Answer:
To show that the rate of growth of V is equal to r using the derivative, we differentiate the function V = A*e^t with respect to time (t).
Explanation:
V = A*e^t
Differentiating both sides with respect to t:
dV/dt = A*e^t * d/dt(t)
Since d/dt(t) is simply 1, we can simplify the expression:
dV/dt = A*e^t
The derivative of V with respect to t is equal to A times e^t.
Now, we have dV/dt, which represents the rate of growth of V. In the given function, we can observe that A is a constant, and e^t is also a constant factor since it represents exponential growth with a fixed rate. Therefore, the rate of growth of V, dV/dt, is equal to A times e^t.
Now, let's calculate the rate of growth for the expression "debet 3/":
Given the expression, debet 3/, it seems that it might be a typographical error or incomplete. If you can provide more information or clarify the expression, I would be happy to help you calculate the rate of growth based on the given information.
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Consider the previous model (question 23) but this time the equation for the investment is 200 + 0.2Y. Then the equilibrium income will be: (hint solve the equation Y = 300 + 0.8((Y - .02Y) +200 + 0.2Y +200 +100 – 0.04Y)
a. 3,500
b. 2,500
c. 6,500
d. 4,500 and
e. 4,000
The equilibrium income is found by substituting the value of Y back into the equation. The equilibrium income in this scenario is approximately $3,703.70. None of the answer choices provided match this exact value, but the closest option is 4000. The correct option is option E.
To solve for the equilibrium income in this scenario, we need to first substitute the given equation for investment (200 + 0.2Y) into the original equation for Y:
Y = C + I + G
Y = 300 + 0.8(Y - 0.02Y) + (200 + 0.2Y) + 200 + 100 - 0.04Y
Next, we simplify and solve for Y:
Y = 300 + 0.8(0.98Y) + 400 + 100 - 0.04Y
Y = 800 + 0.784Y
0.216Y = 800
Y = 3,703.70
Therefore, the equilibrium income in this scenario is approximately $3,703.70. None of the answer choices provided match this exact value, but the closest option is 4000.
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Demand for wine bottles at one of Vino’s warehouses is normally distributed with average 1000010000 and standard deviation 33333333. The firm keeps a safety inventory of 20002000 units. What is the service level of the warehouse?
a.
0.800.80
b.
0.600.60
c.
0.780.78
d.
0.73
Service level is the probability of fulfilling an order within the lead time specified by the customer or agreed upon by the company.
The service level formula is given by:Service level formula = z (standard deviation) - (average demand) / standard deviationWhere,z = standard score or z-scoreAverage demand = 10000Standard deviation = 3333Safety inventory = 2000By substituting the values in the above formula, we get:Service level formula = z (standard deviation) - (average demand) / standard deviation= (2000 - 10000) / 3333= -3Now, referring to the standard normal distribution table, the value of z at -3 is 0.0013. Therefore, the service level of the warehouse is:Service level = 1 - (probability of stockout) = 1 - (0.0013) = 0.9987 ~ 0.73 (approx)Therefore, the service level of the warehouse is 0.73, correct to two decimal places.
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Kermit Plumbing Products Ltd. reported the following data in 20X0 (in billions) (Click the icon to view the financial statements) Compute Kermit's times-interest earned ratio and write a sentence to explain what the ratio values mean. Would you be willing to lend Kermd $1 billon? State your reason (Ender all amounts in billions.) Determine the formula for the times interest eamed ratio. Then, complete the formula and calculate the debt ratio. (Found your answer to one decimal pace, X.X.) Times interested alo es This means that Would you be willing to lend Kermit $1 billion? State your reason Based on times-interest-eamed ratio, the authors be willing to lend $1 billion to Kermit in 2000, Kermit Plumbing s existing interest expense mplete the formula a =Times-interest willing to lend $1 bill Data table Net operating revenues. Operating expenses Operating income Non-operating items: Interest expense Other Net income.... Print ********K $ 20X0 Done 29.8 24.6 5.2 (1.6) (0.2) 3.4 X X.) expense.
The calculation of Kermit Plumbing Products Ltd.’s times-interest earned ratio and explanation of the ratio values are shown below:Formula: Times interest earned ratio = (Net operating income + Interest expense + Income tax expense) / Interest expenseTimes-interest earned ratio = (5.2 + 1.6 + 1.6) / 1.6 = 4.5The times interest earned ratio represents the ability of a company to pay its interest charges on outstanding debt.
If a company's ratio is higher, it means the company is generating sufficient income to cover its interest expenses, and its debt risk is low. On the other hand, a low ratio indicates the company's inability to service its debt burden, and its debt risk is high.Based on the times-interest earned ratio, it is evident that Kermit Plumbing Products Ltd. generated sufficient income to cover its interest expense. It is, therefore, reasonable to lend $1 billion to Kermit in 20X0. Nonetheless, the lenders should also look at other financial ratios, such as liquidity ratios and debt ratios, before lending such a huge amount of money.
.The formula for the debt ratio is as follows:Debt ratio = Total debt / Total assetsIn this case, the debt ratio can be calculated as follows:Debt ratio = (1.6 + 0.2) / 29.8 = 0.06 (rounded to one decimal place)Therefore, the debt ratio of Kermit Plumbing Products Ltd. is 0.06 in 20X0.
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PRUEBA DE PRACTICA CAP 22 & 230 12 Seved A company provided the following direct materials cost information. Compute the direct materials quantity variance Standard costs assigned: Direct materials standard cost (476,000 units # $2.50/unit) Actual costa: $1,190,000 Direct materials costs incurred (474,720 units # $2.80/unit) $1,329.216 Multiple Choice $3.584 Unfavorable $3,584 Favorable $139.216 Favorable $3.200 Favorable $3,200 Unfavorable. Next > Help Save & Exit Sub
The direct materials quantity variance can be computed using the following formula: DMQV = (AQ - SQ) x SP Where, AQ = Actual quantity of materials used SQ = Standard quantity of materials allowed for actual production SP = Standard price of materials per unit.
Direct materials quantity variance: DMQV = ($1,329,216/474,720 units - $1,190,000/476,000 units) x $2.50/unit DMQV = $2,793.344 unfavorable. Given, Standard cost per unit of direct materials = $2.50Actual cost per unit of direct materials = $1,329,216/474,720 units = $2.80 Standard quantity of direct materials for actual production = 476,000 units Actual quantity of direct materials used = 474,720 units Therefore, DMQV = (AQ - SQ) x SPDMQV = (474,720 units - 476,000 units) x $2.50/unit DMQV = -$3,584 unfavorable Hence, the direct materials quantity variance is -$3,584 unfavorable. The correct option is option C. $3,584 unfavorable. This is so because the negative variance suggests that the actual quantity of materials used was higher than the standard quantity of materials allowed for actual production, which led to an unfavorable variance.
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on the payment calculator sheet the payment per month in cell d7 is
On the payment calculator sheet, the payment per month in cell D7 is calculated using the following formula: `=PMT(D5/12,D6*12,-D4)`. This formula is based on the present value of the loan, the interest rate, and the number of payments that will be made to repay the loan.
In this formula, `D5/12` represents the interest rate per month (since the formula requires a monthly interest rate but the input field takes an annual interest rate, the yearly interest rate is divided by 12), `D6*12` represents the number of payments that will be made (since the formula requires a total number of payments but the input field takes the number of years, the number of years is multiplied by 12), and `-D4` represents the present value of the loan (since the formula requires a negative value for the present value because it is a debt).
The result of this formula is the payment that must be made each month to repay the loan over the specified period of time. The payment per month is displayed in cell D7 and can be adjusted by changing the values in cells D4, D5, and D6. The payment calculator sheet is a useful tool for calculating loan payments and understanding the factors that affect them.
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Riverbed Corp. issues 690 shares of $2 par value common stock and 330 shares of $100 par value preferred stock for a lump sum of $135,800.
(a)
Prepare the journal entry for the issuance when the market price of the common shares is $140 each and market price of the preferred is $140 each. (Round intermediate calculations to 6 decimal places, e.g. 1.284379 and final answers to 0 decimal places, e.g. 5,125. Cre
The journal entry for the issuance of 690 shares of $2 par value common stock and 330 shares of $100 par value preferred stock for a lump sum of $135,800 when the market price of the common shares and preferred shares is $140 each can be prepared.
The issuance of stock for a lump sum involves allocating the total lump sum amount to the respective stock classes based on their par value and market value.
To prepare the journal entry, we need to determine the allocation of the lump sum amount to common stock and preferred stock based on their par value and market price.
The par value of the common stock is $2, and the par value of the preferred stock is $100. The market price of both the common and preferred shares is $140 each.
First, we calculate the total par value for the common stock: 690 shares * $2 par value = $1,380.
Next, we calculate the total par value for the preferred stock: 330 shares * $100 par value = $33,000.
Now, we need to allocate the remaining amount to the common and preferred stock based on their market prices.
The total lump sum amount is $135,800. We subtract the total par value of both stock classes from the lump sum amount: $135,800 - ($1,380 + $33,000) = $101,420.
To allocate the remaining amount, we need to determine the ratio between the market price of each stock class and the total market price:
Common stock market price / Total market price = $140 / ($140 + $140) = 0.5
Preferred stock market price / Total market price = $140 / ($140 + $140) = 0.5
Now, we can allocate the remaining amount to each stock class:
Common stock: 0.5 * $101,420 = $50,710
Preferred stock: 0.5 * $101,420 = $50,710
The journal entry to record the issuance would be as follows:
Cash $135,800
Common Stock $50,710
Preferred Stock $50,710
Paid-in Capital in Excess of Par - Common $650
Paid-in Capital in Excess of Par - Preferred $50,000
The cash account is debited for the total lump sum amount received. The common stock and preferred stock accounts are credited for their respective par values. The remaining amount is allocated to paid-in capital in excess of par for each stock class.
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How would you apply principles of ethical reasoning to conclude whether a business practice is good or bad, right or wrong, ethical or unethical.
Ethical reasoning involves the use of logical and moral principles to determine whether a particular action or decision is morally justifiable.
Applying ethical reasoning to evaluate a business practice requires considering the impact of the practice on stakeholders, including customers, employees, suppliers, and society as a whole. Ultimately, the goal is to determine whether the practice is consistent with basic ethical principles, such as fairness, honesty, respect, and responsibility.
To determine whether a business practice is ethical, one must assess its potential consequences, both positive and negative. This involves analyzing the potential benefits and harms of the practice for all stakeholders involved. For example, if a business practice involves using sweatshop labor to produce products at a lower cost, one must consider the impact on the workers, the company's reputation, and the long-term sustainability of the business model. Beyond a simple cost-benefit analysis, ethical reasoning requires consideration of the broader moral implications of the practice, including fairness, justice, and respect for human dignity.
Ultimately, the conclusion about whether a business practice is ethical or unethical depends on a careful and comprehensive assessment of the moral principles involved, as well as the consequences of the practice for all stakeholders.
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Assume you are creating an app for a water taxi business in the Cayman Islands. You must use PESTEL and Porter’s 5 Force to analyse the industry’s external environment, profitability and competitive intensity. Your answer should take the below questions into account.
Is there a trend changing the industry’s structure (.g., Covid-19, trade war, new technology)? Is this industry consolidating? How is this industry’s current competitions and profitability? Any existing players? who are they? What do they offer customers? what are their strength & weaknesses? Any barrier for new players?
The Cayman Islands is known for its water taxi business, which transports passengers and goods from one island to another.
Before creating an app for the water taxi business, a PESTEL and Porter’s Five Forces analysis of the industry's external environment, profitability, and competitive intensity is essential. Yes, technology is changing the industry's structure. As a result, water taxi businesses in the Cayman Islands must keep up with the latest technology. The emergence of new technology has resulted in a significant shift in the water taxi industry.
The use of technology can enhance the overall customer experience, safety, speed, and efficiency.Is this industry consolidating?Yes, the industry is consolidating.
Many of the existing players in the industry are merging with other companies to expand their operations. The growth of tourism in the Cayman Islands has attracted more investors, leading to industry consolidation.
The industry is competitive, and many businesses are fighting for a share of the market. The existing players in the industry offer customers exceptional services.
Yes, several existing players offer customers exceptional services. These companies include Island Dream Tours, Fat Fish Adventures, and Cayman Sea Private Charter. Island Dream Tours is known for providing exceptional customer service, while Fat Fish Adventures is known for its private tours. Cayman Sea Private Charter is known for its luxurious amenities. Their strengths include experience in the industry and their ability to cater to the customers' needs.The high costs of establishing a water taxi business in the Cayman Islands can be a significant barrier for new players. Obtaining the necessary licenses, permits, and equipment can be expensive, and competition is already fierce.
Furthermore, the island's geography and marine environment can be challenging for new players who are not familiar with the terrain.
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hatteras hammocks is a company that takes a strategic approach to hrm. it has a(n) that outlines a plan for future staffing of managerial positions.
Hatteras Hammocks is a company that takes a strategic approach to HRM (Human Resource Management).
What does it have?It has a Succession Plan that outlines a plan for future staffing of managerial positions. Succession planning is a systematic process that ensures a workforce's ongoing ability to fill key roles by developing employees with the potential to fill those roles.
It is the systematic identification, assessment, and development of employees to fill key roles within an organization. It is important for organizations to have a succession plan to minimize the impact of key employee turnover and to ensure that key roles are filled by employees with the necessary skills, knowledge, and abilities to maintain the company's performance levels.
By implementing a succession plan, Hatteras Hammocks is preparing for the future by identifying and developing its future leaders, which is a crucial aspect of strategic HRM.
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Ivanhoe Company needs to make adjusting entries for each of the following reconciling items. Identify the account to be debited and the account to be credited in each case. 1. A check for $52 written to the company by J. Jones was returned NSF. 2. The monthly service charge by the bank was $52. 3. The bank collected a $1,000 note plus interest of $75 on the company's behalf. The company had not accrued the interest.
1. Debit: Account Receivable Credit: Checking Amount 2. Debit: Bank Service Charge Account Credit: Checking Account 3. Debit: Noted Receivable Credit: Interest Revenue.
1. When a check for $52 written to the company by J. Jones was returned NSF, the bank would credit the checking account for the amount of the check and would debit accounts receivable for the same amount (i.e., $52).
2. When a bank imposes a monthly service charge of $52, the bank would debit the checking account for the amount of the service charge and would credit the bank service charge expense account for the same amount (i.e., $52).
3. When a bank collects a $1,000 note plus interest of $75 on the company's behalf, the bank would credit the checking account for the amount of the note ($1,000), would credit interest revenue for the amount of the interest ($75), and would debit the notes receivable account for the combined amount of principal and interest ($1,075).
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WonderBurgers LLC, is a UK restaurant chain with more than 125 restaurants throughout mainland Britain. The firm positions itself as a 'hip' burger chain, attracting a premium customer segment. Restaurants operate mainly in large metropolitan areas. Recently the company acquired a small burger chain headquartered in France. WonderBurgers LLC wants to expand operations further by acquiring other restaurant chains in Europe. WonderBurgers LLC decided to bring on a consultant (You) to advise them on how to best expand and set up operations in foreign markets. 1. Describe the options of an ethnocentric, polycentric, and a geocentric approach to staffing the new subsidiaries in France and in other countries. Explain 2 main advantages and 2 main disadvantages for each staffing approach in the context of the case, and argue which staffing approach you would recommend to WonderBurgers LLC. [50 marks]
The parent company may lack control over the subsidiaries due to a mix of local and parent company staff.The best staffing approach for WonderBurgers LLC is geocentric staffing. The approach allows the company to use the best of both ethnocentric and polycentric approaches. This will enable the company to utilize local staff's skills while maintaining control over the subsidiaries. The approach is flexible and enables the company to adapt to different foreign markets. Additionally, the company can share knowledge and experience across subsidiaries, enabling them to develop and grow.
There are three possible approaches to staffing new subsidiaries in foreign countries, namely ethnocentric, polycentric, and geocentric. WonderBurgers LLC is looking for the most effective approach for the French subsidiary and other foreign countries.Ethnocentric approachEthnocentric approach involves using parent-country staff in key positions at the subsidiary. The parent company staff has extensive experience, a deep understanding of the business, and familiarity with company policies and procedures.Advantages:Control over the subsidiary since the parent-country staff has the same values, culture, and behavior as the parent company.Improved communication between the parent company and the subsidiary. The staff is familiar with the company's products, services, and the organizational culture.Disadvantages:The high cost of transferring and managing parent company staff in foreign countries.The locals in the subsidiary may feel undermined and powerless due to lack of representation in key positions.Polycentric approachIn this approach, the company uses local personnel in the subsidiary since they are best suited to understand and handle the local market. Local employees have an understanding of the local language, culture, and customs.Advantages:The company saves on costs since it does not have to relocate employees from the parent company.Quick establishment of the subsidiary, since local staff knows how to navigate the legal and cultural barriers of the local market.Disadvantages:Limited flow of communication between the parent company and the subsidiary due to the cultural differences.The parent company may lack control over the subsidiary due to the distance and lack of understanding of local policies.Geocentric approachGeocentric approach emphasizes the best of both ethnocentric and polycentric approaches. The company is interested in talent, and the staffing approach is based on experience, skills, and the ability to do the job.Advantages:The approach is best suited for foreign subsidiaries since it can utilize the skills of both parent company and local staff. The company can share knowledge and experience across subsidiaries, enabling them to develop and grow.Flexibility in staffing based on the requirements of the local market.Disadvantages:The cost of transferring and managing personnel between subsidiaries.The parent company may lack control over the subsidiaries due to a mix of local and parent company staff.The best staffing approach for WonderBurgers LLC is geocentric staffing. The approach allows the company to use the best of both ethnocentric and polycentric approaches. This will enable the company to utilize local staff's skills while maintaining control over the subsidiaries. The approach is flexible and enables the company to adapt to different foreign markets. Additionally, the company can share knowledge and experience across subsidiaries, enabling them to develop and grow.
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Take me to the text Beverly earns a salary of $46,000 per year and is paid semi-monthly. The current CPP rate is 5.1%, the current El rate is 1.62% and her income tax rate is 21%. Calculate her net pay for each semi-monthly pay period. Properly account for the $3,500 exemption. Do not enter dollar signs or commas in the input boxes. Use the negative sign for values that must be subtracted. Round your answers to 2 decimal places. Gross Pay $ Canada Pension Plan $ Employment Insurance $ Income Tax $ Net Pay $
Beverly's net pay for each semi-monthly pay period is $1,412.
to calculate beverly's net pay for each semi-monthly pay period, we need to deduct the canada pension plan (cpp), employment insurance (ei), and income tax from her gross pay. let's calculate each deduction step by step:
step 1: calculate gross pay for each semi-monthly pay period.beverly's annual salary is $46,000, so her semi-monthly gross pay is $46,000 / 24 = $1,916.67.
step 2: calculate the cpp deduction.
the current cpp rate is 5.1% of the pensionable earnings, up to the yearly maximum pensionable earnings (ympe). for 2021, the ympe is $61,600.since beverly's salary is below the ympe, her cpp deduction will be 5.1% of her gross pay.
cpp deduction = $1,916.67 * 0.051 = $97.83
step 3: calculate the ei deduction.the current ei rate is 1.62% of the insurable earnings, up to the yearly maximum insurable earnings (ymie). for 2021, the ymie is $56,300.
since beverly's salary is below the ymie, her ei deduction will be 1.62% of her gross pay.ei deduction = $1,916.67 * 0.0162 = $31.04
step 4: calculate the income tax deduction.
to calculate the income tax, we need to consider beverly's income tax rate and the tax exemption.her income tax rate is 21%, and she has a $3,500 exemption.
taxable income = gross pay - cpp - ei - exemptiontaxable income = $1,916.67 - $97.83 - $31.04 - $3,500 = $1,786.80
income tax deduction = $1,786.80 * 0.21 = $375.63
step 5: calculate net pay.net pay = gross pay - cpp - ei - income tax
net pay = $1,916.67 - $97.83 - $31.04 - $375.63 = $1,412.17 17.
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[The following information applies to the questions displayed below.] Delph Company uses a job-order costing system and has two manufacturing departments-Molding and Fabrication. The company provided the following estimates at the beginning of the year: Molding 24,000 Machine-hours Fabrication 33,000 Total 57,000 Fixed manufacturing overhead cost $ 800,000 $ 3.00 Variable manufacturing overhead cost per machine-hour $ 220,000 $ 2.00 $ 1,020,000 During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs- Job D-70 and Job C-200, It provided the following information related to those two jobs: Job D-70 Total Direct materials cost Direct labor cost Machine-hours Molding $ 370,000 $ 240,000 16,000 Fabrication $ 320,000 $ 160,000 $ 690,000 $ 400,000 24,000 8,000 Job C-200 Molding $ 300,000 Direct materials cost Direct labor cost Machine-hours Fabrication $ 260,000 $ 260,000 25,000 $ 160,000 8,000 Total $ 560,000 $ 420,000 33,000 Delph had no underapplied or overapplied manufacturing overhead during the year. 2. Assume Delph chooses to combine its departmental rates from requirement 1 into a plantwide predetermined overhead rate based on machine-hours. a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200 c. If Delph establishes bid prices that are 150% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-200? d. What is Delph's cost of goods sold for the year? Required 2A Required 28 Required 2C Required 2D Assume Delph chooses to combine its departmental rates from requirement 1 into a plantwide predetermined overhead rate based on machine-hours. Compute the plantwide predetermined overhead rate. (Round your answer to 2 decimal places.) Predetermined overhead rate per MH Required 2A Requited 28 Required 2C Required 2D Assume Delph chooses to combine its departmental rates from requirement 1 Into a plantwide predetermined overhead rate based on machine-hours. Compute the total manufacturing cost assigned to Job D-70 and Job C-200. (Round your Intermediate calculations to 2 decimal places.) Total manufacturing cost Job D-70 Job C-200 Required 2A Required 28 Required 2C Required 2D Assume Delph chooses to combine its departmental rates from requirement 1 Into a plantwide predetermined overhead rate based on machine-hours. If Delph establishes bid prices that are 150% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-200? (Round your Intermediate calculations to 2 decimal places.) Bid price Job D-70 Job C-200 Required 2A Required 28 Required 2C Required 2D Assume Delph chooses to combine its departmental rates from requirement 1 into a plantwide predetermined overhead rate based on machine-hours. What is Delph's cost of goods sold for the year? (Round your Intermediate calculations to 2 decimal places.) Cost of goods sold
To calculate the plantwide predetermined overhead rate, total manufacturing cost assigned to Job D-70 and Job C-200, bid prices for the jobs, and the cost of goods sold for the year, Delph Company combines its departmental rates into a plantwide rate based on machine hours.
a. To compute the plantwide predetermined overhead rate, add the fixed manufacturing overhead costs of both departments and the variable manufacturing overhead costs per machine-hour of both departments. Then divide the total manufacturing overhead cost by the total estimated machine-hours of both departments. In this case:
Total manufacturing overhead cost = $1,020,000
Total estimated machine-hours = 57,000
Plantwide predetermined overhead rate per machine-hour = Total manufacturing overhead cost / Total estimated machine-hours
Plantwide predetermined overhead rate per machine-hour = $1,020,000 / 57,000
b. To calculate the total manufacturing cost assigned to each job, multiply the machine hours of each department for the job by the plantwide predetermined overhead rate per machine hour. Then add the direct materials cost and direct labor cost for each job. For Job D-70:
Total manufacturing cost for Job D-70 (Molding) = Machine-hours (Molding) × Plantwide predetermined overhead rate per machine-hour + Direct materials cost + Direct labor cost
Total manufacturing cost for Job D-70 (Molding) = 16,000 × (Plantwide predetermined overhead rate per machine-hour for Molding) + $370,000 + $240,000
Perform similar calculations for Job D-70 (Fabrication), Job C-200 (Molding), and Job C-200 (Fabrication).
c. To determine the bid prices for each job, multiply the total manufacturing costs for the jobs by 150%.
Bid price for Job D-70 = Total manufacturing cost for Job D-70 × 150%
Bid price for Job C-200 = Total manufacturing cost for Job C-200 × 150%
d. The cost of goods sold for the year is the sum of the total manufacturing costs for all completed jobs.
Cost of goods sold = Total manufacturing cost for Job D-70 + Total manufacturing cost for Job C-200
By following these calculations, the required values for the plantwide predetermined overhead rate, total manufacturing costs assigned to the jobs, bid prices, and cost of goods sold can be determined based on the provided information.
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Xiomara Ltd, a manufacturing company, is considering a significant new investment in a product line that utilizes green technology aimed at households. Xiomara's current manufacturing will stop making revenues shortly, so the new asset is a welcome addition to the balance sheet that can help pay off Xiomara's long-term debt burden.
Xiomara is currently finalizing an investigation into the new product line's earnings potential, estimated to be between £30m and £100m. The research will reveal the true earnings potential, which will be any number between £30m and £100m. The investment cost is £40m, and the firm will not make the investment decision until the firm finalizes its investigation into the earnings potential of the new product line.
The face value of the current long-term debt burden of Xiomara is £20m. The debt is due shortly. and the firm can service only £5m of this liability from the firm's current earnings flow.
For your answer, you should assume that the market is risk-neutral, that the discount rate is zero. and that the earnings potential signal is distributed uniformly between £30m and £100m.
Please answer the following questions:
(a) If the firm had zero long-term debt, what would be the current value of the firm's equity (that is, before the firm finalizes its investigation into the earnings potential)? (10 marks)
(b) What is the current value of the firm's debt and equity?
The current value of the firm's debt is £20m, and the current value of the firm's equity is £45m.
(a) If the firm had zero long-term debt, the current value of the firm's equity would be equal to the potential earnings of the new product line. Since the earnings potential is estimated to be between £30m and £100m, the average earnings potential can be calculated as the average of the lower and upper bounds:
Average Earnings Potential = (£30m + £100m) / 2
= £65m
Therefore, the current value of the firm's equity would be £65m.
(b) To determine the current value of the firm's debt and equity, we need to consider the debt repayment capability based on the firm's current earnings flow.
The firm can service only £5m of the £20m long-term debt liability from its current earnings flow. This means that the remaining debt amount of £15m cannot be repaid with the current earnings.
Given that the market is risk-neutral and the discount rate is zero, we can assume that the current value of the firm's debt is equal to the face value, which is £20m.
The current value of the firm's equity can be calculated by subtracting the current value of the debt from the potential earnings of the new product line:
Current Value of Equity = Average Earnings Potential - Current Value of Debt
= £65m - £20m
= £45m
Therefore, the current value of the firm's debt is £20m, and the current value of the firm's equity is £45m.
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Consider an economy in which the real exchange rate is constant and equal to 1. Consumption, investment, taxes and government spending are given by: C = 10+ 0.8YD = 10 G = 10 T = 10 Imports and exports are given by IM = 0.3Y = 0.3Y* where Y* is foreign output, which we assume is Y* = 100. a) Find the equilibrium level of output of this economy. What is the multiplier of this economy? If we were to close the economy, so imports and exports were both zero, what would the multiplier be? Why would the multiplier be different in a closed economy? b) Assume that the domestic government has a target level of output of 125. What is the increase in G necessary to achieve the target output in the domestic economy? What are the effect of the change of governemtn spending on the trade balance (net exports)?
a) The equilibrium level of output (Y) can be found by setting Y = YD in the consumption function: 10 + 0.8Y = 10 + 0.8Y* (Y* = 100). Solving this equation, we get Y = 100. The multiplier of this economy is 1/(1 - 0.8) = 5.
b) To achieve a target output of 125, the increase in government spending (G) would need to be G = (125 - 100) + T = 35.
a) to find the equilibrium level of output, we need to set output (y) equal to aggregate demand (ad) and solve for y. the aggregate demand equation is given by:
ad = c + i + g + (x - im)
where:
c = consumption
i = investment
g = government spending
x = exports
im = imports
in this case, imports and exports are given as im = 0.3y and x = 0.3y*. since the real exchange rate is constant and equal to 1, we can assume that the domestic and foreign prices are the same, and so we have y* = 100 and im = 0.3y.
substituting the given values into the aggregate demand equation, we get:
ad = (10 + 0.8y) + i + 10 + (0 - 0.3y)
simplifying further:
ad = 20 + 0.5y + i
now, we set ad equal to y to find the equilibrium level of output:
y = 20 + 0.5y + i
rearranging the equation:
0.5y = 20 + i
y = 40 + 2i
since we know that y* = 100, we can substitute this value into the equation to find the equilibrium level of output:
y = 40 + 2i = 100
solving for i:
2i = 60
i = 30
substituting the value of i back into the equation for y:
y = 40 + 2(30) = 100
, the equilibrium level of output in this economy is 100.
the multiplier of this economy can be found using the formula:
multiplier = 1 / (1 - mpc)
where mpc is the marginal propensity to consume. in this case, the marginal propensity to consume is given by the consumption equation:
c = 10 + 0.8yd
the marginal propensity to consume is the coefficient of yd, which is 0.8.
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While most companies record transactions very carefully, the reality is that mistakes still happen. For example, bank regulators fined Banc One Corp $1.8 million because they felt that the unreliability of the bank’s accounting system caused it to violate regulatory requirements. Also, in recent years Fannie Mae, the government mortgage association, announced a series of large accounting errors. Finally, before a major overhaul of its accounting system, the financial records of Waste Management Inc. were in such disarray that of the company’s 57,000 employees, 10,000 were receiving pay slips that were in error. The Sarbanes-Oxley Act was created to minimize the occurrence of errors like these by increasing every employee’s responsibility for accurate financial reporting.
In order for these companies to prepare and issue financial statements, their accounting equations must have been in balance at year-end. How could these errors or misstatements have occurred? Discuss two ways that organizations can avoid these costly mistakes. Be sure to incorporate at least two outside scholarly sources into your post. Your post must be a minimum of two paragraphs.
There are a variety of reasons why errors or misstatements might occur in an organization's financial statements, ranging from simple mistakes to intentional fraud.
However, there are also several steps that organizations can take to avoid these costly mistakes.
One way to prevent errors is to implement effective internal controls. Internal controls are policies and procedures put in place by management to ensure that transactions are properly authorized, recorded, and reported. These can include things like segregation of duties, where different employees are responsible for different aspects of the accounting process; regular reconciliations of accounts, to ensure that transactions are being accurately recorded; and independent audits, to provide an objective review of the financial statements. According to one study, organizations with strong internal controls were less likely to experience financial statement errors (Alfraih & Almutairi, 2019).
Another way to prevent errors is to prioritize ethical behavior and a culture of integrity throughout the organization. This includes training employees on ethical conduct and providing incentives for ethical behavior. Research has shown that organizations with a strong ethical culture are more likely to have accurate financial reporting (Pierce & Sweeney, 2015). In addition, the Sarbanes-Oxley Act requires that public companies establish codes of ethics for their senior financial officers, and that they disclose any changes to those codes (Nelson, 2003).
In conclusion, errors or misstatements in financial statements can have serious consequences for organizations, including fines, legal action, and damage to the company's reputation. However, by implementing effective internal controls and prioritizing a culture of ethics and integrity, organizations can minimize the risk of these costly mistakes.
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CASE 9.2 ENDOWMENTS: TO SPEND NOW OR SAVE FOR A RAINY DAY Journey Center, a drop-in center for teens aged 13 to 18 years old had been operating in the predominately low-income community of Kingston for almost 10 years. The organization was established by members of a church in the neighboring upscale town of Middleton as a separate 501(c)(3) nonprofit with the mission of giving local kids a safe place after school to spend their free time and receive homework assistance, if needed. The majority of funding for the center came through the support of church parishioners in the form of cash donations and fund-raisers held at the church on behalf of Journey Center. The center's founding board was made up of Kingston community members, some of whom were also parishioners. Journey Center operated out of a rented storefront two blocks away from the local high school. When they first opened the doors, word spread about the center, and before long it was viewed as the "cool" place to hang out. On average, 20 students used the facility every week- day when school was in session. The center was closed on the weekends and during the summer. Brightly painted rooms were filled with a hodgepodge of donated bean bag chairs, board games, and a worn pool table. There were chairs and tables scattered about where students could complete their schoolwork. The program was run by a part-time executive director, Jorge Partida. Jorge enjoyed the lively chaos that the teens brought to the center and prided himself on knowing all of their names. Jorge carefully monitored every penny of the center's annual $300,000 budget. He employed several part-time staff who, along with volunteers, helped deliver tutoring programs and monitored the teens' activities. For their part, church members were also very proud of the center they had helped to build. One spring, parishioners and staff were working on the annual giving campaign for the church when Barb Sandke, a longtime parishioner and major donor to the church and the center said, "You know, I've been thinking..." Chapter 9
As Barb Sandke, a longtime parishioner and major donor to the church and the center said, "You know, I've been thinking...". Her thought was on how the church should handle its endowments: should it spend the money now, or save it for a rainy day?
As Barb Sandke, a longtime parishioner and major donor to the church and the center said, "You know, I've been thinking...". Her thought was on how the church should handle its endowments: should it spend the money now, or save it for a rainy day? The Journey Center was founded as a separate 501(c)(3) nonprofit by members of a church in the neighboring upscale town of Middleton with the mission of providing a safe space for local kids to hang out, do their homework, and engage in other activities.The center's majority of funding came from church parishioners in the form of cash donations and fundraisers held at the church on behalf of Journey Center. The center's founding board was made up of Kingston community members, some of whom were also parishioners. Journey Center operated out of a rented storefront two blocks away from the local high school, serving an average of 20 students every weekday when school was in session.Its part-time executive director, Jorge Partida, carefully monitored every penny of the center's annual $300,000 budget. Several part-time staff who, along with volunteers, helped deliver tutoring programs and monitored the teens' activities. For their part, church members were also very proud of the center they had helped to build.In conclusion, the church should consider the immediate needs of the center. A portion of the endowment could be used for the Journey Center to improve its facilities, expand the programs and attract more students. However, the church also needs to ensure the safety of the center in case of unforeseen events that could threaten its operations. Therefore, it's best to create a balance by keeping the money in a reserve account and using it only when necessary. Finally, the church should invite members of the Kingston community to offer their input on how to use the funds.
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5 minutes Save The Redwoods, a nonprofit entity devoted to informing the public about the essential existence of redwood trees for environmental health, sends out brochures to a large number of earth conservation organizations urging them to place the brochures in the organization’s waiting rooms. The four-page brochure, with a total cost of $8,000 contains detailed information about the history, benefits, and suggested conservation actions for the redwood population throughout the world in the first three pages. The last page (1/4 of the brochure) contains an appeal for funds with no mention of previous donors. The expense(s) the nonprofit entity will recognize for the cost of the brochure is (are):
Group of answer choices
Support Expense – Fundraising $8,000.
Program Expense $6,000, Support Expense – Fundraising $2,000.
Program Expense $8,000.
Support Expense – Administrative $6,000, Support Expense – Fundraising $2,000.
The expense(s) the nonprofit entity will recognize for the cost of the brochure is **Program Expense $6,000, Support Expense – Fundraising $2,000**.
In this scenario, the brochure serves a dual purpose. The first three pages provide detailed information about the redwood population and its conservation, aligning with the nonprofit's programmatic activities and mission. Therefore, the cost associated with these pages, which is $6,000, would be recognized as Program Expense.
However, the last page of the brochure solely focuses on an appeal for funds without mentioning previous donors. This page's content primarily serves fundraising purposes, distinct from the programmatic activities. As a result, the cost associated with this page, amounting to $2,000, would be recognized as Support Expense - Fundraising.
By recognizing $6,000 as Program Expense and $2,000 as Support Expense - Fundraising, the nonprofit entity accurately reflects the allocation of expenses between its program activities and fundraising efforts.
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note: may you please solve and
explain with using formulas
An investor puts £5,000 in a savings account that pays 10% simple interest at the end of each year. Compare how much the investor would have after 6 years if the money was: A. invested for 6 years B.
The amount after 6 years for £5,000 invested for 4 years and then withdrawn, and the proceeds invested for a further 2 years at 10% simple interest is £8,400.
What does it show?Given: An investor puts £5,000 in a savings account that pays 10% simple interest at the end of each year. We have to compare how much the investor would have after 6 years if the money was: A. invested for 6 years B.
Let's calculate the amount after 4 years for £5,000 at 10% simple interest. T = 4 years , R = 10%P = £5,000Using the simple interest formula, we can calculate the interest: I = P × R × TI = 5000 × 10/100 × 4I = £2000So, the interest is £2,000. And the total amount after 4 years will be P = I + P = 2000 + 5000P = £7000Now, the proceeds of £7,000 were invested at 10% simple interest for another 2 years.
So, let's calculate the interest on £7,000 at 10% for 2 years. T = 2 years ,R = 10%P = £7,000Using the simple interest formula, we can calculate the interest: I = P × R × TI = 7000 × 10/100 × 2I = £1,400So, the interest is £1,400. And the total amount after 2 years will be:P = I + P = 1400 + 7000P = £8400.
Therefore, the amount after 6 years for £5,000 invested for 4 years and then withdrawn, and the proceeds invested for a further 2 years at 10% simple interest is £8,400.
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Royal Company is preparing budgets for all the five months: Budgeted sales for the next five months are: April 20,000 units May 50,000 units June 30,000 units July 25,000 units August 15,000 units. The selling price is $10 per unit. All sales are on account. Royal's collection pattern is: 70% collected in the month of sale, 25% collected in the month following sale, 5% uncollectible. The March 31 accounts receivable balance of $30,000 will be collected in full. 1. Prepare a sales budget for the April, May & June, July and August. 2. Prepare expected cash collections budget for all the months.
The expected cash collections budget will provide estimates of the cash inflows for each month based on the collection pattern and the sales figures.
1. Sales Budget:
- April: 20,000 units x $10 = $200,000
- May: 50,000 units x $10 = $500,000
- June: 30,000 units x $10 = $300,000
- July: 25,000 units x $10 = $250,000
- August: 15,000 units x $10 = $150,000
2. Expected Cash Collections Budget:
To determine the expected cash collections, we consider the collection pattern provided:
- April: 70% of April sales ($200,000 x 70% = $140,000)
- May: 25% of April sales ($200,000 x 25% = $50,000) + 70% of May sales ($500,000 x 70% = $350,000)
- June: 25% of May sales ($500,000 x 25% = $125,000) + 70% of June sales ($300,000 x 70% = $210,000)
- July: 25% of June sales ($300,000 x 25% = $75,000) + 70% of July sales ($250,000 x 70% = $175,000)
- August: 25% of July sales ($250,000 x 25% = $62,500) + 70% of August sales ($150,000 x 70% = $105,000)
The expected cash collections budget will provide estimates of the cash inflows for each month based on the collection pattern and the sales figures.
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The only viable and sustainable way for service organizations to remain in business is to develop and maintain long-term relationships with their customers, a fact that is becoming increasingly apparent to service providers around the globe. Recent surveys conducted by a number of providers of financial services revealed that while some relationship development strategies impose restrictions on customers and leave them with no other option, other strategies that allow customers to remain in the relationship voluntarily are more viable and sustainable. Using illustrative examples, evaluate four (4) such strategies that do not restrict customers and allow them to maintain relationships with their preferred service providers.
Four strategies that do not restrict customers and allow them to maintain relationships with their preferred service providers are transactional, functional, affiliative, and strategic.
What is customer relationship?
The techniques, plans, and procedures a business use to develop and preserve client connections are referred to as customer relations or customer relationship. Every client interaction matters, so it's critical for businesses to constantly deliver on their promises.A customer should always have a favourable interaction with a firm, leaving them with a favourable impression of the enterprise. The Customer and the business appreciate one another and have a long-lasting understanding of one another.
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classify the following as either current assets or non-current
assets
cash and balances at central banks
balances
at banks and financial institutions
deposits
at banks and financial institutio
Based on the provided information, the classification of the following items as either current assets or non-current assets is as follows:
Cash and balances at central banks - Current asset
Balances at banks and financial institutions - Current asset
Deposits at banks and financial institutions - Current asset
All three items listed are considered current assets because they are expected to be converted into cash or used up within a relatively short period, usually within one year or the operating cycle of the business, whichever is longer.
Current assets are assets that are either cash or assets that are expected to be converted into cash, sold, or consumed within a short period of time. They are typically used in the day-to-day operations of the business.
It's important to note that the classification of assets can vary based on specific circumstances and accounting standards followed by the company. Therefore, it is advisable to refer to the company's financial statements or consult with a financial professional for precise asset classification.
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if a bond's yield to maturity exceeds its coupon rate, the bond's _____.
If a bond's yield to maturity exceeds its coupon rate, the bond's price would decrease.
A bond's yield to maturity (YTM) is the rate of return earned by an investor if they hold the bond until it matures.
The YTM of a bond reflects the bond's interest rate, its purchase price, and the number of years until it matures.
A bond's coupon rate, on the other hand, is the rate of interest that is paid on the bond's face value.
In the case that a bond's yield to maturity exceeds its coupon rate, this means that the bond is sold at a premium. In other words, the bond's purchase price is higher than its face value.
When a bond is sold at a premium, its coupon rate is lower than the yield to maturity.
This is because the coupon payments are based on the bond's face value, not its purchase price.
Therefore, the bond's price would decrease until its yield to maturity is equal to its coupon rate.
This is because the bond's market value needs to adjust in order to reflect the lower return that investors will receive from the lower coupon payments.
Hence, if a bond's yield to maturity exceeds its coupon rate, the bond's price would decrease.
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nswer the following questions briefly (within 100 words):
(A.) Stocks Alpha, Beta and Gamma have exhibited CAPM beta of 0.5, 1.5, and -0.25 over the last five years. If the market return has been 12% and the risk-free rate is 5.5%, what are the expected returns from these stocks? Also, which of these stocks will offer the maximum diversification and why?
(B.) Let's say you have invested in a callable bond. Discuss how does it affect your reinvestment risk.
Expected returns for the three stocks are 6.5%, 13%, and 2.5%. A)Expected returns from Alpha, Beta, and Gamma can be calculated as follows:
Stock Alpha
Expected returns = Risk-free rate + (Beta x Market return – Risk-free rate)
Expected returns = 5.5% + (0.5 x 12% – 5.5%)Expected returns = 6.5%
Stock Beta
Expected returns = Risk-free rate + (Beta x Market return – Risk-free rate
)Expected returns = 5.5% + (1.5 x 12% – 5.5%)
Expected returns = 13%
Stock Gamma
Expected returns = Risk-free rate + (Beta x Market return – Risk-free rate)
Expected returns = 5.5% + (-0.25 x 12% – 5.5%)
Expected returns = 2.5%
Beta measures systematic risk, and high beta means high systematic risk. Stocks that have a higher beta will have a greater diversification benefit. Stock Beta, which has a beta of 1.5, will provide the most diversification benefit. The explanation for this is because the stock has a high systematic risk, it is more prone to market volatility, and it has a stronger correlation to market returns, allowing for greater diversification benefits.
B)Callable bonds are bonds that can be repaid before their maturity date. When interest rates decline, investors will exercise their right to call back the bonds and reissue them at a lower interest rate. The investor would then need to reinvest the bond's principal at a lower interest rate, lowering the investor's future returns. As a result, callable bonds increase the investor's reinvestment risk.
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In 1992, South Central Los Angeles exploded into riots...again. Why? What had improved for black Americans in the city since the 1960s, and what problems remained? Or what new problems emerged? And what did these portend for the future of race and American cities?
The 1992 riots in South Central Los Angeles, also known as the Los Angeles uprising, were sparked by the acquittal of four white police officers involved in the beating of Rodney King, a black motorist. However, the riots were not solely a response to this incident but were a result of deeper-rooted issues in the city. To understand why the riots occurred, it is important to consider the context of racial tensions, socioeconomic conditions, and systemic inequalities prevalent at the time.
Since the 1960s, there were both improvements and persisting problems for black Americans in Los Angeles. Some improvements included advancements in civil rights legislation, increased access to educational opportunities, and the rise of black political representation. These changes provided avenues for empowerment and social mobility for some black residents.
However, significant problems remained, particularly in marginalized communities like South Central Los Angeles. Economic disparities persisted, with limited job opportunities and high unemployment rates among black residents. Racial discrimination and police brutality continued to plague the community, leading to a strained relationship between law enforcement and black residents.
New problems also emerged over the years. The influx of drugs, particularly crack cocaine, into inner-city communities exacerbated social and economic challenges. Drug-related violence, gang activity, and the associated destabilization of neighborhoods further compounded the problems faced by black Americans in Los Angeles.
The riots served as a powerful expression of frustration and anger over these longstanding issues. They highlighted the deep-seated inequalities, racial tensions, and systemic injustices that were not adequately addressed. The riots exposed the underlying social, economic, and political dynamics that contributed to the marginalization of black communities.
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Easy Over Eggs Limited (EEL) has been paying a regular cash dividend of $1.50 per share each year
for over a decade. They are paying out all their earnings as dividends and they are not expected to
grow. There are 6,000,000 shares outstanding selling for $28 per share. EEL have sufficient cash
on hand to pay the next annual dividend. Suppose that, staring in year 1, EEL decide to cut its cash
dividend to zero and announce that they will repurchase shares instead.
a) What is the immediate stock price reaction? Ignore taxes, and assume that the repurchase
program conveys no information about operating profitability or business risk. b) How many shares will EEL purchase?
a) The immediate stock price reaction to EEL's dividend cut and share repurchase announcement is uncertain. b) The number of shares EEL will purchase depends on available cash.
a) The immediate stock price reaction to EEL's announcement of cutting the cash dividend to zero and implementing a share repurchase program is uncertain. Stock prices are influenced by various factors, including market sentiment, investor expectations, and demand and supply dynamics. In this case, the elimination of the cash dividend may disappoint income-seeking investors, potentially leading to a decline in the stock price. However, the share repurchase program may signal confidence in the company's financial health, which could have a positive impact on the stock price. Overall, the immediate stock price reaction depends on the market's interpretation and perception of the news.
b) The number of shares that EEL will purchase under the share repurchase program depends on the total amount of cash available for repurchases. Given that EEL has sufficient cash on hand to pay the next annual dividend, this cash can be used for the repurchase. The number of shares that can be repurchased is determined by dividing the available cash by the current stock price.
Number of Shares Repurchased = Total Cash Available / Current Stock Price
Using the information provided, with a dividend of $1.50 per share and 6,000,000 shares outstanding, the total cash available for repurchases would be 6,000,000 shares multiplied by $1.50, which equals $9,000,000.
However, the specific number of shares that EEL will purchase cannot be determined without additional information regarding the repurchase plan, such as the repurchase price or any limitations on the repurchase program. The number of shares repurchased will depend on the cash allocation and the desired impact on the company's capital structure.
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Consider a pure exchange economy with two goods. (a) Show that the gross substitute property implies z(p) = 0 and z(p')≠ 0 implies p . z(p') > 0, (1) so that a unique Walrasian equilibrium is globally stable. (b) Prove that if (1) holds, the set of equilibrium price vectors {p ∈ R² : z(p) = 0} is a convex set. (c) Suppose that all the consumers in the economy have quasilinear utility functions of the form u¹(x₁, x₂) = v(x₁) + x₂, where v(.) is strictly concave. Show that the gross substitute property is then satisfied, so that a Walrasian equilibrium is unique and (globally) stable.
(a) To show that the gross substitute property implies z-score (p) = 0 and z(p') ≠ 0 implies p · z(p') > 0, we can use the definition of the gross substitute property.
The gross substitute property states that for any two price vectors p and p' such that p' is a price increase from p, if the consumer's demand for good 2 (denoted as z(p)) is zero, then the consumer's demand for good 2 (denoted as z(p')) is positive.Let's assume z(p) = 0 and z(p') ≠ 0. Since p' is a price increase from p, we have p' > p.If z(p) = 0, it means that at price vector p, the consumer does not demand any quantity of good 2. Since p' > p, the consumer's budget constraint has expanded, and it is possible for the consumer to afford positive quantities of both goods.Therefore, z(p') ≠ 0 implies that the consumer demands positive quantity of good 2 at price vector p'. In other words, p · z(p') > 0.
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long answer pls and can include graph.
Why did the growth of house and share prices create a boom only to burst soon afterward, creating the Great Recession of 2007 - 2016?
The growth of house and share prices leading up to the Great Recession of 2007-2016 can be attributed to several interconnected factors.
Let's examine some key reasons for the boom and subsequent burst:
1. Housing Bubble:
The housing bubble refers to a period when housing prices experienced rapid and unsustainable increases. This bubble was fueled by various factors:
a. Easy Credit and Lax Lending Standards:
Prior to the recession, there was a significant expansion of credit availability and a relaxation of lending standards. Financial institutions were offering subprime mortgages to borrowers with lower creditworthiness, allowing them to obtain home loans. This led to increased demand for housing and drove up prices.
b. Speculative Investment:
As housing prices continued to rise, there was a widespread belief that the trend would continue indefinitely. Speculative investors entered the market, buying properties with the expectation of selling them at higher prices in the future. This further increased demand and created a self-reinforcing cycle of rising prices.
2. Financial Innovation and Excessive Risk-Taking:
Financial practices and instruments played a significant role in exacerbating the housing boom and subsequent burst:
a. Securitization and Mortgage-Backed Securities (MBS):
Financial institutions bundled mortgages into complex securities known as mortgage-backed securities (MBS). These MBS were then sold to investors. The underlying idea was to spread the risk associated with mortgage lending. However, the complex nature of these securities made it difficult to assess their underlying quality, leading to mispricing and underestimation of risks.
b. Derivatives and Risky Financial Instruments:
Derivatives, such as collateralized debt obligations (CDOs), further amplified the risks associated with mortgage-backed securities. These complex financial instruments were based on pools of mortgages, including both prime and subprime loans. The risks associated with these instruments were not well understood, and they were often given high credit ratings, misleading investors about their actual risk levels.
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QUESTION 4 For the following demand function: Q(P) = 1872-24P Calculate the price where the quantity demanded falls to zero QUESTION 5 For the following demand and supply curves: Qa(P) 763-14P Qs(P)=-458+19P Please find the equilibrium QUANTITY
The price where the quantity demanded falls to zero is $78. the equilibrium quantity is 245.
Given, The demand function is Q(P) = 1872-24PThe price where the quantity demanded falls to zero is given as; Substitute Q = 0We have; 1872 - 24P = 0 Now, Solving for PWe get; 24P = 1872P = 1872/24P = 78 Hence, the price where the quantity demanded falls to zero is $78.
Given, The demand function is Qa(P) = 763-14P The supply function is Qs(P) = -458+19P Equilibrium occurs when the quantity demanded is equal to the quantity supplied. e Qa(P) = Qs(P)763-14P = -458+19PSolving for PWe get; 33P = 1221P = 1221/33P = 37Substitute P = 37 in Qa(P) or Qs(P) Qa(P) = 763 - 14(37)Qa(P) = 245Qs(P) = -458 + 19(37)Qs(P) = 245 Therefore, the equilibrium quantity is 245.
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3.
On February 28, 2018, payment of a deposit of $5,000 for a promotional event that will take place in June 2018. Do the journal entry
Entry:
A promotional event in June 2018 received a $5,000 deposit on February 28, 2018. Journal entry:
28 February 2018.
Prepaid expenses $5,000 debit.
Cash: $5,000
The debt to the Prepaid Expenses account represents the promotional event deposit's prepaid asset increase. Prepaid expenses are costs that have not yet been incurred. Since the event will happen later, the deposit represents a prepaid expense.
As payments are made, the Cash account decreases. The company's available funds are in cash.
By registering this transaction, the corporation increases the prepaid asset and decreases cash. Over the course of the June 2018 event, prepaid expenses will be recognized as incurred expenses.
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