Answer:
Results are below.
Explanation:
Giving the following information:
Fixed cost= $31,750
Unitary contribution margin= 134 - 67= $67
To calculate the number of units to be sold, we need to use the following formula:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Desired profit= $8,450
Break-even point in units= (31,750 + 8,450) / 67
Break-even point in units= 600
Now, the desired profit is $9,700; we need to use the following formula:
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (31,750 + 9,700) / (67/134)
Break-even point (dollars)= 41,450 / 0.5
Break-even point (dollars)= $82,900
Chad, who owns the only coffee shop in Rivercity, learns that Jose is about to open a competing coffee shop in the same small town, just a few blocks from Chad's. Chad offers Jose $10,000 in return for Jose's promise not to open a coffee shop in the Rivercity area for six months. Jose accepts the $10,000 but goes ahead with his plans, even though he had agreed not to do so. When Jose opens his coffee shop for business, Chad sues to enjoin Jose's continued operation or to recover the $10,000
Required:
Can Chad sues Jose?
Answer:
Rivercity Coffee Shop
Chad cannot sue Jose. The $10,000 is paid to Jose is a bribe. Since a bribe is not legal, it cannot form the basis for an enforceable contract.
Moreover, the offer by Chad is an antitrust and anti-competition consideration that is legally frowned upon. illegal contract
Explanation:
For a contract to be enforceable, it cannot be illegal. A bribe is illegal. The basis for the contract is illegal. Therefore, Chad cannot sue Jose. Since Jose decided to breach the contract, neither Chad nor Jose is entitled to any compensation. Jose cannot be held liable for non-performance.
Implement anyone principle from Industry 4.0 Six Design Principles on any organization?
Answer:
There is no principal in this room.
Explanation:
Come and get it https://app.conversion.ai/
RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. The break-even point in sales dollars is $_____________.
Answer: $75000
Explanation:
In order to solve the question, firstly we need to calculate the contribution margin ratio which will be:
= ($10 - $6) / $10
= 40%
Then, the break even sales will then be:
= Fixed cost / Contribution margin ratio
= $30000 / 40%
= $75000
Therefore, the break-even point in sales dollars is $75000
A metal fabrication company is buying a CNC machine for $600,000. After 20 years of use, the machine should have a salvage value of $35,000.
Required:
a. Under 100% bonus depreciation, what depreciation can be claimed in year 1?
b. Under 100% bonus depreciation, what depreciation can be claimed in year 2?
Answer:
100% Bonus Depreciation:
a. Year 1 = $565,000
b. Year 2 = $0
Explanation:
a) Data and Calculations:
Cost of CNC Machine = $600,000
Salvage value = $35,000
Depreciable amount = $565,000 ($600,000 - $35,000)
100% Bonus Depreciation:
Year 1 = $565,000
Year 2 = $0
b) The 100% bonus depreciation is not limited to the firm's taxable income. The firm can carry back loss arising from 100% bonus depreciation to previous year's income and also carry any unused loss forward to deduct against future income.
1 1.1 Briefly name and explain the aspects of the marking mix.
Answer: Marketing mix could described as methods taken by an organization to boast their brand or improve demand of product in the market.
Explanation:
Marketing mix could described as methods taken by an organization to boast their brand or improve demand of product in the market.
Aspects of marketing mix are Price, product, promotion and place.
Price; this refers to the value of a product. The organization in considering marketing mix would have to make her price affordable for the market in relation with the value of the product it's selling.
Product; this is the item being sold. The item must be valuable and worth the buy of the customers, this would improve consistent buying and referral by those who have already bought.
Promotion: this refers to actions taken to make known the product visibility in the market. This actions could be through branding, marketing with the aim of making the products demanded more than usual always.
Place: these is referred to as the target market. Every market is not a market, the place refers to those who are either already customers or would be customers. The organization must try to identify those who her products address and try selling to them.
The Johnson Robot Company’s marketing managers estimate that the demand curve for the company’s robots in 2012 is P = 6,000 - 40Q where P is the price of a robot and Q is the number sold per month. If the firm wants to maximize its dollar sales volume, what price should it charge?
Any help 75 points
Quantity supplied varies positively (directly) with price, other things constant, as price rises, the quantity supplied rises; as price falls, the quantity supplied decreases
Answer:
law of supply
Explanation:
this is the law of supply
Use this information for Mason Corporation to answer the question that follow. Mason Corporation had $1,114,000 in invested assets, sales of $1,281,000, income from operations amounting to $209,000, and a desired minimum return of 15%. Round your answer to two decimal places. The investment turnover for Mason Corporation is a.1.38 b.1.15 c.1.72 d.0.92
Answer:
b.1.15
Explanation:
The computation of the investment turnover is shown below:
= Sales ÷ average operating assets
= $1,281,000 ÷ $1,114,000
= 1.1499
= 1.15
hence, the investment turnover is 1.15
Therefore the option b is correct
The same should be considered and relevant
Why irish lions rugby playing with Japan?
Answer:
I expect the answer in the following form
Explanation:
Irish lions play with Japan to get better and learn new things
On January 1, 2019, Sunland Company granted Sam Wine, an employee, an option to buy 1,000 shares of Sunland Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5520. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Sunland Co. stock in 2021 were:
Using the fair value method, Sunland Company should recognize compensation expenses for 2019on its books in the amount of 2019 is $5,520.
What is a compensation expense?Compensation expenses are compensation-associated expenses used as a reward for exceptional job performance.
Examples of such compensation expense plans include bonuses, commissions, stock options, and profit-sharing.
Data and Calculations:Number of option shares granted = 1,000 shares
Grant price = $30
Exercise period = 5 years
Total compensation expense based on the fair value option pricing model = $5,520
The 2019 compensation expense = $6,000 ($30 x 1,000)/5
Question Completion:Quoted market prices of Sunland Co. stock in 2021 were:
July 1 = $30 per share
Oct 1 = $36 per share
Dec 1 = $40 per share
Required:
As a result of the option granted to Wine, using the fair value method, Sunland Company should recognize compensation expenses for 2019 on its books in the amount of 2019.
Thus, the 2019 compensation expense is $5,520.
Learn more about stock options at https://brainly.com/question/25693765
Prepare journal entries to record each of the following transactions. The company records purchases using the gross method and a perpetual inventory system.
Sept. 15 Purchased merchandise with an invoice price of $77,500 and credit terms of 3/5, n/15.
Sept. 29 Paid supplier the amount owed on the September 15 purchase.
Answer and Explanation:
The journal entries are shown below;
On Sept 15
Merchandise inventory $77,500
To Accounts payable $77,500
(Being purchase of inventory is recorded)
On Sep 29
Accounts payable $77,500
To Cash $75,175
To Merchandise inventory (3% of $77,500 ) $2,325
(Being payment to suppliers after discount is recorded)
PART A. MULTIPLE CHOICE - 15 MARKS
1. Company orientation does not include which topic below?
Economic Factors
b. Fringe Benefits
C. Occupational Health and Safet
d. None of the above
what is the answer?
Answer: a. Economic factors
Explanation:
Company orientation refers to training that is given to new employees to better prepare them to work in the company and be as efficient as possible.
It includes things like occupational health and safety so that the employee may know how best to behave so as not to cause accident or get injured by one. It also includes telling the employees of the various fringe benefits that might accrue to them.
It would not include economic factors as these as not specific to the company.
Alpha and Beta, two tiny islands in the Pacific, produce pearls and pineapples. The following production possibilities schedules describe their potential output in tons per year:
ATTACHMENT IS BELOW
Suppose Alpha and Beta agree that the terms of trade will be one for one and exchange 10 pearls for 10 pineapples.
a. If Alpha produced 6 pearls and 15 pineapples while Beta produced 30 pearls and 8 pineapples before they decided to trade, how many pearls would each be producing after trade? Assume that the two countries specialize according to their comparative advantage.
(i) Alpha: _____ pearls
(ii) Beta: _____ pearls
b. How much would the combined production of pineapples increase for the two islands due to specialization?
_____ pineapples
c. How much would the combined production of pearls increase?
_____ pearls
d. What is the post-trade consumption for each island?
Alpha consumes _____ pearls and ______ pineapples.
Beta consumes ______ pearls and ______pineapples.
Answer:
The opportunity cost of pearls for A is 2.5 pineapples and the opportunity cost of pearls for A is 0.27.
Explanation:
If Alpha produced 6 pearls and 15 pineapples, while B produced 30 pearls and 8 pineapples before the trade, we can calculate the opportunity cost for each island. For island Alpha, their opportunity cost will be:
6 pearls = 15 pineapples
1 pearl = 15/6 pineapples
1 pearl = 2.5 pineapples
Therefore, the opportunity cost of pearls for A is 2.5 pineapples
For island Beta, their opportunity cost will be:
30 pearls = 8 pineapples
1 pearl = 8/30 pineapples
1 pearl = 0.27 pineapples
Therefore, the opportunity cost of pearls for A is 0.27 pineapples
b)
It appears that A will increase production of pineapples from 15 pineapples to 25 pineapples, and due to their opportunity cost, will decrease pearl production from 6 pearls to 2 pearls
It appears that B will increase the production of pearls from 30 pearls to 40 pearls, and due to their opportunity cost, will decrease pineapple production from 8 pineapples to 4 pineapples.
ne implication from the evidence on EI to date is that employers should consider it a factor in hiring employees, especially in jobs that demand ________. good mathematical skills good critical thinking skills good analytical skills the ability to work independently a high degree of social interaction
Answer:
a high degree of social interaction
Explanation:
Emotional intelligence can be regarded as "emotional quotient" It is been defined as the ability to understand as well as to use and manage one's emotions in positive ways so that individual can be relieve of stress or communicate effectively with others or express empathize with others. With Emotional intelligence individual can overcome challenges as well as defusing conflict. Emotional intelligence (EI) can be regarded as concept which is moderately correlated with job performance.
Components of Emotional intelligence are;
✓Social skills.
✓Self-awareness.
✓Motivation.
✓Empathy.
✓Self-regulation.
It should be noted that One implication from the evidence on EI to date is that employers should consider it a factor in hiring employees, especially in jobs that demand a high degree of social interaction.
Exercise 9-15A (Static) Using the current ratio to make comparisons LO 9-7 The following information was drawn from the balance sheets of the Kansas and Montana companies: Kansas Montana Current assets $ 59,000 $ 78,000 Current liabilities 40,000 43,000 Required a. Compute the current ratio for each company. b. Which company has the greater likelihood of being able to pay its bills
Answer:
a. 1.5 and 1.8
b. Montana
Explanation:
Below is the calculation for the current ratio:
a. Formula used, Current ratio = Current assets / Current liabilities
Current ratio of Kansas = 59000 / 40000 = 1.5
Current ratio of Montana = 78000 / 43000 = 1.8
b. The company that has a higher current ratio will have a greater likelihood to pay bills so Montana is the correct answer.
Perit Industries has $110,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:
Project A Project B
Cost of equipment required $110,000 $0
Working capital investment required $0 $110,000
Annual cash inflows $20,000 $68,000
Salvage value of
equipment in six years $8,600 $0
Life of the project 6 years 6 years
The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 16%.
Required:
1. Compute the net present value of Project A.
2. Compute the net present value of Project B.
3. Which investment alternative (if either) would you recommend that the company accept?
Answer:
$-32,775.48
$185,710.69
Project B
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
Project A
Cash flow in year 0 = -$110,000
Cash flow in year 1 - 5 = $20,000
Cash flow in year 6 = $20,000 + $8,600 = 28,600
I = 16%
NPV = $-32775.48
Project B
Cash flow in year 0 = -$110,000
Cash flow in year 1 - 5 = $68,000
Cash flow in year 6 = $68,000 + $110,000 = $178,000
I = 16%
NPV = $185,710.69
Project B should be chosen because its NPV is positive
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
You have just started a new job and plan to save $5,200 per year for 36 years until you retire. You will make your first deposit in one year. How much will you have when you retire if you earn an annual interest rate of 9.54 percent?
a. $1,331,411.17
b. $1,394,509.68
c. $1,346,423.14
d. $1,268,312.65
e. $1,333,878.83
Answer:
$1,394,509.68
Explanation:
Savings amount = $5200
Period = 36 years
Interest = 9.54 percent
We solve for the future value of the annuity
= $5200[(1+0.0954)³⁶-1/0.0954]
= 5200 x [1.0954³⁶-1/0.0954]
= 5200 x 268.1749
= 1,394,509.681 dollars
Therefore after retirement and at an interest rate of 9.54 percent, you would be earning 1,394,509.681 dollars.
Option b.
A rules-based monetary policy :_______.a. is advocated by activists. b. is advocated by nonactivists. c. could involve a predetermined steady growth rate in the money supply. d. b and c e. all of the above
Answer:
d. b and c
Explanation:
Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country (Federal Reserve System in the United States of America) to control the money supply and interest rates so as to boost or enhance economic growth.
Basically, monetary policies are used by the central bank to manage inflation, economic growth through long-term interest rates and level of unemployment in a country. In order to boost economic growth, the national government through its central bank introduces monetary policy to increase money supply (liquidity). Also, a monetary policy can be used to prevent inflation through the reduction of money supply at a given period of time.
A rules-based monetary policy is advocated by non-activists and when it's adopted by the central bank of a country, it could involve a predetermined steady growth rate in the money supply because it's implemented based on specific indicator events existing in the economy.
Your mayor just announced that the local unemployment rate dropped from 10.5% to 10.4% from the prior month. Evaluate the unemployment rate drop and discuss whether there is enough information to determine significance. Support your response with specific examples. In replies to peers, discuss whether you agree or disagree with their assessments and justify your response
Answer:
Not enough information
Explanation:
from this question, this mayor has only given us the estimated proportion of the rate of unemployment for these months. In order to know if it is significant or not, we have to carry out other tests such as the hypothesis testing for the population proportion. But here we do not have any sample data or population data with which we can use to test this significance. The sample size is unknown so we cannot proceed to test if the claim is significant or not.
Five years ago, when the relevant cost index was 120, a nuclear centrifuge cost $40,000. The centrifuge had a capacity of separating 1500 gallons of ionized solution per hour. Today, it is desired to build a new centrifuge with capacity of 4500 gallons per hour, but the cost index now is 300. Assuming a power sizing exponent to reflect economies of scale, x, of 0.75, use the power sizing model to determine the approximate cost (expressed in today's dollars) of the new reactor.
Answer:
The approximate cost (expressed in today's dollars) of the new reactor is $227,950.71.
Explanation:
This can be calculated as follows:
Cost of centrifuge with 4500 capacities 5 years ago / Cost of centrifuge with 1500 capacities 5 years ago = (Capacity of centrifuge with 4500 capacities / Capacity of centrifuge with 1500 capacities)^Power sizing exponent
Cost of centrifuge with 4500 capacity 5 years ago / $40,000 = (4500 / 1500)^0.75
Cost of centrifuge with 4500 capacities 5 years ago / $40,000 = 2.27950705695478
Cost of centrifuge with 4500 capacities 5 years ago = 2.27950705695478 * $40,000 = $91,180.28
Therefore, we have:
Cost of centrifuge with 4500 capacities now = (Cost index now / Cost index 5 years ago) * Cost of centrifuge with 4500 capacities 5 years ago = (300 / 120) * $91,180.28 = $227,950.71
Therefore, the approximate cost (expressed in today's dollars) of the new reactor is $227,950.71.
On January 7, stockholders invest $45,000 in JumpStart in exchange for common stock. Provide the journal entry for this transaction.
Answer:
Dr Cash $45,000
Cr Common stock $45,000
Explanation:
Preparation of the journal entry
Based on the information given the appropriate Journal entry On January 7 since the stockholders invest the amount of$45,000 in JumpStart in exchange for common stock will be:
January 7
Dr Cash $45,000
Cr Common stock $45,000
(To record investment in JumpStart)
Borges Machine Shop, Inc., has a 1-year contract for the production of 225,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:
General-Purpose Equipment (GPE) Flexible Manufacturing System (FMS) Dedicated Machine (DM)
Annual contracted units 225,000 225,000 225,000
Annual fixed cost $125,000 $225,000 $480,000
Per unit variable cost $15.00 $14.00 $13.00
The option GPE is best when the contracted volume is below:__________
Answer:
For 225,000 units FMS is the best alternative.
For GPE: TC
GPE
[tex]= $100,000 + ($15.00\times 225,000)\\\\= $3,475,000[/tex]
For 0 units GPE has the lowest TC. The next lowest cost is FMS.
x = ($200,000-$100,000)/($15-$14) = 100,000
Therefore, for 0 to 100,000 units GPE is the best alternative.
Explanation:
Formula used:-
For 225,000 units FMS is the best alternative.
Total Cost (TC) = Fixed Cost (FC) + [Variable Cost (VC) x Annual Contract Units (ACU)]
For GPE: TC
GPE
[tex]= $100,000 + ($15.00\times 225,000)\\\\= $3,475,000[/tex]
For FMS: TC
FMS
[tex]= $200,000 + ($14.00\times 225,000)\\\\= $3,350,000[/tex]
For DM: TC
DM
[tex]= $480,000 + ($13.00 \times225,000)\\\\= $3,405,000[/tex]
For 0 units GPE has the lowest TC. The next lowest cost is FMS. Comparing these two plans, let x be the no of units when the cost of both plans is the same.
x = ($200,000-$100,000)/($15-$14) = 100,000
Therefore, for 0 to 100,000 units GPE is the best alternative
Similarly comparing FMS and DM to find x, we get
x= ($ 480,000-$ 200,000)/($14-$13) = 280,000
So, for the 225,000 and 280,000 range, FMS is the best alrernative.
For greater than 280,000 DM is the best alternative.
The option GPE is best when the contracted volume is below 100,000 units
The option FMS is best when the contracted volume is between 100,000 and 280,000 units (enter your response as a whole number)
The option DM is best when the contracted volume is over 280,000 units (enter your response as a whole number)
lamingos, Inc. has two service departments and two operating (production) departments. Administrative Department costs are allocated to the Assembly and Packaging departments based on the number of employees, and Maintenance Department costs are allocated to the Assembly and Packaging departments based on square feet occupied. Data for these departments follows:
Department Direct Expenses No. of employees Sqaure Feet
Administrative $30,000
Maintenance 15,000
Assembly 70,000 6 2,000
Packaging 45,000 4 3,000
The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is: __________
Answer:
Packaging= $12,000
Explanation:
First, we need to calculate the allocation rate of the Administrative Department:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Allocation rate= 30,000 / (6 + 4)
Allocation rate= $3,000 per employee
Now, we can allocate to the Packaging Department:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Packaging= 3,000*4
Packaging= $12,000
please someone should help me.....how do we solve the square root of x +8 plus the square root of x+1 equals 7.....note the question is a surd question
The solution to the surd equation here is x = 449/49
How to solve for the value of the surd[tex]\sqrt{x+8} +\sqrt{x-1} = 7[/tex]
We have to isolate the surds
[tex]\sqrt{x+8} =\sqrt{x-1} +7[/tex]
Square the both sides of the equation
x+8 = x-1+49-14√x-1
Separate the equations on the left and the right hand side
14√x-1 = -x-8+x-1+49
Rearrange the equation
14√x-1 = 40
square the both sides of the equation such that
196x -1796 = 0
Divide through by 196
x = 1796/196
x = 449/49
Read more on surds here:
https://brainly.com/question/26957266
#SPJ1
Tori Inc. has some material that originally cost $68,800. The material has a scrap value of $30,300 as is, but if reworked at a cost of $1,500, it could be sold for $31,600. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap? (CIMA adapted)
a. $(71,100)
b. $(1,100)
c. $29,800
d. $(40,200)
Answer:
($200)
Explanation:
Calculation to determine What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap
Sales value of reworked material: $31,600
Less: Cost to rework material: $1,500
Net Sales Value: $30,100
Current Scrap Value: $30,300
Net Disadvantage: ($200)
($30,100-$30,300)
Therefore What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap is ($200)
Define the term creativity
Answer:
Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems, communicating with others, and entertaining ourselves and others.
Answer:
Creativeness is defined as the tendency to generate or recognize ideas, alternatives, or opportunities which can be useful for problem-solving, communication, and for fun with others.
Explanation:
Examples include creative thinking: problem-solving, writing, visual art, communication skills, and openness.
In 2019, website and moving development, web production, user interface, and interaction design as well as design and visual design will be the main fields for creative grabbing.
A restaurant offers a 20% discount on all meals for people aged 60 and older. This restaurant is practicing:_________
a. monopolistic competition.
b. efficient pricing.
c. reservation pricing.
d. price discrimination.
e. price retention.
Answer:
d
Explanation:
Price discrimination is when the same product is sold at different prices to customers in different markets
types of price discrimination
1. first degree price discrimination : here sellers charge each consumer at their willingness to pay in order to eliminate consumer surplus.
2. second degree price discrimination : here firms offer different prices depending on the quantity purchased. e.g. giving discounts for bulk purchases.
3, third degree price discrimination : firms charge different prices to different groups of customers. e.g. having a certain price for senior citizens, students
Requirements to practice successful price discrimination
1. The firm must have market power. If the firm does not have market power and attempts to price discriminate they would lose customers
2. The firm must have different elasticities of demand for their product in different markets
3. The firm must be able to segment the market for their products
The restaurant who offers a 20% discount on all meals for people aged 60 years and above is practicing price discrimination.
Price discrimination can be defined as a situation in which the producer charges different prices for different groups of customers buying the same product.This means, all customers be are purchasing the bc same commodity but are charged differently by the producer.Therefore, the restaurant is practicing price discrimination system
Learn more about price discrimination here:
https://brainly.com/question/18564948
On January 1, 2019, Loeffler Company acquired a machine at a cost of $200,000. Loeffler estimates that it will use the machine for 4 years or 8,000 machine hours. It estimates that after 4 years the machine can be sold for $20,000. Loeffler uses the machine for 2,100 and 1,800 machine hours in 2019 and 2020, respectively.
Required:
Compute depreciation expense for 2019 and 2020 using the () straight-line, (2) double- declining-balance, and (3) units-of-production methods of depreciation
Answer:
1. $45,000
$45,000
2. $100,000
$50,000
3. $47250
$40,500
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($200,000 - $20,000) / 4 = $45,000
Depreciation expense each year would be $45,000
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life) = 2/4 = 1/2
Depreciation expense in 2019 = 1/2 x 200,000 = $100,000
Book value in 2020 = 200,0000 - 100,000 = 100,000
Depreciation expense in 2019 = 1/2 x 100,000 = 50,000
Activity method based on hours worked = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)
2019 = ($200,000 - $20,000) x ( 2,100 / 8000) = 47250
2020 = ($200,000 - $20,000) x ( 1800 / 8000) = 40,500
Economists look at any situation in terms of its component parts: the people making decisions, the environment in which they're making those decisions, and the goods or services being exchanged. For example, think about doing your laundry. Which of the following laundry-related items are nondurable goods?
a. A washing machine
b. Having a pair of pants dry-cleaned
c. A T-shirt
d. A clothes dryer
Four fundamental factors affect the cost of money:
1. The return that borrowers expect to earn on their investments
2. The preference of savers to spend their income in the current period rather than delay their consumption until some future period
3. The risks associated with the investment
4. Expected inflation
Consider the following statements that address these factors, and indicate if you think each statement is true or false.
Statement
True
False
Investments providing cash flows that are more likely to equal their expected value are said to exhibit more risk.
The actual relationship between the risk-free rate of return (r*r*) and the expected future inflation rate or inflation premium (IP) is actually multiplicative—that is, [(1 + rRFrRF) x (1 + IP)] – 1—but it is often simplified to reflect an additive relationship.
All things being equal, rational savers and investors prefer to invest in an asset that provides a 12% return rather than one that provides an 8% return.
All things being equal, savers and investors prefer more risk to less risk and prefer lower risk premiums on projects exhibiting higher levels of risk.
On average and everything else held constant, an investment that can provide a 4% return should attract more investment capital from savers/investors than an otherwise identical investment that can generate a 12% return.
Answer:
True statement is:
All thing being equal, savers and investors prefer more risk to less risk and prefer lower risk premiums on projects exhibiting higher levels of risk.
Explanation:
Investors wish to receive less risk and more return. They prefer from more risk to lesser risk and receive risk premium on project that exhibit higher level of risk and delayed compensation. A project with 12% return will be more riskier than a project with 8% return. Rate of return increases as the level of risk increases.
