Answer:
- For company B: Workers: 131; Supervisor: 14; Line Manager: 2; Senior Manager: 1; COO: 1
- For company C: Workers: 26; Supervisor: 6; Line Manager: 2; Senior Manager: 1; COO: 1
- For combined Company: Workers: 157; Supervisor: 16; Line Manager: 2; Senior Manager: 1; COO: 1
Explanation:
- For company B:
+ Number of workers needed = Number of person-hours needed/ total number of working hour in a year = 250,000/ (240 x 8) = 131 workers.
=> Number of supervisor needed = 14; Number of Line manager needed = 2; Number of Senior needed = 1; Number of COO needed = 1 ( that is 1 upper management level for every 10 lower level).
- For Company C:
+ Number of workers needed = Number of person-hours needed/ total number of working hour in a year = 50,000/ (240 x 8) = 26 workers.
=> Number of supervisor needed: 6; Number of Line manager needed = 1; Number of Senior needed = 1; Number of COO needed = 1 ( that is 1 upper management level for every 5 lower level).
- For the combined firm:
+ Total number of workers: 131+ 26 = 157 workers
=> Number of supervisor needed = 16; Number of Line manager needed = 2; Number of Senior needed = 1; Number of COO needed = 1 ( that is 1 upper management level for every 10 lower level).
A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost?A) plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units B) plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units. C) Plant A, because it is cheaper than Plant B for all volumes D) plant B, because it has the lower variable COM per unit E) Neither Plant A nor Plant B, because (he crossover point is at 10 million units.
Answer:
A) plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units
Explanation:
Please see attachment.
The plant that offers the lowest total cost is plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.
Which plant should be chosen?In order to determine the plant that would be chosen, the total cost of each plant has to be determined.
Total cost = fixed cost + (variable cost x total output)
Total cost of plant A = $4,000,000 + (0.3 x 10 million) = $7million
Total cost of plant B = $3,600,000 + (0.35 X 10 million) = 7.1 million
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A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Salary for sales manager: $30,000; Miscellaneous administrative expenses: $5,000. The total selling expenses on the January selling expense budget will be
Answer: 60000
Explanation:
400,000 • 5% = 10,000+ 30,000= 60000
Answer: $61,250
Explanation:
A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Depreciation on store equipment: $25,000; Rent on administrative building: $30,000; Miscellaneous administrative expenses: $5,000. The total general and administrative expenses on the January general and administrative expense budget will be
a:
Administrative salaries: $1,250
+ Sales commissions: 5% of sales ($400,000.00) =$20,000
+ Advertising: $10,00
+ Rent on administrative building: $30,000
You own a stock which has produced annual returns of 11 percent, 3 percent, 8 percent, and 14 percent over the past four years, respectively. The arithmetic rate of return is _____ percent and the geometric rate of return is _____ percent.A) 8.50; 8.92B) 8.50; 18.92C) 9.00; 8.92D) 9.00; 9.92E) 9.00; 18.92
Answer:
C) 9.00; 8.92
Explanation:
The arithmetic rate of return is given by:
[tex]R_{A} = \frac{11+3+8+14}{4} \\R_{A} = 9.00[/tex]
The geometric rate of return is given by:
[tex]R_{G} = (\sqrt[4]{(1.11*1.03*1.08*1.14)} -1) *100 \%\\R_{G} = (1.0892-1) *100 \%\\R_{G} = 8.92[/tex]
Therefore, the arithmetic rate of return is 9.00 percent and the geometric rate of return is 8.92 percent
The answer is C) 9.00; 8.92.
Consider a hypothetical closed economy in which households spend $0.70 of each additional dollar they earn and save the remaining $0.30. The marginal propensity to consume (MPC) for this economy is , and the spending multiplier for this economy is . Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will _______
Answer:
1. 0.7
2. 3.3
3. -$210
Explanation:
1. The marginal propensity to consume refers to the amount that is spent on consumption for each of the extra income earned. Therefore, the marginal propensity to consume (MPC) is equal to 0.7.
2. The multiplier is calculated as follows:
Multiplier = 1 ÷ (1 - MPC)
= 1 ÷ (1 - 0.7)
= 3.33
3. A reduction in the government purchases by $300 billion then this will reduce the income level of the consumers and change the consumption level as follows:
= Change in government purchases × MPC
= $300 billion × 0.7
= -$210
Edinburgh Exports has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%.
Should Edinburgh Co. accept or reject the prject?
A. Accept
B. Reject
On what grounds do you base your accept-reject decision?
A. Division H's project should be accepted, because its return is greater than the risk-based cost of capital for the divison.
B. Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.
Answer:
Part 1. B Reject
Part 2. Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.
Explanation:
Division H's project should be rejected, because its return is less than the risk-based cost of capital for the division.
Edinburgh Co. should reject the project because the expected return, 12%, is less than Division H's cost of capital, 14%. This indicates that the project is unlikely to generate a return above the required rate, meaning it won't bring value to the company.
Explanation:The decision to accept or reject a project should be based on whether the expected return is greater than or less than the cost of capital. In this case, Division H of Edinburgh Co. is considering a project with an expected return of 12%, while its weighted average cost of capital is 14%.
Because the expected return is less than the cost of capital, the project is unlikely to generate return above the required rate, hence it should be rejected. This method of deciding is used in companies to ensure they undertake projects that will bring value. Therefore, the correct answer is option B: the project should be rejected because its return is less than the risk-based cost of capital for the division.
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The yield rate on a one year zero-coupon bond is currently 7% and the yield rate on a 2-year zero coupon bond is currently 8%. The Treasury plans to issue a two year bond with a 9% annual coupon, maturing at $100 par value. Determine the yield to maturity of the two year coupon bond.
Answer:
The Yield to maturity is 7.96%.
Explanation:
The two-year Treasury Bond will generate the cashflow as below:
Year 1: Coupon payment = 9% x 100 = $9
Year 2: Coupon payment + face value repayment = (9% x 100 + $100) = $109
Present value of the two cash flows above is : 9/1.07 + 109/1.08^2 = $101.86
The yield to maturity need to be found is the discounted rate of the two mention-above cash flows which equals the present value of the two cash flows to the present value of $101.86 as calculated above.
=> 9/ (1+YTM) + 109 / (1+YTM)^2 = 101.86 => YTM = 7.96%.
According to _____, people measure outcomes such as pay in terms of their inputs.A. expectancy theoryB. equity theoryC. retributive justice theoryD. progressive justice theoryE. economic theory
Answer:
Letter B is correct. Equity theory.
Explanation:
The equity theory created by J. Stacy Adams refers to the belief that for every effort there must be proportional and equal reward for all.
In an organization, individuals look at their benefits, such as salary, growth opportunities, bonuses, promotions, and other variables, and judge whether they match their competencies and compare with the group.
According to equity theory, individuals measure outcomes such as pay in relation to their inputs, seeking fairness in their relationships.
Explanation:According to equity theory, people measure outcomes such as pay in terms of their inputs. Equity theory, developed by John Stacey Adams in 1963, is based on the principle that individuals seek to achieve fairness in their relationships. When people feel that their ratios of inputs to outcomes are equal to those of referent others, they perceive their situation as fair. Inputs can include effort, loyalty, hard work, commitment, skill, ability, adaptability, flexibility, tolerance, determination, heart and soul, enthusiasm, trust in superiors, support from coworkers and colleagues, and personal sacrifice, whereas outcomes can be pay, recognition, reputation, responsibility, sense of achievement, praise, thanks, stimulation, and sense of advancement/growth.
A $63,000 machine with a 7-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $75,000, with a 5-year class life. The new machine will not increase sales, but will decrease operating costs by $16,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the incremental annual cash flow associated with the project?
The incremental annual cash flow associated with the project is $14,300.
To calculate the incremental annual cash flow associated with the project, we need to consider several factors including the sale of the old machine, the purchase of the new machine, changes in operating costs, and the impact of taxes. Let's break down each component step by step:
1. **Sale of Old Machine:**
- Original cost of old machine: $63,000
- Accumulated depreciation (2 years out of 7-year life): 2/7 * $63,000 = $18,000
- Book value of old machine at sale: $63,000 - $18,000 = $45,000
- Sale price of old machine: $50,000
- Gain on sale of old machine: $50,000 - $45,000 = $5,000
2. **Purchase of New Machine:**
- Cost of new machine: $75,000
3. **Operating Cost Savings:**
- Operating cost savings per year due to new machine: $16,000
4. **Tax Impact:**
- Marginal corporate tax rate: 34%
- Tax impact of gain on sale of old machine: $5,000 * 34% = $1,700
Now, let's calculate the incremental annual cash flow:
[tex]\[ \text{Incremental Cash Flow} = \text{Operating Cost Savings} - \text{Tax Impact on Gain} - \text{Cost of New Machine} \][/tex]
[tex]\[ \text{Incremental Cash Flow} = $16,000 - $1,700 - $75,000 \][/tex]
[tex]\[ \text{Incremental Cash Flow} = $14,300 \][/tex]
Therefore, the incremental annual cash flow associated with the project is $14,300.
The CFO of Twine Enterprises expects sales to increase from $8,000,000 in 2010 to $12,000,000 in 2011. Current assets in 2010 are equal to $5,000,000. Using the percent of sales method, projected current assets for 2011 are equal to A. $7,500,000. B. $7,083,333. C. $5,500,000. D. $9,000,000.
Answer:
$7,500,000
Explanation:
For computing the projected current assets, first we have to determine the percentage of sales which is shown below:
= (2011 sales - 2010 sales) ÷ (2010 sales)
= ($12,000,000 - $8,000,000) ÷ ($8,000,000)
= 50%
Now the current assets would be
= Current assets + current assets × percent of sales
= $5,000,000 + $5,000,000 × 50%
= $5,000,000 + $2,500,000
= $7,500,000
Exercise 11-10 Tamarisk, Inc. was organized on January 1, 2021. During its first year, the corporation issued 2,400 shares of $50 par value preferred stock and 135,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2021, $5,800; 2022, $12,400; and2023, $28,300.Show the allocation of dividends to each class of stuck, assuming the preferred stock dividend is 5% and noncumulative.
Answer:
(1) $5,800; $0
(2) $6,000; $6,400
(3) $6,000; $22,300
Explanation:
Annual preferred dividend:
= Number of shares × par value × preferred stock dividend percent
= 2,400 × $50 × 5%
= $6,000
In 2021:
Allocation to preferred stock = $5,800
Allocation to Common Stock = $0
In 2022:
Allocation to preferred stock = $6,000
Allocation to Common Stock = $12,400 - $6,000
= $6,400
In 2023:
Allocation to preferred stock = $6,000
Allocation to Common Stock = $28,300 - $6,000
= $22,300
A company reported cost of goods sold of $1,760,000 for the year.
During the year, inventory increased from a $92,000 beginning balance to a $140,000 ending balance, and accounts payable increased from a $48,000 beginning balance to a $56,000 ending balance.
How much is the cash paid for merchandise purchased during the year?
a) $1,660,000
b) $1,800,000
c) $1,808,000
d) $1,704,000
Final answer:
The cash paid for merchandise purchased during the year by the company is $1,800,000. This is determined by adding the increase in inventory to the cost of goods sold and then subtracting the increase in accounts payable.
Explanation:
When calculating the cash paid for merchandise purchased during the year, it is important to account for changes in inventory and accounts payable that occurred during the same period. The company reported a cost of goods sold (COGS) of $1,760,000.
The inventory increase indicates that the ending inventory is greater than the beginning inventory; it rose by $48,000 ($140,000 - $92,000). This means the company must have paid cash for additional inventory that is not reflected in COGS. On the other hand, the increase in accounts payable of $8,000 ($56,000 - $48,000) suggests that there is an amount of purchases that have not been paid in cash yet by the end of the year. To adjust COGS to reflect the cash paid for purchases, we need to take these changes into account.
Step-by-step calculation:
Add the inventory increase to COGS: $1,760,000 + $48,000 = $1,808,000.
Subtract the increase in accounts payable from the result: $1,808,000 - $8,000 = $1,800,000.
The correct answer to how much cash was paid for merchandise purchased during the year is $1,800,000.
Jeffrey's preferences are described by U(R.C) = R"C", where R denotes leisure and c denotes consumption. Assume the price of consumption is 1, the wage rate is w, non-labor income is C, and Jeffrey has a total time available (for either work or leisure) equal to R. a. Draw the budget line and write its equation. b. Find the demand function for R' in terms of w, C and R. Hint: imagine you extend the budget line until it crosses the leisure axis. Use the shortcut seen in class to find demands when we have Cobb-Douglas preferences. c. Find the labor supply function, that is, R-R as a function of w, C and R. Is it positively or negatively related to w? Hint: define L' =R-R'. Compute Ollow and check its sign. Assume leisure is defined in hours. What is the value of w that will make Jeffery work eight hours? Express it in terms of C and R. Humans are living longer and longer. If we define R in terms of years of productive life, we can say that is becoming larger. What is the effect of a greater R on optimal leisure and consumption, ceteris paribus? f. Two presidential candidates are proposing alternative policies to increase labor income. Candidate A is proposing a cut in social programs that would decrease C by 20%. Candidate B is proposing a tax cut that would increase w by 20%. Which one would more effective? Explain your answer.
Getting merchandise floor-ready entailsA. distributing and dispatching.B. ticketing and marking.C. vertical supply chain wholesaling.D. intensive cross-docking.E. selective checking.
Answer:
B. ticketing and marking
Explanation:
Floor ready is the term used to refer to the merchandise which is ready to sale and that the merchandise is detailed with every description required.
That means it is ready with the size, quality, and quantity that is required to be marked.
Along with that it is even priced more properly and is already tagged with the label of description and price.
This all labeling and ticketing is basically done in the retail store before it is offered to the customer.
In assessing the competence of a client's internal auditor, an independent auditor most likely would consider the:A. Internal auditor's compliance with professional internal auditing standards.B. Client's policies that limit the internal auditor's access to management salary data.C. Evidence supporting a further reduction in the assessed level of control risk.D. Results of ratio analysis that may identify unusual transactions and events.
Answer:
A. Internal auditor's compliance with professional internal auditing standards.
An independent auditor is likely to consider the internal auditor's compliance with professional internal auditing standards when assessing their competence.
Explanation:When assessing the competence of a client's internal auditor, an independent auditor is most likely to consider the internal auditor's compliance with professional internal auditing standards. This means evaluating whether the internal auditor follows the established guidelines and best practices for audit procedures. The independent auditor will look for evidence that the internal auditor is carrying out their responsibilities correctly and adhering to the required standards.
A service auditor's report on a service center should include a(n) :A. Detailed description of the service center's internal control.B. Statement that the user of the report may assess control risk at the minimum level.C. Indication that no assurance is provided.D. Opinion on the operating effectiveness of the service center's internal control.
Answer:
The answer is letter A.
Explanation:
Detailed description of the service center's internal control.
On January 1, 2017, Doone Corporation acquired 70 percent of the outstanding voting stock of Rockne Company for $672,000 consideration. At the acquisition date, the fair value of the 30 percent noncontrolling interest was $288,000 and Rockne's assets and liabilities had a collective net fair value of $960,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports a net income of $370,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $430,000 in 2017 and $530,000 in 2018. Approximately 40 percent of the inventory purchased during any one year is not used until the following year.a. What is the non-controlling interest's share of Rockne's 2018 income?b. Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers.
Final answer:
The non-controlling interest's share of Rockne's 2018 income is $111,000, calculated as 30% of Rockne's net income. To prepare Doone's 2018 consolidation entries, the intra-entity inventory profits need to be removed by adjusting the inventory values and cost of goods sold.
Explanation:
The student is dealing with an accounting scenario where consolidation and non-controlling interest calculations are involved, typically in an advanced accounting or business degree course.
a. Non-controlling interest's share of Rockne's 2018 income
The non-controlling interest's share is calculated based on the percentage of the company they own. In this case, non-controllers own 30% of Rockne. The formula to calculate their share of the net income would be:
Net income × Non-controlling interest percentage = Non-controlling interest's share
Rockne's net income for 2018 is $370,000, so:
$370,000 × 30% = $111,000
b. Doone's 2018 consolidation entries
To prepare Doone's consolidation entries for the intra-entity inventory transfers, we need to:Determine the inventory sold above cost from Rockne to Doone: $530,000 × 25% markup.Calculate the amount of 2018 inventory still on hand by the end of the year: $530,000 × 40%.Adjust the beginning inventory to remove the markup from 2017's ending inventory that was sold in 2018.To remove the excess markup from 2018's ending inventory, Doone must credit Inventory and debit Cost of Goods Sold (COGS) or an Inventory Profit Elimination account for the markup amount.
In _____, the organization purchases insurance as a means to compensate for any loss.
a. Risk acceptance
b. Risk analysis
c. Risk mitigation
d. Risk management
e. Risk transference
Answer:
The correct answer is letter "E": Risk transference.
Explanation:
Risk transference is a risk management method in which the liability of a potential loss is transferred from one party to another with a contract in between where the coverage terms and limits are specified. A typical is a company buying an insurance policy. There the policyholder is transferring his liabilities to the insurance company.
Open-end mutual funds are the most common type of investment company. Which of the following statements characterize these funds?
Check all that apply.
A. Make automatic reinvestment easy.
B. Allow shareholders to convert shares from one fund to another within the same fund family.
C. Always publicly traded on exchanges.
D. Good choices only if you have lots of capital to invest.
E. Convenient to own but difficult to set up.
Answer:
The answers are letter A and B.
Explanation:
A. Make automatic reinvestment easy, because the capital gains are automatically used to buy more shares.
B. Allow shareholders to convert shares from one fund to another within the same fund family, it is an interesting low rate exchange transaction. It costs $5 to $10 per transaction.
Open-end mutual funds are characterized by making automatic reinvestment easy and allowing shareholders to convert shares within the same fund family. They are not always publicly traded, are not only for those with lots of capital, and are generally both convenient to set up and to own.
Explanation:Open-end mutual funds, the most common type of investment company, have certain distinguishing characteristics. Statements A and B are accurate with regard to these funds. A. Open-end mutual funds typically allow for automatic reinvestment.
This means that any gains or dividends are automatically used to purchase additional shares. B. They also typically allow shareholders to convert shares from one fund to another within the same fund family. However, C, D and E are not necessarily accurate. Contrary to statement C, Open-end funds are not always publicly traded on exchanges. They are transacted directly with the fund company.
Statement D is also not true because these funds are available for all levels of investors, not only those with significant capital to invest. Lastly, statement E is not necessarily true as open-end funds are generally both convenient to own and set up.
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Jacob went to the grocery store to buy breakfast cereal. He picked up a few cereal boxes to look up their ingredients. However, after going through a few boxes, he gave up and picked two different cereal boxes at random. He did not think that collecting information about his options was worth his time. Jacob's decision is an example of _____.a. an affect-based decision
b. an attribute-based decision
c. bounded rationality
d. instrumental rationality.
Answer: The correct answer is "c. bounded rationality".
Explanation: Jacob's decision is an example of bounded rationality, because according to the theory of limited rationality, people make decisions only partially in a rational way because of our cognitive, information and time constraints.
Ovate, Inc., earns $140,000 in book income before tax and is subject to a 35% marginal Federal income tax rate. Ovate records a single temporary' difference. Warranty expenses deducted for book purposes are $8,000 of which only $2,000 are deductible for tax purposes. Determine the amount of Onate's deferred tax asset or liability.
Answer:
Deferred tax asset = $2100
Explanation:
Deferred tax asset will be created since deduction allowable for tax purposes in current year is in less amount, the other $6000 deduction for warranty expenses will be allowable in future years. Hence, it has deferred tax asset of [(8000-2000)x35%] $2100.
The following data is available for Blaine Corporation at December 31, 2018:
Common stock, par $10 (authorized 30,000 shares) $250,000
Treasury Stock (at cost $15 per share) $ 900
Based on the data, how many shares of common stock have been issued?
A. 30,000
B. 25,000
C. 29,940
D. 24,940
Answer:
B. 25,000
Explanation:
Given important information here is common stock, par $10 authorized, 30,000 shares and $250,000 Treasury Stock.
To calculate how many shares of common stock have been issued we have to divide the total price of common stock/par value which is as follows:
Shares issued = 250,000/10
25,000 shares answer
Therefore the correct answer is 25,000 shares .
To determine the number of shares issued, subtract the treasury stock from the common stock and divide by the par value per share.
Explanation:
To determine the number of shares of common stock that have been issued, we need to subtract the Treasury Stock (at cost $15 per share) from the Common Stock listed. The Common Stock represents the total par value of the authorized shares, while the Treasury Stock represents the shares that the company has repurchased. Subtracting the Treasury Stock from the Common Stock, we get:
Common Stock issued = Common Stock - Treasury Stock
Common Stock issued = $250,000 - $900
Common Stock issued = $249,100
Since the par value of each share is $10, we can divide the total Common Stock issued by the par value per share:
Number of shares issued = Common Stock issued / Par value per share
Number of shares issued = $249,100 / $10
Number of shares issued = 24,910 shares
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Which of the following is correct? Use letters in alphabetical order to select options
A Sometimes recessions are close together.
B Recessions have never occurred very close together.
C Spending, income, and production do not fluctuate closely with real GDP.
D Economic fluctuations are easily predicted by competent economists.
Answer:
The correct answer is letter "A": Sometimes recessions are close together.
Explanation:
Recessions are downturn economic periods that are declared after two consecutive quarters with negative results. Recessions are not necessarily long-term periods. They sometimes are two consecutive slowdowns in the overall economy that last six months that later are followed by an uptrend. In some other cases, it takes years until there is a sign of recovery. For instance, in the U.S. during the '70s and '80s, there were two consecutive recession periods.
Which of the following is an example of expansionary monetary policy?
(A) The president signing an executive order to raise the minimum wage of government employees.
(B) The Fed increasing the money supply to push interest rates lower.
(C) The Fed raising the discount rate for member banks.
(D) Congress passing a new government stimulus package.
Answer:
The correct answer is ( b)
Explanation:
Expansionary monetary policy is the point at which fed utilises its resources to decrease or increase the money supply. Fed usually increases the money supply to lower the interest rate. Expansionary fiscal policy is applied to improve the economic situation of a country as it increases GDP and reduces the interest rate. Monetary policy is an important tool to monitor and control the interest rate of a country.
The Fed increasing the money supply to push interest rates lower is an example of expansionary monetary policy. This method encourages spending and can stimulate the economy.
Explanation:The correct answer to the question is: (B) The Fed increasing the money supply to push interest rates lower. This action is an example of expansionary monetary policy. In this case, the Federal Reserve (the "Fed") increases the amount of money in the economy aiming to encourage consumer and business spending. Lower interest rates make it cheaper to borrow money, which can encourage spending and stimulate the economy. Options A, C and D are not examples of monetary policy as they do not involve actions by the central bank to manage the economy's money supply.
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Palmer Products has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of $1,000 and a current price of $1,295.00. The bonds will mature in 11 years. What is the yield to maturity on the bonds?
a. 10.09%
b. 7.50%
c. 4.53%
d. 3.90%
e. 2.54%
Answer:
4.53%
Explanation:
You can solve this using a financial calculator with the following inputs;
Maturity of the bond; N = 11
Face value of the bond = 1,000
Current price of the bond ; PV = -1,295
Annual coupon payment ; PMT = coupon rate * face value
PMT = 8% *1000 = 80
Next, use the above inputs to find the Yield to maturity(YTM) of the bond by computing I/Y;
CPT I/Y = 4.53%
Therefore, YTM = 4.53%
Determine the maximum annual benefis payable to a participant from a defined benefit plan in the following independent situations:a. Frank, age 66, has been a partiipant for 17 years, and his highest average compensation for 3 years is $127,300.b. Ellen, age 65, has bee a partiipant for 9 years (11 years of service), and her highest average compensation for 3 years is $102,600.
Answer:
a.The maximum annual benefits for Frank is $7500.
b. The maximum annual benefits for Ellen is $11400.
Explanation:
a. The first question requires us to determine the maximum annual benefits payable to a participant from a defined benefit plan. Since we are given that Frank, age 66, has been a participant for 17 years, and his highest average compensation for 3 years is $127,300. We can simply calculate the annual benefit by dividing the highest average compensation for 3 years is $127,300 by the 17 years. Which is 27300/17= 7500 .Therefore the maximum annual benefits for Frank is $7500.
b. The second question requires us to determine the maximum annual benefits payable to a participant from a defined benefit plan .Since we are given the that Ellen, age 65, has been a participant for 9 years (11 years of service), and her highest average compensation for 3 years is $102,600 .We can simply calculate the annual benefit by dividing highest average compensation for 3 years which is $102,600 by 9 years. Which is annual benefit= 102600/9= $11400 .Therefore the maximum annual benefits for Ellen is $11400.
On September 1, year 1, Jackson borrowed $400,000 to refinance the original mortgage on her principal residence. Jackson paid 2 points to reduce her interest rate from 7.5 percent to 7 percent. The loan is for a 30-year period. How much can Mary deduct in year 1 for her points paid?
Answer:
$88.88 or $89 (Approx)
Explanation:
Each point is equal to the 1 percent so, 2 points is equal to the 2%.
Amount of points paid = Borrowed amount × Points percentage
= $400,000 × 2%
= $8,000
Total number of months = Year × Months in a year
= 30 × 12
= 360
Number of months in the deduction year = September to December
= 4
Amount of deduction:
= (Amount of points paid ÷ Total number of months) × Number of months in the deduction year
= ($8,000 ÷ 360) × 4
= $32,000 ÷ 360
= $88.88 or $89 (Approx)
A company manufactures mountain bikes. The research department produced the marginal cost function C'(x)=700-(x/3) where 0 is less than or equal to x which is less than or equal to 900. C'(x) is in dollars and x is the number of bikes produced per month. Compute the increase in cost going from a production level of 300 bikes per month to 900 bikes per month. Set up a definite integral and evaluate it.
The increase in cost going from a production level of 300 bikes per month to 900 bikes per month is $315,900.
Explanation:To compute the increase in cost going from a production level of 300 bikes per month to 900 bikes per month, we need to find the total cost for each production level and then subtract the total costs. First, we integrate the marginal cost function C'(x) to get the total cost function C(x). The integral of 700-(x/3) with respect to x is 700x - (x^2)/6. Next, we evaluate the total cost at x=300 and x=900 to find the increase in cost. Plugging in these values into the total cost function, we get C(300) = 63000 and C(900) = 378900. The increase in cost is C(900) - C(300) = 378900 - 63000 = 315900 dollars.
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Consider an overlapping generation set up with pay-as-you-go social security system in a hypothetical economy. There are 100 old retirees and 103 young workers at the current period. Old retirees earned $1,000 each when they were young. Young workers now earn $1,040 each. Suppose that the population growth is constant and there is a fixed payroll tax of 15%, which is used to finance the pay-as-you-go social security system. (a) what is the population growth rate, n? (b) How much is the total contribution of young workers to the social security system in the current period? (c) How much each retiree can receive from the social security system? (d) How much was the contribution of each old retiree when he or she was young? (e) What is the implicit return on the social security system?
Answer:
a) 3%
b) the new workers contribute 16,068 dollars
c)$160.68 each
d) the old workers contribute 15,000 when they made his contribution
e) rate of return 7.12%
Explanation:
growth rate: the increase in the workforce:
103 new workers / 100 retired - 1 = 0.03 = 3%
103 workers x 1,040 each x 15% = 16,068
assuming no other employee:
$16,068 pension fund / 100 retired persons = 160.68 dollars each
100 workers x 1,000 each x 15% = 15,000
e) the old retire contribute:
1,000 x 15% = 150
they receive 160.68
rate of return:
160.68 / 150 - 1 = 0.0712
The following accounts and balances are taken from Moore Company's adjusted trial balance:
Accounts Payable $8,000
Accounts Receivable 3,400
Accumulated Depreciation 1,400
Depreciation Expense 1,800
Dividends 2,800
Insurance Expense 2,300
Interest Revenue 1,240
Prepaid Insurance 2,220
Retained Earnings 10,600
Salary Expense 23,100
Service Revenue 35,800
Required :
What is the ending balance in Retained Earnings after the closing entries are completed?
Answer:
Retained earnings = Beginning period retained earnings +Net income - Cash dividends - Stock dividends.
We need to find the net income and in order to do that we need to identify all the revenues and expenses.
Interest Revenue= 1,240
Service Revenue = 35,800
Total revenue = 35,800 +1,240 = 37,040
Now we need to find all the expenses
Depreciation expense= 1800
Insurance expense= 2,300
Salary expense = 23,100
Total expense= 1,800 + 2,300 + 23,100= 27,200
Net income = 37,040 -27,200= 9,840
Now we will put all these values in our formula to find the ending balance in retained earnings.
Beginning period retained earnings = 10,600
Net income = 9,840
Cash dividends = 2,800
Stock dividends = 0
Ending retained earning balance = 10,600+ 9,840 -2,800= 17,640
Explanation:
Say that the average worker in the U.S. economy is eight times as productive as an average worker in Mexico. If the productivity of U.S. workers grows at 2% for 25 years and the productivity of Mexico’s workers grows at 6% for 25 years, which country will have higher worker productivity at that point?
Answer:
U.S. workers will have higher worker productivity at that point.
Explanation:
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