Answer and Explanation:
The Preparation of water and sewer fund Statement of Revenues, Expenses, and Changes in Fund Net Position for the year ended December 31, 2017 is shown below:-
Water and Sewer fund
Statement of Revenues, Expenses,
and Changes in Fund Net Position
for the year ended December 31, 2017
Particulars Amount
Operating revenue - Charges for
services $18,087,000
Operating expenses
Personal services $6,177,000
Contractual services $2,995,000
Utilities $888,000
Repair and Maintenance $1,992,000
Depreciation $5,422,000
Total operating expenses $17,474,000
Operating income $613,000
Non operating revenues
Interest revenue $29,000
Interest expenses ($434,000)
State aid $100,000
Total of non operation revenue ($305,000)
Capital contribution $1,632,000
Transfer to general fund ($365,000)
Change in net assets $1,575,000
Jan 1 Net assets $2,700,000
Dec 31 Net assets $4,275,000
We simply deduct all expenses from revenue to arrive ending net assets
Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the:_________.
a. investor sells the investment
b. investee declares a dividend
c. investee pays a dividend
d. earnings are reported by the investee in its financial statements
Answer: Earnings are reported by the investee in its financial statements
Explanation:
Equity method is when investments are being treated in associate companies and it is usually applied in cases whereby an investor entity holds about twenty to fifty percent of the associate company's voting stock. Due to this reason, it has a strong say in the associate company's management.
Under the equity method of accounting for investments, an investor recognizes its share of the earning in the period in which the earnings are reported by the investee in its financial statements.
The following events occur for The Underwood Corporation during 2021 and 2022, its first two years of operations.
June 12, 2021, Provide services to customers on account for $33,800
September 17, 2021, Receive $19,000 from customers on account
December 31, 2021, Estimate that 40% of accounts receivable at the end of the year will not be received.
March 4, 2022, Provide services to customers on account for $48,800
May 20, 2022, Receive $10,000 from customers for services provided in 2021.
July 2, 2022, Write off the remaining amounts owed from services provided in 2021
October 19, 2022, Receive $39,000 from customers for services provided in 2022.
December 31, 2022, Estimate that 40% of accounts receivable at the end of the year will not be received.
Calculate net accounts receivable at the end of 2021 and 2022.
2021 2021
Total accounts receivable
Less: Allowance for uncollectible acounts
Net accounts receivable
Answer:
The Underwood Corporation
Calculation of the net accounts receivable at the end of 2021 and 2022:
2021 2021
Total accounts receivable $14,800 $9,800
Less: Allowance for uncollectible accounts 5,920 3,920
Net accounts receivable $8,880 $5,880
Explanation:
a) Accounts Receivable:
June 12, 2021: Service Revenue $33,800
Sept. 17, 2021: Cash receipts (19,000)
Dec. 31, 2021: Balance $14,800
March 4, 2022: Service revenue 48,800
May 20, 2022: Cash receipts (10,000)
July 2, 2022: Allowance for (4,800)
Oct. 19, 2022: Cash receipts (39,000)
Dec. 31, 2022: Balance $9,800
b) Allowance for uncollectible accounts:
Dec. 31, 2021: Bad Debts Expense $5,920
July 2, 2022: Accounts Receivable (4,800)
Dec. 31, 2022: Bad Debts Expense 2,800
Dec. 31, 2022: Balance $3,920
c) The allowance for doubtful accounts for The Underworld Corporation for 2022 will record a bad debts expense of $2,800, which represents the adjusting difference between the beginning balance of $5,920, the accounts receivable written off, and the ending balance of $3,920.
The crowding-out effect refers to the possibility that:
a. a deficit, financed by borrowing in the capital markets, will increase the interest rate and reduce investment in the private sector.
b. an increase in the supply of money will induce a decline in real spending.
c. when used simultaneously, expansionary fiscal and monetary policies are counter-productive.
d. the speculative demand for money varies inversely with the interest rate.
Answer:
a. a deficit, financed by borrowing in the capital markets, will increase the interest rate and reduce investment in the private sector.
Explanation:
Crowding out effect is when government borrowing from the capital markets leads to an increase in interest rate. this makes it more expensive for private sector to borrow and this reduces investment by private sector
Extracts from cost information of Hebar Corp.:
Simple L3 Pack Complex L7 Pack Total
Setup cost allocated using direct labor-hour$19,250 $5,750 $25,000
Setup cost allocated using setup-hours $13,400 $11,600 $25,000
Assuming that setup-hours is considered a more effective cost drive for allocating setup costs than direct labor-hours. Which of the following statements is true of Hebar's setup costs under traditional costing?
A. L7 pack is undercosted by $5,750
B. L3 pack is overcosted by $5,850
C. L3 pack is undercosted by $5,850
D. L7 pack is overcosted by $5,850
Answer:
B. L3 pack is overcosted by $5,850
Explanation:
The statements that is true of Hebar's setup costs under traditional costing
Using this formula
Hebar's setup costs =Setup cost allocated using direct labor hours - Setup cost allocated using setup-hours
Where ,
Setup cost allocated using direct labor hours =$19,250
Setup cost allocated using setup-hours =$13,400
Let plug in the formula
Hebar's setup costs=$19,250 − $13,400 = $5,850
Therefore the statements that is true of Hebar's setup costs under traditional costing will be $5,850
A growing population encourages economic growth as it creates a larger workforce. Suppose a surge in immigration increases a country's total population and its overall economic output increases. As a result, the country's real GDP increases from $304,000 to $316,500. What is the percent change in real GDP
Answer:
4.11%
Explanation:
the percentage change in real GDP = [(new real GDP - old real GDP) / old real GDP] x 100 = [($316,500 - $304,000) / $304,000] x 100 = 4.11%
Generally a surge in immigration will result in both higher nominal and real GDP, but what should be more important is how real GDP per capita changes. If real GDP per capita increases, then the inflow was positive and made the economy grow for better. If real GDP per capita decreases, even if total real GDP increases, then the economy is not doing better.
"In order to be classified as a _______________, a firm must be owned by the people who run it on a day-to-day basis and cannot have publicly issued stock."
Answer:
private company
Explanation:
a private company is a company whose shares are not sold publicly - they are not traded on the public stock exchange. they also owned by the people who run them and not by managers.
Private firms are not bound by the Securities and Exchange Commission's (SEC) filing requirement.
"In preparing the direct materials budget for Quan Company, management concludes that required purchases are 64,000 units. If 52,000 direct materials units are required in production and there are 9,000 units of beginning direct materials, what is the desired units of ending direct materials
Answer:
desired ending inventory= 21,000
Explanation:
Giving the following information:
In preparing the direct materials budget for Quan Company, management concludes that required purchases are 64,000 units. If 52,000 direct materials units are required in production and there are 9,000 units of beginning direct material.
To calculate the desired ending inventory, we need to use the following formula:
Purchases= production + desired ending inventory - beginning inventory
desired ending inventory= purchases - production + beginning inventory
desired ending inventory= 64,000 - 52,000 + 9,000
desired ending inventory= 21,000
Maria, the landlord, refuses to fix a small leak in the roof that was there prior to the current tenant. Juan, the current tenant, has just discovered the leak after a heavy rain. The consequence is that black mold has been forming in the attic for quite some time. Juan still has significant time remaining on his lease. Juan has notified Maria in writing of the mold and leak issue but has received no response. He is concerned about the premises becoming unsafe to live in. It has been 14 days since he emailed her his notification. What are all of Juan’s options if Maria declines to do the repairs? Please discuss all remedies Juan may seek. Please remember to reference the contract and text to support your analysis.
Answer:
Please see answers below
Explanation:
Joan may as well put a call through to Maria in addition to his previous mail. Several remedial options are available to Juan and each has its own merits and demerits. It is proper for the tenant to consider each options carefully and seek legal opinion where necessary. However, if Maria declines to do the repairs, Juan may seek the following remedies
• Repair and deduct remedy . In this type of remedy, a tenant may deduct money that is equivalent of a month's rent to cover the cost of the repair or defect. Rental unit 156 covers a condition whether faulty or substandard rented unit could affect the tenant's health and safety. Since the landlord has refused to do the repair, she is guilty of implied warranty of habitability which includes leak in the roof, gas leak, no running water etc. Also, the tenant may not have to file a lawsuit against the landlord since this type of remedy has legal aid. Other conditions attached in addition to the above are ; the repairs cannot cost more than a month's rent, the tenant cannot use the repair and deduct remedy more that twice in any 12 month period, tenant must have informed the landlord in writing and through calls of the faulty area that requires repair. His family or pets must not be the cause of the faulty area that needed to be repaired etc.
• The abandonment remedy . Here, the tenant could move out of the faulty unit or defective rental unit due to its substandard condition which could affect his health and safety. Where the tenant uses the abandonment remedy judiciously, he is not liable to pay any other rent once he has abandoned or moved out of the defective rental unit. The conditions attached are that; the defects must be serious and directly related to the tenant's health and safety, the tenant or his family must not be the cause of the faulty space that requires repair. Moreover, the tenant must have informed the landlord whether in writing or orally telephone calls of the defects that requires repair.
• The rent withholding remedy. Legally, a tenant could withhold house rent if the landlord fails to take care of serious defects that negates the implied warranty of habitability. Conditions attached to this type of remedy are; the defects to be repaired must have threatened the tenant's safety and wellbeing. Again, the faulty or defective unit must be such that it becomes uninhabitable for the tenant . The tenant, his family or pets must not be the cause of the defects that requires repairs. The tenant must have also notified the landlord either through phone calls on in writing, amongst others.
• The tenant could also file a lawsuit against the landlord to recover the cost expended to fixing the faulty repairs where the landlord was not willing to do so. Conditions that must be met before this option could stand in the court of law are; the rental unit has serious defect that is not safe for living. A housing inspector has inspected the house and found to be short of minimum requirements for habitable place etc. A tenant may seek this type of redress where the option for out of court settlement has failed with the landlord.
A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange is:
Answer:
Entry to Record this exchange is :
Land $70,000 (debit)
Common Stocks $50,000 (credit)
Share Premium $20,000 (credit)
Explanation:
The Value of the Common Stocks used to settle the land purchase is equivalent to the market value of the land of $70,000.
The Common Stocks have a par value of $10, this means that any amount that is paid in excess of this par value is accounted for in the Share Premium Reserve.
Entry to Record this exchange is :
Land $70,000 (debit)
Common Stocks $50,000 (credit)
Share Premium $20,000 (credit)
Refer to the accompanying figures. If Mallory and Rick are the only two consumers in this market, then the market demand for soda will be 90 cans per month when the price of a can of soda is ____.
90 cans of soda will be consumed monthly by the market if the price of a can is $0.50.
What is the market?The entire number of buyers and sellers in the area or region under consideration is referred to as the market. Earth, as well as several nations, regions, states, and cities, maybe the subject. The worth, expense, and cost of the goods traded depend on the forces of supply and demand in the market.
Refer to the accompanying figures. If Mallory and Rick are the only two consumers in this market, then the market demand for soda will be 90 cans per month when the price of a can of soda is 90 cans of soda will be consumed monthly by the market if the price of a can is $0.50.
Therefore, consumed monthly by the market if the price of a can is $0.50.
Learn more about the market here:
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Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget:
Rumble Thunder
Estimated inventory (units), June 1 750 300
Desired inventory (units), June 30 500 250
Expected sales volume (units):
East Region 12,000 3,500
West Region 14,000 4,000
Unit sales price $160 $200
a. Prepare a sales budget.
b. Prepare a production budget.
Answer:
SONIC INC.
SALES BUDGET
FOR THE MONTH ENDING JUNE 30
Product and Area Unit sales volume Unit selling Price Total sales
Rumble
Midwest Region 12,000 $160 $1,920,000
South Region 14,000 $160 $2,240,000
Total 26,000 $4,160,000
Thunder
Midwest Region 3,500 $200 $700,000
South Region 4,000 $200 $800,000
Total 7,500 $1,500,000
Total Revenue from sales = $4,160,000 + 1,500,000 = 5,660,000
2. SONIC INC.
PRODUCTION BUDGET
FOR THE MONTH ENDING JUNE 30
UNITS RUMBLE UNITS THUNDER
Expected unit to be sold 26,000 7,500
Add: Desired Inventory June 30 500 250
Total 26,500 7,750
Less: Estimated Inventory June 1 750 300
Total units to be produced 25,750 7,450
If the expected sales volume for the current period is 7,000 units, the desired ending inventory is 400 units, and the beginning inventory is 400 units, the number of units set forth in the production budget, representing total production for the current period, is Group of answer choices 7,000 7,100 6,700 7,400
Answer:
7,000 units
Explanation:
Calculation for the number of units set forth in the production budget, representing total production for the current period
Using this formula
Number of units =Current period +Ending inventory - Beginning inventory
Where,
Current period =7,000 units
Ending inventory=400 units
Beginning inventory =400 units
Let make plug in the formula above
Number of units =7,000 units + 400 units-400 units
Number of units =7,000 units
Therefore the Number of units will be 7,000 units
Answer:
7,000 units
Explanation:
Assume that Kish Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D 0 = $0.90; P 0 = $27.50; and g = 7.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? 9.29% 9.68% 10.08% 10.50% 10.92%
Answer:
10.50%
Explanation:
According to the given situation, the solution of cost of equity from retained earning is shown below:-
Cost of equity = (D0 × (1 + g) ÷ P0) + g
Now we will put the values into the above formula.
= (0.90 × (1 + 0.07) ÷ 27.50) + 0.07
= 10.50%
Therefore for determining the cost of equity from retained earning we simply applied the above formula.
An investment earns 35% the first year, earns 40% the second year, and loses 37% the third year. The total compound return over the 3 years was ______. Multiple Choice 158.93% 19.07% 38.00% 6.36%
Answer:
19.07%
Explanation:
The computation of the total compound return over the 3 years is shown below:
= (1 + investment percentage earned in first year) × (1 + investment percentage earned in second year) × (1 + investment percentage loss in second year)
= (1 + 0.35) × (1 + 0.40) × (1 - 0.37)
= 1.35 × 1.40 × 0.63
= 1.1907
= 19.07%
You decrease your product price by $10 in market A but leave it unchanged in market B. Sales in A rise from 840 units per week to 940 while sales in B also rise from 770 to 790. The difference-in-difference estimate of the effect of the price change is:
Answer:80 units.
Explanation:
Change in Sales of Market A =940units -840units = 100 units
Change in Sales of Market B= 790units -770 units = 20units.
Difference-in-difference estimate of the effect of the price change is = Change in sales of Market A - Change in sales of Market B = 100units -20 units = 80 units.
An Ethiopian company decides to launch some of its fashion accessories into the European market. Its marketing director is about to begin the process of creating a marketing plan for this new initiative. Which of the following is the first step the director should take before beginning to plan the marketing mix details?
A. First the director must define the company's target markets and understand which of its products fit with each market's businesses and consumers.
B. First the director needs to research, develop, and create various products to launch into the international market.
C. First the director must decide which promotional tactics to use in particular markets to launch products to consumers and businesses.
Answer:
A. First the director must define the company's target markets and understand which of its products fit with each market's businesses and consumers.
Explanation:
After taking the decision of entering the European Market, the Ethiopian company marketing director should first determine which of the company's products could be commercialized in Europe, and after, the marketing director should narrow the market even more: determining the target customer demographics of the European Market, for example: old people, young people, women, men, college-educated people, non-college educated people, northern Europeans, Southern Europeans, etc.
The founder of Alchemy Products, Inc., discovered a way to turn lead into gold and patented this new technology. He then formed a corporation and invested $200,000 in setting up a production plant. He believes that he could sell his patent for $50 million.
a. What are the book value and market value of the firm?
b. If there are 1 million shares of stock in the new corporation, what would be the price per share and the book value per share?
Answer:
Book Value is $0.2 million
Market Value is $50 million
Book Value per share is $0.2 per share
Market Value per share is $50 per share
Explanation:
Part A. The book value of Alchemy Products Inc., is $0.2 million and its market value is $50 million.
Part B.
The Book value per share of Alchemy Products Inc., is calculated as under:
Book Value per share = $0.2 million / 1 Million shares = $0.2 per share
The Market value per share of Alchemy Products Inc., is calculated as under:
Market Value per share = $50 million / 1 Million shares = $50 per share
You purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. You will get a margin call if the stock drops below what price? (Assume the stock pays no dividends, and ignore interest on the margin loan.)
Answer:
Margin call will be obtained if the stock price drops below $35.71
Explanation:
Here in this question, we start by calculating the maintenance margin
Mathematically;
Maintenance margin = Equity/market value
From the question, maintenance margin= 30%
= 30/100 = 0.3
Let the unknown price be P.
Thus, the market value of the 200 shares at price P is 200p
Hence;
0.3 = (200 * p - purchased stock value * initial margin)/200p
0.3 * 200p = 200p - 200(0.5 * 50)/200p
0.3 * 200p = 200p - 5000
60p = 200p -5000
140p = 5000
p = 5000/140
p = $35.71
More involved in day-to-day operations than in planning, ________ supervise employees and coordinate their activities to ensure consistent companywide work.
Answer:
Firstline Managers
Explanation:
Firstline Managers have the responsibility of supervising and coordinating the activities of employees. This position make up the frontline managers and it is at this level that managerial experience is first acquired. They are not primarily involved in planning, rather they supervise the daily operations of workers in the organization. Positions with designations such as; Supervisor, Head of Department, and Office Manager are examples of Firstline Managers.
An organization typically has three types of Managers namely, the Top Managers, The Middle Managers, and the Firstline Mangers, in order of superiority. The Top Managers are more involved in planning and setting goals for the organization while the Middle Managers allocate resources, report to the Top Managers, and also supervise the Firstline Managers.
Which goal of the U.S. economy is important in reducing the amount of waste of resources?
O efficiency
O stability
O growth
O equity
The answer is....
A.) EfficiencyJust trust a bro
You are thinking of building a new machine that will save you $ 4 comma 000$4,000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 1 %1% per year forever. What is the present value of the savings if the interest rate is 9 %9% per year?
Answer:
The present value of the savings=$37,064.22
Explanation:
The present value of the savings is the amount that it worths today, this would be done in two stages;
The first stage is to determined the present of the first cash savings as follows:
PV of the first payment = 4,000 × (1.09)^(-1)=3,669.72
Second step is to determine the present value of the declining perpetuity
PV of declining perpetuity. A perpetuity is the series of cash flow occurring for the foreseeable future of years.
A- 4,000, g-negative growth rate = 1%,
interest rate = 9%
PV in year 1 = 4,000× (1-0.09)/(0.09+0.01)
= 36,400
PV in year 0 = 36,400 × (1.09)^(-1) = 33,394.49
The present value of the savings = 33,394.49 + 3,669.72= 37,064.22
The present value of the savings=$37,064.22
Coolibah Holdings is expected to pay dividends of $ 1.00 every six months for the next three years. If the current price of Coolibah stock is $ 21.90, and Coolibah's equity cost of capital is 14%, what price would you expect Coolibah's stock to sell for at the end of three years?
Answer: The price that would be expected for Coolibah's stock to sell for at the end of three years is $28.87
Explanation: It should be noted that to calculate a price that would be expected in Coolibah's stock to sell for at the end of three years can be calculated using financial calculator:
A) Using a financial calculator, PV = -$22.60 , PMT = $1.20, n = 6, I = 18% / 2;
calculate FV = $28.87 .
Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.
Sept. 6 Purchased calculators from Green Box Co. at a total cost of $1,620, terms n/30.
9 Paid freight of $50 on calculators purchased from Green Box Co.
10 Returned calculators to Green Box Co. for $38 credit because they did not meet specifications.
12 Sold calculators costing $520 for $690 to University Book Store, terms n/30.
14 Granted credit of $45 to University Book Store for the return of one calculator that was not ordered. The calculator cost $34.
20 Sold calculators costing $570 for $760 to Campus Card Shop, terms n/30.
Required:
Journalize the September transactions.
Answer and Explanation:
The journal entries are shown below:
1. Merchandise Inventory $1,620
To Accounts Payable $1,620
(Being the calculators purchased on account)
2. Merchandise Inventory $50
To Cash $50
(Being freight expenses paid for cash)
3. Accounts Payable $38
To Merchandise Inventory $38
(being the returned inventory is recorded)
4. Accounts Receivable $690
To Sales Revenues $690
(Being the sales is recorded)
Cost of Goods Sold $520
To Merchandise Inventory $520
(Being the cost is recorded)
5. Sales returns $45
To Accounts Receivable $45
(being the sales return is recorded)
Merchandise Inventory $34
To Cost of Goods Sold $34
(Being the cost of returned is recorded)
6. Accounts Receivable $760
To Sales Revenues $760
(being the sale is recorded)
Cost of Goods Sold $570
To Merchandise Inventory $570
(Being the cost is recorded)
How much are you willing to pay for one share of Jumbo Trout stock if the company just paid a $0.70 annual dividend, the dividends increase by 2.5 percent annually, and you require a 10 percent rate of return
Answer:
$9.57 per stock
Explanation:
using the dividend discount model to find the stock's current price (P₀):
P₀ = Div₁ / (Re - g)
Div₁ = $0.70 x 1.025 = $0.7175Re = 10%g = 2.5%P₀ = $0.7175/ (10% - 2.5%) = $0.7175/ 7.5% = $9.5667 ≈ $9.57 per stock
Businesses adopt and identify target markets for their products to: a. maximize the impact of the cost of marketing. b. coerce people into buying products they do not need. c. adopt consumer-friendly pricing strategies such as price skimming for new products. d. collect information from the external marketing environment.
Answer: maximize the impact of the cost of marketing
Explanation:
The target market is a particular group of consumers that the advertisement of a product or service is typically aimed at.
Businesses adopt and identify target markets for their products to maximize the impact of the cost of marketing. When the target market for a product or service has been known by a company, the business can find the most efficient and effective strategy to advertise their product. This will help in the minimization of cost of marketing.
Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2016. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30.
Required:
a. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2021, assuming that the gross method of accounting for cash discounts is used.
b. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 15, 2021, assuming that the gross method of accounting for cash discounts is used.
c. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2016, assuming that the net method of accounting for cash discounts is used.
Answer:
a. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2021, assuming that the gross method of accounting for cash discounts is used.
November 17, 100 units sold to Thomas Company, terms 2/10, n/30
Dr Accounts receivable 42,000
Cr Sales revenue 42,000
November 26, invoice collected from Thomas Company
Dr Cash 41,160
Dr Sales discounts 840
Cr Accounts receivable 42,000
b. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 15, 2021, assuming that the gross method of accounting for cash discounts is used.
November 17, 100 units sold to Thomas Company, terms 2/10, n/30
Dr Accounts receivable 42,000
Cr Sales revenue 42,000
December 15, invoice collected from Thomas Company
Dr Cash 42,000
Cr Accounts receivable 42,000
c. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2016, assuming that the net method of accounting for cash discounts is used.
November 17, 100 units sold to Thomas Company, terms 2/10, n/30
Dr Accounts receivable 41,160
Cr Sales revenue 41,160
November 26, invoice collected from Thomas Company
Dr Cash 41,160
Cr Accounts receivable 41,160
First National Bank charges 14.1 percent compounded monthly on its business loans. First United Bank charges 14.4 percent compounded semiannually. Calculate the EAR for First National Bank and First United Bank. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) EAR First National % First United %
Answer:
For First National Bank = 15.05%
For first United bank = 14.92%
Explanation:
The computation of EAR for First National Bank and First United Bank is shown below:-
Effective annual rate EAR = (( 1 + i ÷ n)^n) - 1
as
I indicates the annual interest rate
n indicates the number of the compounding period
For First National Bank
Annual interest rate i = 14.1%
Effective annual rate EAR is
= ((1 + 0.141 ÷ 12)^12) - 1
= 1.1505 - 1
= 0.1505
or
= 15.05%
For first United bank
Effective annual rate EAR is
= (( 1+ 0.144 ÷ 2)^2) - 1
= 1.1492 -1
= 0.1492
or
= 14.92%
Indicate whether the following changes would cause a shift in the demand curve for Product A and, if so, the direction of the shift.
Change Demand curve shift? Direction of shift?
Increase in price of complementary product Yes or No Increase, decrease or N/A
Increase in the price of the Product A Yes or No Increase, decrease or N/A
Launch of effective advertising campaign for Product Yes or No Increase, decrease or N/A
Answer:
yes decrease
No N/A
Yes, Increase
Explanation:
A complementary good is a good that is consumed together. If the price of the complementary good increases, the quantity demanded of the good would decrease. this would lead to a decrease in demand for product A.
an increase in the price of product A, would increase the quantity demanded. an increase in quantity demanded leads to a movement along the demand curve and not a shift of the demand curve
An effective advertising campaign would increase the visibility of the product and increase the demand for the product. an increase in demand leads to an outward shift of the demand curve.
The city of New Orleans has 200 advertising companies, 199 of which employ designers of normal ability at a salary of $100,000 a year. The firms that employ designers of normal ability each collect $400,000 in revenue a year, which is just enough to ensure that each earns exactly a normal profit. However, the 200th company employs Janus Jacobs, an unusually talented designer. Because of Jacobs's talent, this company collects $1,000,000 in revenue a year.
Required:
a. How much will Jacobs earn?
b. What proportion of his annual salary will be economic rent?
c. Will the advertising company for which Jacobs works be able to earn an economic profit?
Answer:
a. $700,000
b. 6/7 or 85.7%
c. No they will not.
Explanation:
a. Jacobs will earn the normal salary that the other designers in the other companies are getting in addition to the incremental income he brings to the company as a result of his talents.
Incremental income = Revenue with Jacobs - Revenue without Jacobs
= 1,000,000 - 400,000
= $600,000
Jacobs earnings = Normal designer earnings + incremental income
= 100,000 + 600,000
= $700,000
b. Economic rent is the excess amount that the company is paying Jacobs over what it should normally cost to get a designer.
Normal cost of designer is $100,000. Company is therefore paying an economic rent of $600,000.
Proportion of Jacobs salary that is economic rent = [tex]\frac{Economic rent}{Jacobs annual earning}[/tex]
= [tex]\frac{600,000}{700,000}[/tex]
= 6/7 or 85.7%
c. The company hiring Jacobs will not be making an economic profit because for them to make an economic profit they would have to be making more than the $400,000 that the other firms make. They cannot make this amount because for them to do so they would have to reduce the amount they pay Jacobs. If they do so, Jacobs would leave for greener pastures and then they would be making the same $400,000 that the rest are making.
There is a zero coupon bond currently priced at $521.58. This bond has a par value of $1000 and matures in 9 years. What is the yield to maturity of this bond
Answer:
7.5%
Explanation:
The computation of yield to maturity is shown below:-
Let YTM be i%.
As we know that
Present Value = Face Value ÷ (1 + i)^n
$521.58 = $1,000 ÷ (1 + i)^9
(1 + i)^9 = 1.91725
1 + i = 1.075
i = 7.5%
Therefore for computing the yield to maturity we simply applied the above formula and for more clarification, we have attached the spreadsheet.