Answer:
a. 14100 units
Explanation:
Total equivalent units = beginning work in process + completed units + ending work in process
= (2/3×2,400) + (14000 - 2400) + (1/2×1800)
= 1600 + 11600 + 900
= 14100 units
The equivalent units of production for department W, calculated via the FIFO method, sums up to 16500 units. This includes the equivalent units from partially completed beginning and ending inventory, and fully completed transferred units.
Explanation:To determine the equivalent units of production for department W, we use the FIFO method (First-In, First-Out). This method considers the work done on beginning inventory before the current period while calculating equivalent units.
First, calculate the equivalent units for beginning inventory. Since these units were one third completed, their equivalent unit is 2400*(1-1/3) = 1600 units.14000 units were transferred from Department W to Department X, so these are fully completed units and constitutes equivalent units.Finally, 1800 units were half completed at the end of the period, thus their contribution to the equivalent units is 1800*1/2 = 900 units.Adding these components up provides the total number of equivalent units for department W which is 1600 (beginning inventory) + 14000 (transferred) + 900 (ending inventory) = 16500 units.
There appears to be a mistake in the options provided, as none of them match the computed value.
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Economists often are interested in percentage change from one period to the next. The percentage rate of change of gross domestic product (GDP) is an important macroeconomic variable. If in 2010 GDP was $11,150 billion dollars, and GDP increased to $11 comma 78011,780 million in 2011, what is the growth rate of the U.S. economy in 2011?
Answer:
The growth rate of the U.S economy in 2011 was 5.65%
Explanation:
This is a simple calculation
We use this formula to calculate percent changes from one period to another:
% change = [tex]\frac{New Value - Old Vaue}{Old Value} * 100[/tex]
We have that the GDP for 2010 was $11,150 billion and the GDP in 2011 was $11,780 billions we then apply the formula:
% change = [tex]\frac{11,780 - 11,150}{11,150} * 100[/tex]
% change = [tex]\frac{630}{11,150} = 0.056 * 100 = 5.65%[/tex]
This means that the growth rate of the U.S economy in 2011 was 5.65%
To maximize their profits and defend those profits from competitors, monopolistically competitive firms must
A. lobby government to erect barriers to entry in their industries.
B. achieve economies of scale.
C. limit foreign competition in their markets by encouraging the government to impose tariffs and other trade restrictions.
D. differentiate their products.
Answer:
The correct answer is D. differentiate their products.
Explanation:
Product differentiation is a competitive strategy that aims at the consumer perceiving differently the product or service offered by a company, with respect to those of the competition.
Product differentiation can be based mainly on various attributes such as quality, color, size, after-sales service, specialized attention, location, brand recognition or luxury. But any attribute makes perceive a product or service differently is considered product differentiation.
It should be noted that the differentiation also has a subjective element since consumers can perceive that a certain brand is different from another based not on the comparison of objective characteristics but on the idea that they have made of the company and its image.
State whether the following statement is true. "Accounting relies on inexact or approximate measures because many accounts in financial statements are dependent on judgment about future events and on an assessment of management intent."
Final answer:
The statement in question is true as accounting does involve inexact measures due to the need for judgment on future events and management intentions. Financial accounting integrates both objective measures and subjective estimations to represent a business's economic reality.
Explanation:
The statement, "Accounting relies on inexact or approximate measures because many accounts in financial statements are dependent on judgment about future events and on an assessment of management intent," is true. Accounting measures are not exact because they must account for uncertain future events and management's intentions. For instance, the depreciation of assets involves estimation over the useful life of the asset and accounting profit is based on revenues and costs confined to a specific period, like a fiscal year or quarter. Furthermore, accountants may not be able to pinpoint the profitability due to a singular management decision if external factors are also at play, emphasizing the subjective nature of some accounting measures.
Additionally, while entrepreneurs and investors rely on accounting as a guide, it is just one tool among many. Accounting rules, much like arithmetic, provide a conceptual framework within which business decisions can be evaluated. These rules are essential for communicating economic realities for business operations, taxation, and investment analysis. However, errors and biases can affect the accuracy of these records, reiterating the inexact nature of accounting.
Therefore, while accounting provides a standardized approach to financial measurement, it necessarily includes judgment and estimation regarding future events and management's subjective intentions, reflecting a blend between objective data and subjective interpretation.
Which of the following would be considered a suspicious purchasing behavior? A. A customer who purchases a high-risk product for the first time. B. A customer with a commercial account who makes repeated purchases over several years of a high-risk product. C. A customer who reads all the labels for similar items before determining which product to purchase. D. A customer who refuses similar products that are more effective or less expensive for no apparent reason.
Answer: " D. A customer who refuses similar products that are more effective or less expensive for no apparent reason. " would be considered a suspicious purchasing behavior.
Explanation: because it is assumed that a customer always seeks its greatest benefit and rejecting equal, more effective products at a lower cost without an obvious reason would be rejecting the possibility of having greater satisfaction at a lower cost.
A customer who refuses similar products that are more effective or less expensive for no apparent reason would be considered a suspicious purchasing behavior.
Explanation:A suspicious purchasing behavior is one that raises concerns and may indicate fraudulent activity. In this case, option D, a customer who refuses similar products that are more effective or less expensive for no apparent reason, would be considered a suspicious purchasing behavior. This behavior suggests that the customer may have ulterior motives or be involved in illicit activities. It is important for businesses to monitor and investigate such behaviors to protect themselves from potential risks.
Suppose Dee's just acquired the assets of Flo's Flowers. The book value of Flo's Flowers assets was $68,000 but Dee's paid a total of $75,000. The additional $7,000 paid by Dee's will be recorded on Dee's balance sheet as:- accounts payable.- other current assets.- goodwill.- property, plant, and equipment.
Answer:
The correct answer is goodwill
Explanation:
The term Goodwill refers to an asset, categorized as intangible, it is associated with the purchase of one company by another; when the purchase price is greater than the sum of the fair value of all assets purchased in the acquisition and the liabilities assumed in the process.
Some examples of goodwill are patents and a company´s brand name
The accounting and tax departments are the responsibility of the _____. a. inventory manager b. controller c. vice president of finance d. director of capital budgeting e. treasurer
Answer: Controller
Explanation: Controller refer to the accounting officer of the company whose job is to analyze and interpret the transactions related to accounting and fiance.
The duties of controller include conducting internal audit, updating financial statements, filing tax applications on time etc.
Thus, from the above we can conclude that the correct option is B.
The You Look Marvelous! cosmetic company is considering building a new shampoo factory. Its accountants and board of directors meet and decide that it is not a good idea to build the factory. If interest rates fall after the meeting
a.the present value of the factory rises. It’s more likely the company will build the factory.
b.the present value of the factory rises. It’s less likely the company will build the factory.
c.the present value of the factory falls. It’s more likely the company will build the factory.
d.the present value of the factory falls. It’s less likely the company will build the factory.
Answer:
A
Explanation:
The present value of cash inflows or of the factory project depends inversely on the interest rates; if interest rates fall, present value will rise. The formula attached shows the mathematical relationship but intuitively if the interest rate falls then the cost of money over the time decreases, then when you convert cash inflows into monetary units of today, you will discount less and net cash inflows will rise .In this case, cash inflows of the factory, converted into monetary units of today, will increase and the company will perceive better earnings if they decide to build the shampoo factory. Because of that it is more likely that the company will build the factory.
Portia is meeting with her subordinates to determine which workers from her department need training in order to handle production increases expected during the next nine months. Portia is involved inA. vision development.
B. operational planning.
C. controlling.
D. tactical planning.
E. developing an MBO.
Answer:
The correct answer is b) operational planning.
Explanation:
Operational planning OP (also known as a work planing) is the method of preparing strategic objectives to achieve the goals. It describes detailly the steps and conditions that will be put into operation during a specific period, usually the fiscal year of a project or business.
Which area does not cost a company more money for sustainability?
A.update equipment
B.advertise environmental efforts
C.change work processes
D.change sourcing for raw materials
Answer:
C. Change work processes
Explanation:
In general terms, modifying and improving the production methods does not imply more costs. Avoid waste of energy, materials and resources are compatible with sustainability. Moreover, it will make the company save even more money as it implies a saving of valuable resources, that, in other way, must be paid to suppliers.
Answer:
D
Explanation:
The Spokes Bikes makes 18 bicycle models in more than 2 million combinations, with each combination designed to fit the needs of a specific customer. The customer chooses the model, size, color, and design. An analysis of this company's operation would indicate that it uses:
A. lean manufacturing.
B. flexible production.
C. mass customization.
D. continuous production.
Answer:
C. mass customization.
Explanation:
Mass customization is an economic term that refers to a company that promotes mass production of its products, but allows customization according to the needs and desires of the customer.
Therefore, it refers to the creation of a high volume product, which at the same time offers a wide range of options to the consumer, without compromising the gains in scale. The viability of this concept can be obtained by combining some strategies and technologies, such as modular product design and manufacturing technologies. Common marketing examples are the automobile and computer industries, where the customer, according to his needs and desires, "assembles" the product with the items he chooses. It is worth mentioning that until the moment of purchase, these items are stored, and their resupply depends on aggregate demand forecasts, while the assembly and configuration are triggered only by the specific order of the customer.
As part of the strategic planning process, step 4 includes conducting a ________, which evaluates a firm's business mix and assesses the potential of an organization's strategic business units.A. portfolio analysisB. SWOT analysisC. situation analysisD. product development strategyE. BCG growth-market share matrix
Answer:
The answer is: A) Portfolio analysis
Explanation:
Portfolio analysis: Analysis of the company´s product mix carried out to identify the best way to allocate the company´s resources in order to maximize profits. The two most common measures used in this type of analysis are market growth rate and relative market share.
As a major steel manufacturer, SteelMakers Inc. focuses on having the most efficient manufacturing processes in place. The company believes that its competitive edge lies in its ability to offer the best prices. They also maintain an excellent distribution network that ensures wide availability of their products. SteelMakers has a ________.A) selling orientationB) production orientationC) product orientationD) marketing orientationE) social orientation
Answer: Production orientation
Explanation: It refers to a strategy when the company focuses only to provide the best quality product in the market without taking into consideration the preference of the customers.
In the given case, Steel makers are focusing on making their business process the best in market so that they can gain a competitive advantage.
Thus, from the above we can conclude that the correct option is C.
SteelMakers Inc. has a production orientation because it focuses on efficient manufacturing processes to offer competitive prices and prioritize distribution efficiency.
SteelMakers Inc., with its emphasis on efficient manufacturing processes and ability to offer the best prices through those efficiencies, as well as an excellent distribution network for wide product availability, can be said to have a
B) production orientation.
This organizational approach prioritizes production efficiency and operations to minimize costs and maximizes distribution to outcompete others with lower prices. It focuses on the internal capability to produce and distribute goods at scale, often characterized by economies of scale in production, which are evident in the profitability of the company mentioned, providing significant ROI to shareholders.
____________________ conferencing allows attendees to use their computers to access an online, virtual meeting room where they can present PowerPoint slides, share spreadsheets and Word documents, demonstrate products, and interact with participants in real time.
Answer:
Web
Explanation:
Web conferencing is an online administration which allows the attendees to hold conferences, presentations, meetings, introductions and trainings by means of the web especially on TCP/IP associations.
One can associate with the meetings either by phone or utilizing your PC's speakers and amplifier with the help of a VoIP association.
Unlike Video Conferencing, Web conferencing does not require any special equipment to establish a proper connection on both the ends.
Web Conferencing - gives live sound/video correspondence between at least two areas to lead gatherings, preparing, or introductions by means of the Internet. ... Webcast - is basically "communicating" over the web.
Awesome Sweets sells different kinds of cookies, candies, and other sweets. Awesome Sweets has a return on assets (ROA) of 6.9% How does Awesome Sweets know if the 6.9% ROA is a good return to attract possible investors?
Answer:
Check industry standards
Explanation:
In order to be sure that a financial indicator is fine, the company must check it against it's market. The above average the better.
Different companies using the same accounting principles is an example of _________________. For instance, this occurs when two different companies both use the accrual accounting rather than cash-basis accounting or when both companies use the same method to compute depreciation rather than using two different methods.
Answer: Comparability
Explanation: Financial statements of an organisation indicates the position of the business on the market and what are its future prospects. Thus, every organisation markets have to follow same accounting principles while preparing financial statements so that investors in the market could compare different alternatives.
Hence the given statement is an example of comparability.
Other than getting laborers to work their land, how did the sharecrop system benefit landowners? a. Government subsidies provided them with more income. b. Profits were greater than under the slave labor system. c. It provided employment for immigrants. d. It reduced their risk when cotton prices were low.
The freedom of working for yourself is necessarily limited by A. your local competitors. B. the needs of your family and friends. C. your own skills and abilities. D. what your manager tells you to do.
Answer: Option C
Explanation: If someone is working for himself and herself than the only hindrance on his or her freedom to operate is his or her own skills and abilities.
The local competitors are a factor of external environment, hence, they could not affect the internal operations of any person working on itself. If someone wants to operate at a high level than the existing one without having sufficient skills and resources, then there is a slight chance that he will succeed.
Hence from the above we can conclude that the correct option is C.
Which of the following statements is true?
a) If the price of a good is raised and total revenue increases, demand is inelastic.
b) If the price of a good is lowered and total revenue increases, demand is inelastic.
c) If the price of a good is lowered and total revenue decreases, demand is elastic.
d) If the price of a good is raised and total revenue does not change, demand is perfectly elastic.
Answer: Option A
Explanation: In simple words, when the demand for a commodity did not change as per the change in its price , then such commodity is said to have inelastic demand.
In the first option the price of the good is decreased, then her demand should have decreased resulting in decrease or no change in revenue. Although it resulted in increase in revenue.
Hence from the above we can conclude that the correct option is A.
Answer:
If the price of a good is raised and total revenue does not change, demand is perfectly elastic ( D )
Explanation:
An elastic demand is a type of demand for a good or service that changes with changes in price of goods and services and also with changes in purchasing power of the customer while an inelastic demand is a type of demand for gods and services that is constant regardless of changes in prices and purchasing power of the customer.
if the price of a good is raised and the total revenue ( purchasing power ) does not change demand will definitely change ( perfectly elastic )
What is the law of demand?
a table that lists the quantity of a good all consumers in a market will buy at each different price
the desire to own something and the ability to pay for it
a tendency for consumers to buy more of a good when its price decreases and less when its price increases
a table that lists the quantity of a good a person will buy at each different price
Answer: A table that lists the quantity of a good all consumers in a market will buy at each different price
Final answer:
The law of demand states that as the price of a good or service increases, quantity demanded decreases, and vice versa, assuming other factors remain constant. This principle illustrates the inverse relationship between price and demand, typically represented by a downward sloping demand curve.
Explanation:
The law of demand states that there is an inverse relationship between the price of a good or service and the quantity demanded. This means that, other things being constant, when prices rise, demand falls, and when prices drop, demand increases. This is because as the price of a good increases, the opportunity cost of purchasing that good also goes up, leading consumers to forgo the purchase or look for cheaper alternatives. The law of demand is often depicted graphically as a demand curve, which is typically downward sloping to reflect the negative relationship between price and quantity demanded.
Assume a single taxpayer is taxed at 10% on the first $9,275 of taxable income, 15% on the next $28,375 of income, and at 25% for the following $53,500 of income. What is the average tax rate for that individual if her taxable income is $42,000?
Answer:
14.93%
Explanation:
Given:
For taxable income $9,275, tax rate = 10%
For taxable income $28,375, tax rate = 15%
For taxable income $53,500, tax rate = 25%
Now,
Tax on income = tax rate × taxable income
thus,
Total Tax on first $9,275 = $9,275 × 10% = $927.5
and,
Total tax on next $28,375 = $28,375 × 15% = $4,256.25
Therefore, the total income that has been taxed till the $9,275 + $28,375
= $37,650.
and, the amount left to be taxed = $42,000 - $37,650 = $4,350
Thus,
Tax on remaining $4,350 = $4,350 × 25% = $1,087.5
Total tax = $927.5 + $4,350 + $1,087.5 = $6,365
Therefore,
The average tax rate = [tex]\frac{\textup{Total tax}}{\textup{Taxable income}}\times100[/tex]
or
The average tax rate = [tex]\frac{6,365}{42,000}\times100[/tex]
or
Average tax = 14.93%
Final answer:
The average tax rate for a single taxpayer with a $42,000 taxable income is approximately 12.34%, calculated by dividing the total tax paid ($5,183.75) by the total income.
Explanation:
To calculate the average tax rate for a single taxpayer with a taxable income of $42,000, we must apply the tax rates to the relevant income brackets. The brackets are 10% on the first $9,275 of income, 15% on the next $28,375, and 25% on any income beyond that threshold.
Here's the calculation:
Taxes on the first $9,275 at 10% = $927.50Taxes on the next $28,375 at 15% = $4,256.25Since $42,000 does not reach the third bracket, we do not apply the 25% rate.Total tax = $927.50 + $4,256.25 = $5,183.75To find the average tax rate, divide the total tax by the total income:
Average tax rate = Total tax ÷ Total incomeAverage tax rate = $5,183.75 ÷ $42,000 = 0.12342Therefore, the average tax rate is approximately 12.34%.
Julie is the CEO of a leading yet mature company in the automotive industry. Her company's sales growth has been steadily declining the past few years. To stimulate growth, Julie may have to: _________
Answer:
Invest in new product offerings that cannibalize existing sales of legacy products
Explanation:
Since the sales of the automotive industry has been going down in the past few years, Julie working as the Chief Executive Officer of the company has to make decision and make investments in new projects and products so that the company sustains and the the growth also rises. Starting new projects in the market will help Julie's company to gain their returns and will help sustaining the company. Julie can also make cannibalize or use the machine part or the spare as the source of raw materials to manufacture other parts. Thus in this way, Julie can regain her declining sales growth.
Answer:
Growth is expected to grow much more quickly than average.
Explanation:
An organization decides to ask three advertising agencies to pitch a proposal to handle the organization's business, instead of asking all of the advertising agencies in the city where this organization's headquarters are located to pitch the account. What type of decision does this represent?
A. Programmed
B. Nonprogrammed
C. Satisficing
D. Certainty
E. Illusion of control
Answer:
C.
Explanation:
Satisficing is searching for and accepting something that is satisfactory rather than insisting on the perfect or optimal.
Managers tend to satisfice rather than optimize in considering and selecting alternatives.
Characteristics:
-accept good enough
-do not obsess over other opinions
-can move on after deciding
-happier with outcomes
A recent study shows the benefits of using public transportation. Government officials have hired your consulting firm to increase the demand for public transportation. They come to you with three of their suggestions.
• Suggestion 1. Reduce the price of public transportation.
• Suggestion 2. Increase the price of private transportation by increasing tolls.
• Suggestion 3. Offer monthly and yearly passes that reduce the price paid per ride of public transportation.
Which suggestion(s) does your firm recommend?
A. 1
B. 2
C. 3
D. 1 and 3
Answer:
C. 3
Explanation:
The decision to use public or private transport is individual and depends on the tastes and preferences of each consumer. If there is a proposal to stimulate the use of public transport, it is necessary to affect these preferences, which are often associated with costs.
Measure 1 would only be feasible if a study showed that there is room for tariff reduction. Public transport should be used, but it should be sustainable without relying on subsidies.
Measure 2 may be adopted, as rising private transportation costs such as tolls, fares and so on may force people to decide to use public transport, but this is a more extreme measure that affects other sectors and I would not recommend it.
Measure 3 would be recommended because it is a stimulus to the consumption of public transport. If annual passes provide discounts, consumers' perceptions may change as public transport may become more economically attractive.
"" In order to produce 100 oatmeal cookies, GoodieCookieCo incurs an average total cost of $0.25 per cookie. The company’s marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is:
Answer:
Total cost to produce 50 oatmeal is $20
Explanation:
We have given average total cost to produce 100 oatmeal cookies = $0.25
So Total cost = 0.25×100 = 25
Total variable cost to produce 100 cookies = marginal cost×100 = 0.1×100 = 10
Total fixed cost to produce 100 cookies = total cost-total variable cost = 25-10 = $15
Total cost of producing 50 cookies
=total fixed cost + total variable cost
=total fixed cost +(marginal cost ×50)
=15+(0.1×20)
=15+5
=$20
The total cost to produce 50 oatmeal cookies is $12.50.
Explanation:The total cost to produce 50 oatmeal cookies can be calculated by multiplying the average total cost per cookie by the number of cookies produced. In this case, the average total cost is $0.25 per cookie, so the total cost to produce 50 cookies would be $0.25 x 50 = $12.50.
This calculation assumes that the marginal cost remains constant for all the cookies produced, which is $0.10. The marginal cost represents the additional cost of producing one more cookie.
In summary, the total cost to produce 50 oatmeal cookies is $12.50.
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llocative efficiency is a situation in which the quantities of goods and services produced are those that people _____ - it is not possible to produce more of a good or service _____ some of another good that people _____.
Answer:
The correct answer is: value highly; without giving up value highly.
Explanation:
Allocative efficiency refers to the situation where all the resources are being spent on those bundles of goods that are preferred or valued highly by people.
We are aware that we have fixed or scarce resources and we need to allocate these to alternative uses. To increase the production of one good or service, we need to give up producing another good or service preferred by people.
This is the opportunity cost of increasing production of a good.
Kristi goes shopping with a friend and notices her friend’s new duct tape wallet. She thinks of her own worn wallet and realizes she needs a new one. In which stage of the consumer purchase decision process was Kristi when she had this realization?
Answer:
Problem recognition
Explanation:
The problem recognition stage arises when the purchaser or consumer recognizes the need or problem which can be satisfied by a good or service in the market. This is the first stage of the consumer purchase decision process. Kristi recognized the need for a new wallet after seeing her friend's wallet.
Which of the following professional services would be considered an attestation engagement?A. Advising management in the selection of a computer system to meet business needs.B. Preparing the income statement and balance sheet for one year in the future based on client expectations and predictions.C. Advocating on behalf of a client about trust tax matters under review by the Internal Revenue Service.D. Providing financial analysis, planning, and capital acquisition services as a part-time, in-house controller.
Answer: Option B
Explanation:
In simple words, attestation engagement refers to the preparation of reports and investigation by a third party on the order or request from the client's side.
Attestation engagement requires independence in the working of the investigator. Audit is an example of attestation engagement.
Hence from the above we can conclude that the correct option is B.
Which of the following is an advantage of consumer credit? a) It costs more than cash purchases. b) It can encourage customers to spend beyond their means. c) It can allow you to save money if you time your purchases correctly. d) It can earn extra money for lenders.
Answer:
The answer is D
Explanation:
Answer: NOT D
Explanation:
A clothing store chain tracks the sale of each product at each location. Managers use this information to calculate the organization's profits, to track inventory needs, and to determine which styles and fabrics are the most popular among its customers. This is an example of quality information that is ___________.
Answer:Flexible
Explanation:
According to the question, clothing store tracks the sale at each location so, they are taking a very large base of consumers and they are considering each consumer that is why the quality information is flexible.
Demands of each consumer may vary such that one wants cotton fabric, another wants polyester so this makes the information more flexible as it may vary largely.
Use the appropriate compound interest formula to find the amount that will be in each account, given the stated conditions. $26,500 invested at 3.85% annual interest for 2 years compounded (a) daily (n equals365); (b) continuously
Answer:
= $26.5000 * ( 1+ 0,0104%)^(365*2)
Explanation:
First of all, you have to convert the 3,85% annual interest rate in a daily interest rate because n= 365.
1) = ((1+annual interest)^ (1/n))-1
= ((1+3,85%)^(1/365))-1
= 0,0104% it the result of the daily interest rate
Secondly, you need to use the compund interest formula according with the invested money
2) = Capital invested*(1+ daily interest rate)^ (365 x numbers of years)
= $26.5000 * ( 1+ 0,0104%)^(365*2)
= $26.5000 * ( 1+ 0,0104%)^(365*2)
= $26.5000 * 107,85%
= $28.580,78
Finally, as you can see the compunded interest formula is elaborated by the information of the daily interest rate calculated first, multiplied by the days of the year (n) and the numbers of the years (2) that the investing is going to be generating profits.
The future value of an investment of $26,500 at an annual interest rate of 3.85% compounded daily for 2 years is $28,487.88. When the compounding is continuous, the future value becomes slightly higher at $28,495.67.
Explanation:The subject of your question is compound interest, where the interest in each compounding period is added to the principal before calculating the interest for the next period. Compound interest significantly enhances the growth of an investment over time compared to simple interest.
Part (a): Daily Compounding
For daily compounding, we use the formula A = P(1 + r/n)^(nt) where P = principal amount (initial investment), r = annual interest rate (in decimal), t = time the money is invested for (in years), n = number of times interest applied per time period.
By substituting the given values into the formula, we have A = $26,500 * (1 + 0.0385/365)^(365*2) = $28,487.88
Part (b): Continuous Compounding
For continuous compounding, we use the formula A = Pe^(rt), where P = principal amount, r = annual interest rate (in decimal), t = time for which the money is invested and e is Euler's number approximately equal to 2.71828.
By plugging in the given values, we get A = 26500 * e^(0.0385*2) = $28,495.67. Hence, the higher the frequency of compounding, the higher the future value of the investment.
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