rising prices make comparisons of data from one point in time to another more difficult
c. Money is more useful as a store of value when inflation makes each dollar worth less.
d. As a medium of exchange, money will be more in demand as prices rise because more money will be required to function from day to day
e. Money is less useful as a store of value when inflation makes each dollar worth less.
f. As a unit of account, money will remain equally useful, regardless of inflation
Answer:
B,C, D, E
Explanation:
B. Rising prices (inflation) makes comparism of financial data less reliable. This is one of the major drawbacks of historic financial information because such information does not take into account the impact of inflation.
C. Money loses its attributes as a store of value in inflationary period. This is because the nominal value of money increase through an increase in Consumer Price Index (CPI) while the real value of money drops as the unit amount of purchasing power decrease from increase in prices.
D. The demand for money increases in inflationary period as more money chases few goods. This reduces purchasing power of individuals and leads to rise in prices.
E. This has the potential of reducing purchasing power as money loses its value in periods of inflation.
Inflation can increase the demand for money as a medium of exchange, make it less useful as a store of value, and complicate its usage as a unit of account.
Explanation:The effects of inflation on the three functions of money - a medium of exchange, a unit of account, and a store of value - can be understood as follows:
a and d: Money, as a medium of exchange, will be more in demand as prices rise, because more money will be required to function day to day.
b: As a unit of account, money might become less useful during inflation, as rising prices make comparisons of data from different points in time more difficult.
e: Money becomes less useful as a store of value when inflation makes each dollar worth less – not more (c).
f: Although inflation can affect how we view money as a medium of exchange or a store of value, it does not necessarily make money less useful as a unit of account. However, it can make it challenging to compare the value of goods and services over time.
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Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas’s fastest moving inventory item has a demand of 6000 units per year. The cost of each unit is $100.00, and the inventory carrying cost is $10.00 per unit per year. The average ordering cost is $30.00 per order. It takes about 5 days for an order to arrive, and demand for 1 week is 120 units (this is a corporate operation, there are 250 working days per year). a. What is the EOQ? b. What is the average inventory if the EOQ is used? c. What is the optimal number of orders per year? d. What is the optimal number of days in between any two orders? e. What is the annual cost of ordering and holding and holding inventory? f. What is the total annual inventory cost, including cost of the 6,000 units?
Answer:
a. 190 Units
b.95 Units
c. 31.6
d.7.9 Units
e.$1.898
f.$601.898
Explanation:
Please see attachment
The director of the Environmental Protection Agency has been in the news recently for overspending on luxuries for his office, such as a $250,000 bathroom renovation. A Congressional committee investigation is instigated. This is an example of ______.
Answer:
Fire alarm oversight
Explanation:
Fire alarm oversight is an oversight which becomes active or in action only when there is evidence or proof of bureaucratic wrongdoing.
In this case, the EPA (Environmental Protection Agency) is in the news for overspending on the luxuries for the office like they spent $250,000 for the renovation of the bathroom. A committee investigates the scenario. Therefore, it is an example of the fire alarm oversight.