Answer and Explanation:
The classification is as follows
1. current liability
2. current liability
3. Current assets
4. Non current asset or fixed asset
5. Current asset
6. Stockholder equity
7. Non current asset or fixed asset
8. Current liability
9. Non currnet asset or fixed asset
10 Current liability
11 Stockholder equity
12 Current asset
13 Current liability
Alice deposits $2000 at time 0 under a nominal interest rate 6% compounded monthly for two years. And the end of the first year she deposit another $3000 under a nominal interest rate 7% compounded quarterly for one year. What is the equivalent annual effective interest rate for these two deposits over the first two years (i.e. the rate under which Alice would have the same total balance at time 2)
Answer:
effective rate of 6.59%
Explanation:
First, we solve for the amount after 2-years
[tex]2,000 \times (1 +\frac{0.06}{12}) ^{2 \times 12})+ 3,000 (1+\frac{0.07}{4})^4=[/tex]
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 2,000.00
time 24.00
rate 0.00500
[tex]2000 \: (1+ 0.005)^{24} = Amount[/tex]
Amount 2,254.32
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 3,000.00
time 4.00
rate 0.01750
[tex]3000 \: (1+ 0.0175)^{4} = Amount[/tex]
Amount 3,215.58
Total: 2,254.32 + 3,215.58 = 5,469.90
Now, we solve for the effective rate:
[tex]2,000(1+r_e)^2 + 3,000(1+r_e) - 5,469.90 = 0[/tex]
We use the quadratic formula and find the roots:
2.5658882124183746
1.0658882124183746
we use the positive one.
Getting an effective rae of 6.59%
Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package
Suppose good X and good Y are perfect complements to each other. The kinks of indifference curves are along the y=2x straight line. The consumer has a wealth level of 12. The price of good X is $2 and the price of good Y is $1. What is the consumer's utility maximization market basket?
Answer:
D. 3 Unit of goods x and 6 unit of good y
Explanation:
Option include as attached.
We have y = 2x
And budget constraint equation
PxX + PyP = M
2X + 1Y = 12
Now put y = 2x
2X + 2X = 12
4X = 12
X = 3
Y = 2X
Y = 2(3)
Y = 6
Sawyer Company had the following information for the year: Direct materials used $ 197,700 Direct labor incurred (7,600 hours) $ 248,100 Actual manufacturing overhead incurred $ 335,000 Sawyer Company used a predetermined overhead rate using estimated overhead of $382,500 and 8,500 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods Inventory balance of $9,400. What was adjusted cost of goods sold
Answer:
adjusted cost of goods sold is $771,400.
Explanation:
Predetermined Overheads = Estimated Overheads ÷ Estimated Activity
= $382,500 ÷ 8,500
= $45
Calculate the Manufacturing Cost
Direct materials $ 197,700
Direct labor $ 248,100
Applied Overheads (7,600 × $45) $342,000
Cost of Goods Manufactured $787,800
Calculate the Cost of Sales
Beginning Finished Goods Inventory $0
Add Cost of Goods Manufactured $787,800
Less Ending Finished Goods Inventory ($9,400)
Cost of Goods Sold $778,400
Adjust the Cost of Sales
Applied Overheads : $342,000 > Actual Overheads $ 335,000, we say that overheads are over-applied.
Therefore,
Cost of Goods Sold $778,400
Less Overheads over-applied ($342,000 - $ 335,000) ($7,000)
Adjusted Cost of Goods Sold $771,400
Excerpt from Areojet Corporation records for month of February: Per Unit Per Month Selling price $ 200,000 Direct materials used in production 40,000 Direct labor 10,000 Variable manufacturing overhead 2,000 Fixed manufacturing overhead $ 140,000 Variable selling and administrative expenses 20,000 Fixed selling and administrative expenses 40,000 Assuming the absorption costing method is used, what is the total manufacturing costs added to work in process during the month of February
Answer:
Work in process= $192,000
Explanation:
Giving the following information:
Direct materials used in production 40,000
Direct labor 10,000
Variable manufacturing overhead 2,000
Fixed manufacturing overhead $ 140,000
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
Work in process= 40,000 + 10,000 + 2,000 + 140,000
Work in process= $192,000
On November 1, 2021, New Morning Bakery signed a $207,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2022. New Morning Bakery records the appropriate adjusting entry for the note on December 31, 2021. What amount of cash will be needed to pay back the note payable plus any accrued interest on May 1, 2022? (Do not round your intermediate calculations.)
a) $208,035.
b) $212,175.
c) $207,000.
d) $213,210.
Suppose the following information (in millions of dollars) is available for Limited Brands for a recent year: sales revenue $8,780, net income $153, preferred dividend $0, and weighted-average common shares outstanding 300 million. Compute the earnings per share for Limited Brands.
Answer:
$0.51 million
Explanation:
Earnings per share is calculated as ;
Net income - preferred dividends/ Weighted average common shares outstanding.
Given that;
Net income = $153 m
Preferred dividends = 0$
Weighted average common shares outstanding = $300 m
Therefore,
Earnings per share = $153 - $0 / $300
= $0.51 million
g You are considering the purchase of an industrial printer for your business. The salesman states that you can purchase the printer today for $92,000 or pay nothing today and make monthly installment payments of $1,910 for 5 years. Your company's current financing rate is 7.00% annually. What is the present value of the monthly payment plan and which payment option should you choose
Answer and Explanation:
The computation is shown below:
First we have to find the present value based on monthly payment i.e. to be determined by using the present value formula and the same is to be shown in the attachment
Given that,
Future value = $0
Rate of interest = 7% ÷ 12 months = 0.58333%
NPER = 5 years × 12 months = 60 months
PMT = $1,910
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the present value is $96,458.90
As it can be seen than the lumpsum amount i.e. $92,000 is less than the monthly payment present value so here the lumpsum option should be chosen.
AP Macro Topic 1.3 Comparative Advantage and Trade Part 1 - Mastering Skills- Answer the following questions to verify that you fully understand opportunity cost, absolute advantage, comparative advantage, and terms of trade. Units produced per hour Burgers Pizzas Bob 30 5 Frank 16 4 1. Is this an output problem or an input problem? 2. What is Bob’s opportunity cost of producing 1 pizza? 3. What is Frank’s opportunity cost of producing 1 burger? 4. What is Bob’s opportunity cost of producing 1 burger? 5. What is Frank’s opportunity cost of producing 1 pizza? 6. Who has the absolute advantage in producing burgers? 7. Who has the absolute advantage in producing pizzas? 8. Who has the comparative advantage in producing burgers? 9. Who has the comparative advantage in producing pizzas? 10. What would acceptable terms of trade be between Bob and Frank? Hours need
Answer:
1. It is an input problem (time).
2. Bob's opportunity cost of producing 1 pizza:
= 6 (12/2) burgers that it could have produced using 12 minutes it used to produce 1 pizza.
3. Frank's opportunity cost of producing 1 burger:
= 0.25 (3.75/15) pizzas that it could have produced using 3.75 minutes to produce 1 burger.
4. Bob's opportunity cost of producing 1 burger:
= 0.17 (2/12) pizzas that it could have produced using 2 minutes to produce 1 burger.
5. Frank's opportunity cost of producing 1 pizza:
= 4 burgers (15/3.75) that it could have produced using 15 minutes to produce 1 pizza.
6. Bob has the absolute advantage in producing burgers. It produces 30 burgers in 1 hour than Frank.
7. Bob has the absolute advantage in producing pizzas. It produces 5 pizzas in 1 hour than Frank.
8. Bob has the comparative advantage in producing burgers. It uses 2 minutes to produce 1 burger instead of Frank's 3.75 minutes.
9. Bob has the comparative advantage in producing pizzas. It uses 12 minutes to produce 1 pizza instead of Frank's 15 minutes.
10. The acceptable terms of trade would be for Bob to devote 2 hours in producing 60 burgers and selling to Frank while Frank produces 8 pizzas using 2 hours and selling to Bob. But, since Bob has absolute and comparable advantage over Frank in the production of the two items, it seems that Frank should allow Bob to produce them, while it devotes its hours in producing another product or service where it has comparative advantage.
Explanation:
a) Data and Calculations:
Units produced per hour
Burgers Pizzas
Bob 30 5
Frank 16 4
Minutes per unit:
Bob 2 12
Frank 3.75 15
What is the difference between C2C and B2C e-commerce?
Answer:
C2C means consumer to consumer transactions while B2C is a business to consumer transaction and represents a transaction between a business and consumers.
Explanation:
In Business, e-commerce can be defined as a business model which involves the buying and selling of goods or products over the internet.
Generally, e-commerce comprises of four (4) business models and these are;
1. Business to Business (B2B).
2. Business to Consumer (B2C).
3. Business to Government (B2G).
4. Consumer to Consumer (C2C).
The difference between a C2C and a B2C is given below;
C2C is an acronym for consumer to consumer in e-commerce and it is a business model that involves the trading of goods specifically between consumers. This simply means that, in C2C both the buyer and seller is a consumer.
On the other hand, a B2C is a business model which means business to consumer and it is typically a market which involves businesses selling their goods and services directly to the end consumers for their personal use.
In 2019, Jose paid the following amounts for his son to attend Big State University: Tuition $15,000 Room and board 10,500 Books 1,500 A car to use at school 6,150 Student football tickets 315 Spending money 4,640 How much of the above is a qualified higher education expense for purposes of his Qualified Tuition Program
Answer:
$27,000
Explanation:
Calculation for how much of the above is a qualified higher education expense for purposes of his Qualified Tuition Program
Using this formula
Qualified higher education expense=Tution+Room and Board+and Books
Where,
Tuition= $15,000
Room and board= $10,500
Books= $1,500
Let plug in the formula
Qualified higher education expense=$15,000+$10,500+$1500
Qualified higher education expense=$27,000
Therefore how much of the above that is a qualified higher education expense for purposes of his Qualified Tuition Program will be $27,000.
The statement of cash flows cannot help address questions such as: Select one: a. How is the increase in investments financed? b. What is the source of cash for new plant assets? c. How much cash is generated from or used in operations? d. How much of the company's revenues have been retained as profit? e. Why is cash flow from operations different from income?
Answer: d. How much of the company's revenues have been retained as profit?
Explanation:
The cash flow statement is chiefly concerned with how much actual cash the company has received vs how much that it has spent and it finds this out placing cash transactions under three sections being the Operating, Investing and Financing activities.
The cashflow statement cannot help answer questions such as how much of revenue will be retained as profit because the profit sometimes is not all cash. The statement that will tell how much is retained as profit will be the Income Statement.
Pricing Stock Issues in an IPO Zang Industries has hired the investment banking firm of Eric, Schwartz, & Mann (ESM) to help it go public. Zang and ESM agree that Zang's current value of equity is $60 million. Zang currently has 3 million shares outstanding and will issue 1.6 million new shares. ESM charges a 9% spread. What is the correctly valued offer price? Do not round intermediate calculations. Round your answer to the nearest cent. $ How much cash will Zang raise net of the spread? Enter your answer in millions. For example, an answer of $1.234 million should be entered as 1.234, not 1,234,000. Do not round intermediate calculations. Round your answer to three decimal places. $ million
Answer:
A. $ l19.08
B. $27,780,480
Explanation:
A. Calculation for the correctly valued offer price
Using this formula
Correctly Valued Offer Price = Current Value of Equity/[(Number of new share issued*Spread)+ Number of Outstanding shares)
Let plug in the formula
Correctly Valued Offer Price= 60,000,000/[(1, 600,000*9%)+3,000,000]
Correctly Valued Offer Price=60,000,000/(144,000+3,000,000)
Correctly Valued Offer Price= 60,000,000/3,144,000
Correctly Valued Offer Price= $ 19.08
Therefore the correctly valued offer price will be
$ 19.08
B. Calculation for How much cash will Zang raise net of the spread
Using this formula
Cash Raised net of Spread = Valued offer price(1-spread)*No. of new share issued
Let plug in the formula
Cash Raised net of Spread = 19.08(1-0.09)*1,600,000
Cash Raised net of Spread =(19.08*091)*1,600,000
Cash Raised net of Spread =17.3628*1,600,000
Cash Raised net of Spread =$27,780,480
Therefore Cash Raised net of Spread will be $27,780,480
For Gee-Whiz Devices calculate the following: working capital, current ratio, and acid-test ratio Gee-Whiz Devices Balance Sheet Data Cash Market securities Net accounts and notes receivable Retailers inventories Prepaid expenses Accounts and notes payable (short-term) Accrued expenses $100,000 45,000 150,000 200,000 8,000 315,000 90,000
Answer:
1. Working Capital
= Current Assets - Current Liabilities
= ( Cash + Marketable Securities + Net accounts and notes receivable + Retailers Inventories + Prepaid expenses) - ( Accounts and notes payable(Short term) + Accrued expenses)
= ( 100,000 + 45,000 + 150,000 + 200,000 + 8,000) - ( 315,000 + 90,000)
= $98,000
2. Current Ratio
= Current Assets/ Current Liabilities
= ( Cash + Marketable Securities + Net accounts and notes receivable + Retailers Inventories + Prepaid expenses) / ( Accounts and notes payable(Short term) + Accrued expenses)
= ( 100,000 + 45,000 + 150,000 + 200,000 + 8,000) / ( 315,000 + 90,000)
= 1.24
3. Quick Ratio
= (Current Assets - Inventory) / Current Liabilities
= ( 100,000 + 45,000 + 150,000 + 8,000) / ( 315,000 + 90,000)
= 0.75
Accountant's define and understand Receivables:
A) To include accounts receivables, notes receivables and other receivables.
B) To be claims from individuals and companies that are expected to be collected in cash.
C) To be shown on the balance sheet valued at its cash net realizable value.
D) A and B only.
E) All of the above represent characteristics of receivables.
Answer:
The answer is E.
Explanation:
Account Receivables is the type of account that is used to record expected money from the sale of goods on credit. Account receivables is an asset to the company because future economic benefits are expected to flow to the entity. It includes all forms of receivables.
Accounts receivables is being measured at cash net realizable value.
Answer:
A) To include accounts receivables, notes receivables and other receivables.
B) To be claims from individuals and companies that are expected to be collected in cash.
C) To be shown on the balance sheet valued at its cash net realizable value.
Explanation:
Recievables are payments that are yet to be collected from customers for goods and services purchased on credit.
They can be in the form of accounts receivables, notes receivables and other receivables.
On the balance sheet receivables are represented as claims from individuals and companies that are expected to be collected in cash.
When customers eventually repay what they owe the receivables reduces on the company's books.
Receivables that cannot be recovered are recorded in allowance for doubtful accounts
Which one of the following statements are correct? I-The socialism system is the precursor to feudalism II- The invisible hand doctrine suggests that total economic surplus of society is maximized III- The government tax break given when buying an electric car is an example of indicative planning IV- A statement that involves priorities and value judgments is generally regarded as a normative statement
Answer: II, III, IV
Explanation:
Of the options, the correct statements are:
II- The invisible hand doctrine suggests that total economic surplus of society is maximized
III- The government tax break given when buying an electric car is an example of indicative planning
IV- A statement that involves priorities and value judgments is generally regarded as a normative statement.
The invisible hand simply has to do with the unseen forces that have an impact and control the free market economy. It should also be noted that the socialism system is not the precursor to feudalism.
QUESTION 1 The country Grupindor recently experienced a drastic increase in inflation. This led to the depreciation in the value of its currency and affected trade and business drastically. In the context of the general environment, this scenario best illustrates the effect of the _____ on organizations. a. sociocultural aspect of the country b. political condition of the country c. technological changes in the country d. economy of the country
Answer:
Option d (economy of the country) is the appropriate answer.
Explanation:
Along with many other things, the economy of such a given country is regulated by its society, rules, history, as well as geography, and then it develops out of requirement. This example better shows the operational effects of the country's economy although inflation continues threatening the position due to certain external causes and leading to a decrease in present value.Some other options offered aren't relevant to the situation described. For the aforementioned to be the right answer.
Maxene Raices discusses how Wilson Learning runs training with virtual teams, where team members may be spread out all over the globe. One way to teach in such a team would be ________, where online technologies and systems are used for training, including tools such as blogs, chat rooms, and 3-D simulations.
Answer:
e. Web 2.0 learning
Explanation:
Since in the question it is mentioned that for teaching a team what technology is required through which online teaching and the system that are used and involved various tools like chat rooms, 3-D simulations should be Web 2.0 learning as it depend on the online software where the user can learn to edit the document, storage of the content. In this, the virtual team is required than can gained from this method
Therefore the same is to be considered
Suppose the production function is Q = min {K, 2L}. How much output is produced when 4 units of labor and 9 units of capital are employed?a) 2b) 4c) 8.d) 9
Answer:
poj
Explanation:
uiuy
Which of the following is applicable to the Nasdaq PHLX?a. Regional exchange operated by NASDAQb. Offers trading in equity securities and options contractc. Is a completely electronic exchange with no physical trading floord. Regional exchange operated by FINRA for the execution of OTC stock only
Answer: a. Regional exchange operated by NASDAQ
b. Offers trading in equity securities and options contract.
Explanation:
Out of the options given, the correct answers are a and b. The options that are applicable to Nasdaq PHLX are:
Regional exchange operated by NASDAQ
b. Offers trading in equity securities and options contract.
It should be noted that the PHLX is simply a regional exchange which is being monitored and managed by NASDAQ. Furthermore, the equity securities and options contract are being traded on floor and electronically.
Typically, low inflation is a sign of A. healthy economy because it results from a steady rise in demand. B. healthy economy because it results from a steady rise in supply. C. struggling economy because it results from a steady fall in demand. D. struggling economy because it results from a steady fall in supply.
A. a healthy economy because it results from a steady rise in demand.
Typically, low inflation is a sign of a healthy economy because it results from a steady rise in demand. Hence, option A is correct.
What is a healthy economy?The following three factors are present in a steady-state traditional economy: Systemic strength: Low wealth and commerce concentrations, Consistent consumer pricing and widespread and recursive market involvement are examples of stable microeconomic conditions.
There are numerous indicators of a thriving economy. Low unemployment, stable inflation, an increase in the building of new homes, optimism in the consumer confidence index, and rising gross domestic product (GDP) are a few of these.
Growth, high employment, and price stability are the three common objectives of all economies. Growth. An economy delivers goods and services to its population, and economists use the gross domestic product (GDP), which represents the market value of all the goods and services the economy produced during a given year, to assess how well it is performing.
Thus, option A is correct.
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You are considering an investment in Roxie's Bed & Breakfast Corp. During the last year, the firm's income statement listed an addition to retained earnings of $8.40 million and common stock dividends of $2.80 million. Roxie's year-end balance sheet shows common stockholders' equity of $41.6 million with 16 million shares of common stock outstanding. The common stock's market price per share was $9.60. What is Roxie's Bed & Breakfast's book value per share
Answer:
$2.6 per share
Explanation:
Roxie bed and breakfast corporation had a retained earnings of $8.40 million
The common stock dividend is $2.80 million
The year end balance sheet shows a common stock equity of $41.6 million and common stock outstanding of 16 million
Therefore Roxie's bread and breakfast book value per share can be calculated as follows
= common stockholders equity / common stock outstanding
= 41,600,000/16,000,000
= $2.6 per share
Hence Roxie's bread and breakfast book value is $2.6 per share
Stephan is the plaintiff in a negligence action against Viola. The jury determines that Stephan has suffered $250,000 in damages, but that he is 20% responsible for his own injuries. Under comparative negligence, how much money would Viola have to pay Stephan in damages? What if the jury determines that Stephan is 60% responsible? Explain the different results under pure and mixed comparative negligence rules.
Answer:
a. Under comparative negligence, the amount Viola have to pay Stephan in damages is $200,000.
b(i). Under pure comparative negligence, the amount Viola have to pay Stephan in damages is $100,000.
b(ii). Under mixed comparative negligence, the amount Viola have to pay Stephan in damages can be $100,000 or $0.
Explanation:
a. The jury determines that Stephan has suffered $250,000 in damages, but that he is 20% responsible for his own injuries. Under comparative negligence, how much money would Viola have to pay Stephan in damages?
Under a comparative negligence, the amount of damages that the plaintiff will receive is reduced to the percentage of fault of the defendant.
Based on this, the amount Viola have to pay Stephan in damages is 80% (i.e. 100% - 20%) of $250,000. Therefore, we have:
Amount Viola have to pay Stephan in damages = 80% * $250,000 = $200,000
b. What if the jury determines that Stephan is 60% responsible? Explain the different results under pure and mixed comparative negligence rules.
b(i) Pure Comparative Negligence is a rule that gives the plaintiff the opportunity to recover damages that is exactly equal to the percentage of fault of the defendant whether or not the fault of the plaintiff is greater than the fault of the defendant.
Under pure comparative negligence rule, the amount Viola have to pay Stephan in damages is therefore 40% (i.e. 100% - 40%) of $250,000. Therefore, we have:
Amount Viola have to pay Stephan in damages under pure comparative negligence rule = 40% * $250,000 = $100,000
b(ii) Mixed Comparative Negligence is a rule under which the plaintiff may receive only a percentage of damages of the defendant, or none at all if the percentage of fault of the plaintiff is 50% or more than 50% of the total fault.
Thereforem, if it is determined that the amount Viola have to pay Stephan in damages is exactly equal to the percentage of fault of the defendant, the amount Viola have to pay Stephan in damages is therefore 40% (i.e. 100% - 40%) of $250,000. Therefore, we have:
Amount Viola have to pay Stephan in damages under pure comparative negligence rule = 40% * $250,000 = $100,000.
However, it it determined the plaintiff should be paid not damages, Viola have to pay Stephan $0 amoun in damages.
Therefore, under mixed comparative negligence, the amount Viola have to pay Stephan in damages can be $100,000 or $0.
which of the following statements is true of entrepreneurship?
Entrepreneurs often work long hours and must take on the financial responsibilities of the business.
Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 4,500 machine-hours. Budgeted and actual overhead costs for the month appear below: Original Budget Based on 4,500 Machine-Hours Actual Costs Variable overhead costs: Supplies $ 12,000 $ 12,730 Indirect labor 38,400 38,700 Fixed overhead costs: Supervision 20,600 20,240 Utilities 6,800 6,760 Factory depreciation 7,800 8,110 Total overhead cost $ 85,600 $ 86,540 The company actually worked 4,520 machine-hours during the month. The standard hours allowed for the actual output were 4,510 machine-hours for the month. What was the overall variable overhead efficiency variance for the month
Answer:
Variable overhead efficiency variance= $112 unfavorable
Explanation:
Giving the following information:
Estimated budget:
4,500 Machine-Hours
Supplies $ 12,000
Indirect labor 38,400
Total= $50,400
The company worked 4,520 machine-hours during the month.
The standard hours allowed for the actual output were 4,510 machine-hours for the month.
First, we need to calculate the predetermined variable overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 50,400/4,500
Predetermined manufacturing overhead rate= $11.2 per machine hour
Now, to calculate the variable overhead efficiency variance, we need to use the following formula:
Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Variable overhead efficiency variance= (4,510 - 4,520)*11.2
Variable overhead efficiency variance= $112 unfavorable
what is
hotel management
Hotel management is a field of business and study, that tends itself to the operation aspects of a hotel as well as wide range of affiliated topics such as Accounting, administration, finance, information systems, human resources management, public relations and other more.
Following me and I hope you know this answer
Forum question 1: Do you know of a situation in which a female staff person is referred to by her first name only (e.g., “See Joan at the front desk”) but the higher-ranking employees are referred to by their first and last names (e.g., “Jim Smith in Tech Support can answer your question”)? What do you think of this practice? Is it ever acceptable? Forum question 2: If you see something misspelled, do you correct it? Discuss and support your answers with examples.
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As winner of a breakfast cereal competition, you can choose one of the following prizes: a. $180,000 at the end of five years. b. $11,400 a year forever. c. $19,000 for each of 10 years. d. $6,500 next year and increasing thereafter by 5% a year forever. Assume that discount rate is 12%. i. (20 pts) Write down the discounted cash flow equation for each option. ii. (10 pts) Decide which prize you should choose and why?
Answer:
i. Discounted cashflow equations.
a. $180,000 at the end of five years.
This is a lump sum present value/ discounted cashflow which can be calculated as;
Formula = 180,000 / ( 1 + r)^n
= 180,000/ ( 1 + 12%)^5
= $102,136.83
b. $11,400 a year forever
This is a perpetuity. The present value/ discounted cashflow of a perpetuity is calculated as;
Formula = Amount/rate
= 11,400/12%
= $95,000
c. $19,000 for each of 10 years.
This is an annuity. The formula for calculating the Present value/ discounted cashflow of an annuity is;
[tex]Formula = Annuity * [\frac{( 1 - (1 + i)^{-n} )}{i} ][/tex] where i is interest rate and n is number of periods
[tex]= 19,000 * [\frac{( 1 - (1 + 0.12)^{-10} )}{0.12} ][/tex]
= $107,354.24
d. $6,500 next year and increasing thereafter by 5% a year forever.
This is a growing perpetuity. The present value/ discounted cashflow formula is;
= Amount / ( discount rate - growth rate)
= 6,500 / ( 12% - 5%)
= $92,857.14
ii. Choose $19,000 for each of 10 years as it has the highest present value.
Bloomington Brewery produces beer and ale. Beer sells for $5 per barrel, and ale sells for $2 per barrel. Producing a barrel of beer requires 5 lb of corn and 2 lb of hops. Producing a barrel of ale requires 2 lb of corn and 1 lb of hops. 60 lb of corn and 25 lb of hops are available. Formulate an LP that can be used to maximize revenue. Solve the LP graphically.
Answer:
The answer is below
Explanation:
Let x represent the amount of beer sold and y represent the amount of ale sold. The revenue of selling x barrels of beer is 5x and selling y barrels of ale is 2y hence the total revenue = 5x + 2y. If z represent the maximum revenue then:
z = 5x + 2y
Since 60 lb of corn is available and beer requires 5 lb of corn while ale require 2 lb of corn hence:
5x + 2y ≤ 60
Also, 25 lb of hops is available and beer requires 2 lb of hops while ale require 1 lb of hops hence:
2x + y ≤ 25
Also x > 0 and y > 0
The LP is:
z = 5x + 2y
5x + 2y ≤ 60
2x + y ≤ 25
x > 0 and y > 0
Using geogebra graphing, the maximum revenue is at (0, 30)
Hence:
z = 5x + 2y = 5(0) + 2(30) = 60
The maximum revenue is 60
PLEASE HELP ME ASAP.
Suppose you put $150 in the bank 1 year ago. A sign at the bank reads 2% simple annual interest. Fill in the values to complete the table.
Answer:
1 a year
Explanation:
The calculation of a loan's interest rate can be done quickly and simply using simple interest. The daily rate of interest, the principle, and the number of days between payments are multiplied to determine simple interest.
To calculate simple interest, multiply the daily rate of interest by the principle and the number of days between payments. Consumers who pay their loans off on time or ahead of schedule each month benefit from simple interest.
Although some mortgages employ this calculation approach, this kind of interest typically relates to auto loans or short-term loans.
Learn more about simple interests, from:
brainly.com/question/25845758
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