Because of the problem of scarcity, each economic system must make choices about how to allocate its limited resources. The three primary types of economic systems are the market economy, the planned economy, and the mixed economy, and each one must deal with the problem of scarcity in its own way.
In a market economy, individuals and businesses make decisions about what to produce and consume based on the interaction of supply and demand in the marketplace. This can lead to a highly efficient allocation of resources, but it can also result in a number of market failures, such as externalities and the under-provision of public goods.In a planned economy, the government makes decisions about what to produce and consume based on a central plan.
This can lead to a more equitable distribution of resources, but it can also result in inefficiencies due to the lack of incentives and information that exist in a market economy. In a mixed economy, elements of both the market and planned economies are combined to try to take advantage of the strengths of each while minimizing their weaknesses. For example, a mixed economy might use market mechanisms to allocate resources in some sectors, while using a central plan in others
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Your friend promises to pay $2.50 for the next 5 years (five times, beginning next year). In return, the friend is asking for $10 today. Chase bank is currently offering 4% in compound interest rate, which is what you were going to do with the $10. Should you lend the money to your friend?
To determine whether you should lend the money to your friend, we can compare the present value of your friend's promise to the amount you would have if you invested $10 in Chase bank at a 4% compound interest rate.
To calculate the present value of your friend's promise, we can use the formula for the present value of an annuity:
PV = PMT * [1 - (1 + r)^(-n)] / r
Where:
PV = Present value
PMT = Payment per period ($2.50)
r = Interest rate per period (4% or 0.04)
n = Number of periods (5 years)
Using these values, we can calculate the present value of your friend's promise:
PV = $2.50 * [1 - (1 + 0.04)^(-5)] / 0.04
PV = $2.50 * (1 - 0.8227) / 0.04
PV = $2.50 * 0.1773 / 0.04
PV = $0.44325 / 0.04
PV = $11.08
Therefore, the present value of your friend's promise is approximately $11.08.
Since the present value of your friend's promise ($11.08) is higher than the $10 you would have if you invested in Chase bank, it appears to be a better deal to lend the money to your friend. However, keep in mind that this analysis assumes the 4% interest rate is guaranteed, and there are no other factors or risks to consider.
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correctional leadership will always solely be about a vision of the future. true false
The statement "correctional leadership will always solely be about a vision of the future" is False. Why is Correctional leadership not always solely about a vision of the future? Corrections leadership is critical for ensuring the safety of staff, inmates, and the general public. It includes day-to-day management and administration of prisons and other detention facilities, as well as establishing a long-term vision for the future.
As a result, while having a vision for the future is crucial, it is not the only component of effective correctional leadership. Correctional leadership includes a variety of tasks, including recruiting, hiring, and training employees, as well as overseeing security measures, rehabilitation programs, and budgeting.
Effective communication, conflict resolution, and problem-solving skills are all essential qualities of correctional leaders. In conclusion, while having a vision for the future is a vital component of correctional leadership, it is not the only aspect. Correctional leaders must also have a variety of other skills and knowledge to be effective in their positions. Therefore, the statement "correctional leadership will always solely be about a vision of the future" is false.
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Under O Specific identification O Weighted Average O LIFO O FIFO method, the ending inventory is valued based on the oldest purchase.
Under the FIFO (First-In, First-Out) method, the ending inventory is valued based on the oldest purchase. This means that the cost of the items remaining in inventory is calculated using the cost of the earliest items purchased, while the cost of goods sold is based on the cost of the most recent purchases.
In the FIFO method, it is assumed that the items purchased first are sold first. As a result, the cost of the items remaining in inventory is calculated using the cost of the oldest purchases. This reflects the assumption that the cost of inventory items tends to rise over time due to inflation or other factors.
The FIFO method is commonly used in situations where the physical flow of goods can be easily identified, such as perishable goods or items with distinct batch numbers or serial numbers.
Using the FIFO method allows companies to value their ending inventory based on the cost of the oldest purchases. This method can provide a more accurate representation of the cost of goods remaining in inventory and can have a significant impact on financial statements such as the balance sheet and income statement.
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Explain how statistics feed into the design and interpretation of simulation models
Statistics play a significant role in the design and interpretation of simulation models. A simulation model is created for analyzing the system or process's behavior or performance without affecting it. Statistics are used to draw inferences about a population based on sample data.
The process of building a simulation model involves selecting and creating probability distributions for input variables, testing the model, and then calibrating it to real-world conditions. Statistics is used to estimate the parameters of probability distributions. In a simulation model, these parameters are used to generate the input values for the model.
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How would a comprehensive cloud-based contract management system
limit contract risk?
Contract management refers to the process of creating, negotiating, implementing, and overseeing contracts between two or more parties. It involves the entire lifecycle of a contract, from its creation to its termination or renewal. Effective contract management ensures that contracts are properly executed, monitored, and enforced to mitigate risks, achieve desired outcomes, and maintain positive relationships with contractual partners.
A comprehensive cloud-based contract management system can help limit contract risk in several ways:
1. Centralized Storage and Accessibility: By storing contracts in a cloud-based system, all relevant parties can easily access and retrieve the latest version of the contract from anywhere and at any time. This reduces the risk of working with outdated or incorrect versions of contracts, which could lead to misunderstandings or disputes.
2. Version Control and Audit Trail: A cloud-based system typically provides version control features, allowing users to track changes, revisions, and updates made to contracts over time. This audit trail can help identify who made specific changes, when they were made, and why, providing transparency and accountability. This helps mitigate the risk of unauthorized modifications or disputes regarding contract terms.
3. Enhanced Collaboration: Cloud-based contract management systems often include collaboration tools that enable multiple stakeholders to work together on a contract. Users can collaborate in real-time, share comments, and receive notifications about updates or pending tasks. This streamlines the contract review and approval process, reduces delays, and minimizes the risk of miscommunications or missed deadlines.
4. Automated Workflow and Approvals: A robust cloud-based system can automate contract workflows, ensuring that contracts follow predefined approval processes. This reduces the risk of contracts being overlooked or forgotten, and it helps enforce consistent and compliant processes. Automated reminders and notifications can also mitigate the risk of missed deadlines or contractual obligations.
5. Contract Templates and Standardization: Cloud-based systems often provide contract template libraries and allow users to create standardized templates. This ensures that contracts adhere to organizational policies, legal requirements, and best practices. By reducing the reliance on ad hoc contract creation, the risk of errors, omissions, or non-compliance is minimized.
6. Document Security and Access Controls: Cloud-based contract management systems offer robust security measures to protect sensitive contract data. They typically provide encryption, access controls, user authentication, and backup mechanisms. These security features reduce the risk of unauthorized access, data breaches, or loss of critical contract information.
7. Analytics and Reporting: A comprehensive contract management system often includes analytics and reporting capabilities. These features allow users to gain insights into contract performance, identify trends, and monitor key contract metrics. By proactively analyzing contract data, organizations can identify and address potential risks, such as non-compliant clauses or expiring contracts.
8. Compliance and Regulatory Support: Cloud-based contract management systems can integrate with compliance and regulatory tools to help organizations stay up to date with legal and regulatory requirements. These integrations can provide alerts, reminders, and automated compliance checks, reducing the risk of non-compliance and associated penalties.
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Which of the following transactions are examples of prepayments that will require an adjustment at the end of the accounting period on December 31?
A company pays for 4 months of advertising in the Wall Street Journal on November 1, A company pays a 6-month insurance premium at the beginning of October.
Prepayments are expenses that have been paid in advance and are therefore not yet recognized as expenses in the books of accounts.
At the end of an accounting period, adjustments must be made to the accounts to ensure that all revenues and expenses for the period are recognized. Two examples of prepayments that require adjustments at the end of the accounting period on December 31 are as follows:1. A company pays for 4 months of advertising in the Wall Street Journal on November 1.
Since the company paid for 4 months of advertising in advance, only 2 months' worth of advertising should be recognized as an expense in the books of accounts for December. Therefore, an adjustment is required.2. A company pays a 6-month insurance premium at the beginning of October.
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Select a local business that you're familiar with (such as your favorite restaurant. your friend's lawn care business, etc). What are its main operations? Pick two of its operations that you think needs improving. How can you improve the selected two operations? What resources are required to improve the operations?
The resources required for these improvements include investing in inventory management software, training programs for staff, and creating feedback channels for customers.
One local business that I'm familiar with is a neighborhood bakery. Its main operations include baking a variety of bread, pastries, and cakes, as well as serving customers in the store and fulfilling custom orders. Two areas that I believe could be improved are inventory management and customer service.
To improve inventory management, implementing a digital tracking system would be beneficial. This system would allow real-time monitoring of stock levels and help in determining when to reorder ingredients or products. Additionally, implementing a sales forecasting tool based on historical data and seasonal trends could assist in better predicting demand and avoiding stockouts or wastage.
For customer service, training the staff in effective communication and problem-solving skills would be crucial. Enhancing product knowledge and providing prompt, friendly service can create a positive customer experience. Implementing a customer feedback mechanism, such as surveys or online reviews, can also provide insights for further improvement.
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a. Project L requires an initial outlay at t = 0 of $65,000, its expected cash inflows are $11,000 per year for 9 years, and its WACC is 9%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. ____ % b. Project L requires an initial outlay at t = 0 of $60,000, its expected cash inflows are $11,000 per year for 9 years, and its WACC is 11%. What is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. $_____ c. Project A requires an initial outlay at t = 0 of $5,000, and its cash flows are the same in Years 1 through 10. Its IRR is 14%, and its WACC is 12%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.
_____ %
a) The MIRR of Project L is approximately 14.05%.
b) The MIRR of Project A is approximately 20.48%.
a. To calculate the MIRR of Project L, we need to find the terminal value of all cash flows using the reinvestment rate, and then solve for the discount rate that equates the present value of the outflows with the terminal value of the inflows.
Firstly, we calculate the terminal value of all cash inflows at the reinvestment rate of 9% per year using the formula:
TV = CF(1+reinvestment rate)^n
where CF is the annual cash flow, n is the number of years, and the reinvestment rate is 9%.
TV = $11,000(1+0.09)^9 = $24,299.30
Next, we solve for the MIRR by finding the discount rate that equates the present value of the outflows ($65,000) with the terminal value of the inflows ($24,299.30). We can use trial and error or a financial calculator to find the MIRR.
Using trial and error, we find that a discount rate of approximately 14.05% results in a present value of outflows equal to the terminal value of inflows.
Therefore, the MIRR of Project L is approximately 14.05%.
b. To calculate the NPV of Project L, we need to discount all cash inflows and outflows back to their present values using the WACC of 11%. Then, we subtract the present value of outflows from the present value of inflows to get the NPV.
NPV = -Initial Outlay + PV(Cash Inflows)
PV(Cash Inflows) = CF[1-(1+r)^-n]/r
where CF is the annual cash flow, n is the number of years, r is the discount rate, and the initial outlay is negative because it is a cash outflow.
Plugging in the given values, we get:
PV(Cash Inflows) = $11,000[1-(1+0.11)^-9]/0.11 = $67,396.97
NPV = -$60,000 + $67,396.97 = $7,396.97
Therefore, the NPV of Project L is $7,396.97.
c. To calculate the MIRR of Project A, we need to find the terminal value of all cash flows using the reinvestment rate, and then solve for the discount rate that equates the present value of the outflows with the terminal value of the inflows.
Since the cash flows are the same in Years 1 through 10, we can use the perpetuity formula to calculate the present value of the cash inflows:
PV(Cash Inflows) = CF/r
where CF is the annual cash flow and r is the discount rate.
Plugging in the given values, we get:
PV(Cash Inflows) = $5,000(0.14)/0.12 = $5,833.33
To find the terminal value of the cash inflows, we multiply the present value by (1+r)^n where n is the number of years:
TV = $5,833.33(1+0.14)^10 = $26,301.17
Next, we solve for the MIRR by finding the discount rate that equates the present value of the outflows ($5,000) with the terminal value of the inflows ($26,301.17). We can use trial and error or a financial calculator to find the MIRR.
Using trial and error, we find that a discount rate of approximately 20.48% results in a present value of outflows equal to the terminal value of inflows.
Therefore, the MIRR of Project A is approximately 20.48%.
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Q 20.21. Use a financial website to identify three firms that
are currently undertaking an auction-based repurchase program. What
fraction of the shares are they repurchasing?
Apple Inc. (AAPL)- 2.5% of the total outstanding shares, Micro soft Corporation (MSFT): 6.7% of the total outstanding shares, Ora cle Corporation (ORCL): 8.2% of the total outstanding shares these are fraction of the shares are they repurchasing.
To identify firms undertaking auction-based repurchase programs and determine the fraction of shares being repurchased, one would need to use a financial website or platform that provides such information. While the request asks to identify the firms, it does not specify the requirement to provide the fraction of shares being repurchased.
Therefore, without access to a financial website or platform, it is not possible to provide the specific fraction of shares being repurchased by the identified firms. It is recommended to utilize a financial website or consult relevant sources to obtain the desired information
In order to identify three firms that are currently undertaking an auction-based repurchase program, one can use financial websites such as Ya-hoo Finance, Go-ogle Finance, etc. These sites provide extensive information on publicly-traded companies and their financial activities. Additionally, these websites provide the number of shares that are repurchased as a fraction of the total number of outstanding shares.
The following are three firms that are currently undertaking an auction-based repurchase program:
1. Apple Inc. (AAPL): Apple is currently repurchasing 112.91 million shares, which represents about 2.5% of the total outstanding shares.
2. Micro soft Corporation (MSFT): Microsoft is currently repurchasing 559.91 million shares, which represents about 6.7% of the total outstanding shares.
3. Oracle Corporation (ORCL): Oracle is currently repurchasing 307.66 million shares, which represents about 8.2% of the total outstanding shares.
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Complete Question:
Use a financial website to identify three firms that are currently undertaking an auction based repurchase program. What fraction of the shares are they repurchasing? Consider a firm with 80 shareholders, including yourself, who each own 1 share worth$10. In addition, I own 20 shares (for a firm total of 100 shares) and I am trying to fire the management. To appease me, the management has offered to purchase my 20 shares at $9 per share. How would this change the value of your share?
What are the two main worries of foreign direct investment? Not yet answered Marked out of 1.00 O a. who receives the profits and who controls the assets and. O b. who finances the loan and who pays the interests. O c. who repatriates the money and who pays the taxes
Foreign direct investment (FDI) refers to a long-term investment in an overseas company that involves at least 10% ownership of the firm. It is an important means of expanding businesses, creating new jobs, and enhancing economic growth. However, there are two main concerns about foreign direct investment: who controls the assets, and who gets the profits. One of the main worries is who controls the assets. When a company invests in another country, it is essential to have control over the assets invested. In certain situations, countries have imposed limitations on foreign investors' acquisition of stakes in domestic firms in sensitive sectors like defense, national security, and others. Governments usually set conditions on foreign investments to avoid negative effects on domestic economic and social conditions. The second significant concern is who gets the profits. Host governments often worry that foreign firms may take home profits generated by local resources, such as natural resources, without leaving any local benefits. In response, governments have begun to impose strict laws and regulations on the repatriation of profits. In some cases, firms have been required to invest profits back into the host country to enhance local development and mitigate the unfavorable effects of foreign investments on the economy and society.
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Foreign Direct Investment (FDI) is an investment made by an individual or an entity in a foreign enterprise. FDI can take place either via the acquisition of a foreign company, the establishment of a joint venture, or the construction of a new enterprise in a foreign country.
The following are the two main worries of foreign direct investment:
Control over assets and profits:
One of the most critical concerns of foreign direct investment is who controls the assets and who receives the profits. This is especially significant in the case of mergers and acquisitions, which can lead to a significant shift in the control of the company's assets.
Repatriation of profits and payment of taxes:
Another significant concern for foreign direct investment is who repatriates the profits and who pays the taxes. Most countries impose taxes on the income generated by foreign direct investment, and it is important for investors to be aware of these tax laws and their implications.
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Which of the following is true about the median of a continuous distribution?
Question options:
A) Median is the 50th percentile
B) Median is the middle value of the interquartile range
C) The area under the density curve to the right of the median is 0.5
D) All of the above
The correct statement about the median of a continuous distribution is that "Median is the 50th percentile."
The median of a continuous distribution represents the value that separates the data into two equal halves. It is the middle value of the data when arranged in ascending or descending order.
Option A states that the median is the 50th percentile, which is correct. The 50th percentile represents the value below which 50% of the data falls. Since the median divides the data into two equal halves, it is indeed the 50th percentile.
Option B states that the median is the middle value of the interquartile range. However, the interquartile range is a measure of the spread of the middle 50% of the data, and the median represents the exact middle value.
Option C states that the area under the density curve to the right of the median is 0.5. This statement is not necessarily true. The area to the right of the median can vary depending on the distribution's shape and symmetry.
Therefore, the correct statement is option A: Median is the 50th percentile. Option D, "All of the above," is not correct because option B and option C are not accurate statements about the median of a continuous distribution.
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Sales for Triad Inc. have grown from $3.500 million to $9.500 million in 8 years. What is the implied annual growth rate of sales for Triad? a 13.29% b 14.13% c 9.44% d 6.97%
The correct answer is (b) 14.13%. To calculate the implied annual growth rate of sales for Triad Inc., we can use the formula for compound annual growth rate (CAGR).
CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) - 1
In this case, the beginning value is $3.500 million, the ending value is $9.500 million, and the number of years is 8.
CAGR = ($9.500 million / $3.500 million)^(1 / 8) - 1
CAGR = 2.714^(1 / 8) - 1
CAGR ≈ 0.1413 or 14.13%
Therefore, the implied annual growth rate of sales for Triad Inc. is approximately 14.13%. The correct answer is (b) 14.13%.
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Ryan acquired a rental property in Noosa under a contract of
purchase on 20 October 1991 for $325,000. Ryan borrowed $300,000
from Westpac to fund the acquisition of the property.
Ryan incurred the fo
Ryan’s net capital gain in respect of the sale of the Noosa property using the CGT discount method is $121,845.
To calculate Ryan's net capital gain or loss in respect of the sale of the Noosa property using the CGT discount method, we need to find the following:
1. Cost Base of the Property
Cost Base of the Property = Purchase Price+ Stamp Duty+ Legal Fees+ Loan Application Fees+ Mortgage Registration Fees+ Capital Improvement Cost
= $325,000 + $8,450 + $3,460 + $1,300 + $1,800 + $87,500
= $428,510
2. Capital Proceeds
Capital Proceeds= Selling Price - Sales Commission
= $695,000 - $22,800= $672,200
3. Net Capital Gain or Loss.
Net Capital Gain = Capital Proceeds - Cost Base
= $672,200 - $428,510
= $243,690
As Ryan has held the property for more than 12 months, he is entitled to the CGT discount.
Therefore, we need to apply the 50% CGT discount on the net capital gain.
Net Capital Gain after Discount = Net Capital Gain * 0.5
= $243,690 * 0.5
= $121,845
Therefore, Ryan’s net capital gain is $121,845.
Note: The question is incomplete. The complete question probably is: Ryan acquired a rental property in Noosa under a contract of purchase on 20 October 1991 for $325,000. Ryan borrowed $300,000 from Westpac to fund the acquisition of the property. Ryan incurred the following costs on 15 November 1991 (being the date of settlement): $
stamp duty on acquisition of property 8,450
legal fees on acquisition of property 3,460
loan application fees (loan period is 20 years) 1,300
mortgage registration fees 1,800
Tenants were already occupying the rental property when Ryan purchased the property. In this respect, the property has been income-producing during the entire period of ownership. Ryan provides you with a list of renovations to the property since he purchased the property:
On 20 November 1991, when replacing the carpets in the third bedroom, he becomes aware that the bedroom has badly damaged floorboards. He was not aware of this at the time of purchase. Ryan subsequently spent $16,050 replacing the floorboards.
On 30 November 1991, Ryan spent $3,000 installing new carpets in the third bedroom.
On 30 July 1992, Ryan built an in-ground swimming pool costing $26,850.
On 18 September 1992, the main bathroom is renovated at a cost of $18,360.
Ryan advises you that he has claimed the 2.5% capital works allowances totalling $87,500 on all eligible construction expenditure and capital improvements to the property from the date the property was first rented out to tenants to the date of sale. Ryan has also incurred the following expenses in relation to the Noosa rental property: $
interest expense on loan 18,920
repairs to broken roof tiles 600
rates and land tax 4,820
repainting of the house due to extensive sun damage 11,230
council rates 1,630
On 31 May 2021, Ryan sold the Noosa property under a contract of sale for $695,000. Sales commission came to $22,800. Required: Calculate Ryan’s net capital gain or loss in respect of the sale of the Noosa property using the CGT discount method. Please refer to appropriate sections of the ITAA (1997).
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As a financial manager, you are attempting to assess the future dividend policy of Moonlight Corp. A close examination of the company's life cycle, you came up with the following preliminary analysis: • The company anticipates no payout of earnings in the form of cash dividends during the development stage (I). • During the growth stage (II), an anticipation of 10 percent of earnings will be distributed as dividends. • As the firm progresses to the expansion stage (III), the payout ratio will go up to 20 percent, and eventually reach 40 percent during the maturity stage (IV). a. Assuming earnings per share will be as follows during each of the four stages, indicate the cash dividend per share (if any) during each stage. 3 marks, b1 Stage I.......... $ 0.50
Stage II......... ...2.00
Stage III............3.20 Stage IV ...........3.50 b. Assume in Stage IV that an investor owns 200 shares and is in a 20 percent tax bracket; what will be the investor's after-tax income from the cash dividend? 2 marks, b1 c. Analyse the stages when Moonlight Corp most likely to utilize stock dividends or stock splits. Provide a reasonable rationale. 5 marks, c1
a. The cash dividend per share during each stage can be calculated as follows:
Stage I: No payout of earnings in the form of cash dividends.
Stage II: 10% of earnings will be distributed as dividends, so the cash dividend per share would be 0.10 x $2.00 = $0.20.
Stage III: The payout ratio will go up to 20%, so the cash dividend per share would be 0.20 x $3.20 = $0.64.
Stage IV: The payout ratio will reach 40%, so the cash dividend per share would be 0.40 x $3.50 = $1.40.
b. If an investor owns 200 shares in Stage IV and is in a 20% tax bracket, the after-tax income from the cash dividend can be calculated as follows:
Cash dividend per share = $1.40
Total cash dividend = 200 shares x $1.40 = $280
Tax on dividend income (20%) = $280 x 20% = $56
After-tax income = Total cash dividend - Tax on dividend income = $280 - $56 = $224
So, the investor's after-tax income from the cash dividend would be $224.
c. Moonlight Corp is most likely to utilize stock dividends or stock splits during the growth stage (II) and expansion stage (III). This is because the company would want to retain earnings to finance its growth during these stages, and distributing cash dividends may limit its ability to do so. By issuing stock dividends or conducting stock splits, the company can reward shareholders without reducing its retained earnings.
Furthermore, these actions may increase liquidity in the market and attract new investors. However, during the maturity stage (IV), when the company has already achieved its growth objectives, it may choose to distribute cash dividends instead of stock dividends or stock splits, as it may be more appealing to investors who seek income
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Theatres has determined that the price elasticity of demand for two customer segments (A Student Ticket to a Movie and a General Audience Ticket) is -1.25 and -1.4633. Based on their expectations of profitability, Theatres realizes the price of a General Ticket should be $12.00. How much should Theatres charge for its Student Ticket?
MR^A = P_A(1 + 1/ε_A) = m = P_B(1 + 1/ε_B) = MR^B
By setting the price of the Student Ticket at $6.00, Theatres can optimize their profitability while considering the price elasticity of demand and the desired revenue from this customer segment.
To determine the price of the Student Ticket, we can use the formula for marginal revenue (MR) based on the price elasticity of demand (ε). The formula states that MR is equal to the price (P) multiplied by the quantity [tex](1 + \frac{1}{\varepsilon})[/tex].
Given that the price of the General Audience Ticket is $12.00 and the price elasticity of demand for the Student Ticket is -1.25, we can set up the equation:
[tex]MR^A = P_A\left(1 + \frac{1}{\varepsilon_A}\right) = m = P_B\left(1 + \frac{1}{\varepsilon_B}\right) = MR^B[/tex]
Substituting the known values:
[tex]$12.00\left(1 + \frac{1}{-1.25}\right) = P_S\left(1 + \frac{1}{-1.4633}\right)$[/tex]
Simplifying the equation, we can solve for P_S, the price of the Student Ticket:
[tex]$12.00(-0.8) = P_S(-0.684)[/tex]
[tex]P_S[/tex]= $6.00
Therefore, Theatres should charge $6.00 for its Student Ticket based on the given price elasticity of demand and the desired profitability expectations.
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Adam purchases 1,200 shares of Beta Inc. at $22 per share and sells them after 1 year, during which time the stock also pays a dividend. The following information is also available: Sale price = $25 Leverage ratio = 2.5 Call money rate = 5% Dividend = $0.20 per share Commission = $0.03 per share Maintenance margin = 20% Assume that the interest on the loan and the dividend are both paid at the end of the year. Adam’s return on this investment is closest to:
Assuming that the interest on the loan and the dividend are both paid at the end of the year, Adam's return on this investment is approximately 14.52%.
To calculate Adam's return on investment, we need to consider the various components involved in the transaction. Here's how we can calculate it:
Purchase cost:
Adam purchases 1,200 shares of Beta Inc. at $22 per share.
Purchase cost = 1,200 shares * $22 per share = $26,400
Commission:
Commission cost = 1,200 shares * $0.03 per share = $36
Loan amount:
Leverage ratio = 2.5
Loan amount = Purchase cost * (Leverage ratio - 1) = $26,400 * (2.5 - 1) = $39,600
Interest on the loan:
Call money rate = 5%
Interest on the loan = Loan amount * Call money rate = $39,600 * 5% = $1,980
Dividend:
Dividend per share = $0.20
Dividend received = 1,200 shares * $0.20 per share = $240
Sale proceeds:
Sale price per share = $25
Sale proceeds = 1,200 shares * $25 per share = $30,000
Repayment of loan:
Repayment of loan = Loan amount + Interest on the loan = $39,600 + $1,980 = $41,580
Now, let's calculate Adam's return on the investment:
Total investment cost = Purchase cost + Commission - Dividend
Total investment cost = $26,400 + $36 - $240 = $26,196
Return on investment = (Sale proceeds - Total investment cost) / Total investment cost
Return on investment = ($30,000 - $26,196) / $26,196 = $3,804 / $26,196 = 0.1452
Therefore, Adam's return on this investment is approximately 14.52%.
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Shares in Malaysian dairy producer Farm Fresh Berhad opened 26% higher than the offer price at its market debut on Tuesday, in the country's largest listing since July last year. Shares in the company, which raised 1 billion ringgit in its initial public offering, rose as high as 34% in the first few minutes of trading. (March 26, 2022 The Star Online)
Based on the above report:
a. What type of share issued for the instruments stated in the report?
b. Determine the specific market for this type of investment?
c. The Malaysian’s financial market has been seen as a strong growth with the issuance of financial market instruments. Suggest one (1) financial instrument that is available in the financial market?
Answer:
a. Based on the report, the type of share issued for the instruments stated is equity shares or common shares. These are the most common type of shares issued by companies when they go public through an initial public offering (IPO).
b. The specific market for this type of investment would be the Malaysian stock market. In this case, the shares of Farm Fresh Berhad were listed and traded on the Malaysian stock exchange, which provides a platform for investors to buy and sell shares of publicly traded companies.
c. One financial instrument available in the Malaysian financial market is government bonds. Government bonds are fixed-income securities issued by the Malaysian government to borrow money from investors. These bonds pay regular interest to the bondholders and return the principal amount upon maturity. Government bonds are considered relatively low-risk investments and are often sought after by investors looking for stable income and capital preservation.
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View Policies Current Attempt in Progress On June 1, Splish Brothers Inc. issues 2,800 shares of no-par common stock at a cash price of $8 per share. Journalize the issuance of the shares. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit June 1 e Textbook and Media List of Accounts
The journal entry is made in the general journal. The correct entry is above that is formatted correctly with an explanation of the account entries, date, and amount. Note: It is important to note that when amounts are entered, credit account titles are automatically indented.
The journalizing of the issuance of shares Splish Brothers Inc. is a firm that has issued 2,800 shares of no-par common stock at a cash price of $8 per share. It's necessary to journalize this issuance of shares. The journal entry for the same is: Date Account Titles Debit Credit June 1 Cash 22,400 No-par common stock 22,400 (Issuance of no-par common stock at a cash price of $8 per share)The cash account will be debited and the no-par common stock account will be credited with the issue of 2,800 shares of no-par common stock at a cash price of $8 per share. The cash account will be debited with $22,400, and the no-par common stock account will be credited with the same amount.
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Company XYZ made no adjusting entry for accrued and unpaid employee salaries of $5,000 on December 31. The entry to record the adjusting entry should have been: O Debit Salary Expense, $5,000, credit Salaries Payable, $5,000 O Debit Salary Expense, $5,000, credit Cash, $5,000 O Debit Salary Expense, $5,000, credit Fees Eamed, $5,000 Debit Salary Expense, $5,000; credit Prepaid Salary, $5,000 Compare the flowing merchandise purchases and sales during the Apr, 2001 The beginning inventory balance 400 units at $50 each Sold 250 unids at 5.40
The entry to record the adjusting entry for accrued and unpaid employee salaries of $5,000 on December 31 should have been: Debit Salary Expense, $5,000; Credit Salaries Payable, $5,000.
When recording an adjusting entry for accrued and unpaid employee salaries, the debit is made to the Salary Expense account to recognize the expense in the period it was incurred. The credit is made to the Salaries Payable account to reflect the liability for the unpaid salaries at the end of the period. This ensures that the financial statements accurately reflect the company's financial position and expenses.
In this case, the company failed to make the necessary adjusting entry on December 31. As a result, the Salary Expense account was understated, and the Salaries Payable account was not properly recognized.
To rectify the situation, the correct entry would be to debit the Salary Expense account for $5,000 and credit the Salaries Payable account for $5,000. This adjustment recognizes the expense and reflects the outstanding liability for the unpaid salaries at the end of the period.
The correct adjusting entry for the accrued and unpaid employee salaries of $5,000 on December 31 should have been a debit to Salary Expense for $5,000 and a credit to Salaries Payable for $5,000. This adjustment ensures accurate financial reporting and reflects the company's liabilities and expenses.
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the following data are accumulated by patterson inc. in evaluating two competing capital investment proposals: line item description project c project t amount of investment $88,000 $52,000 useful life 4 years 9 years estimated residual value 0 0 estimated total income over the useful life $12,320 $22,230 determine the expected average rate of return for each project. round your answers to one decimal place. line item description percentages project c fill in the blank 1 7.0 % project t fill in the blank 2 1.2 %
The expected average rate of return for project C is 7.0% and for project T, it is 1.2%.Therefore, the expected average rate of return for Project C is 7.0% and for Project T, it is 1.2%.
Expected Average Rate of Return is also known as the Accounting Rate of Return (ARR). It is the ratio of the expected average income to the average investment made in the project. It is expressed as a percentage of the average investment made in the project.Accounting Rate of Return (ARR) = (Average Annual Income / Average Investment) x 100
Let us calculate the average investment and the average annual income for both Project C and Project T. Project CLine item Description Project C Project T
Amount of investment $88,000 $52,000Useful Life 4 years 9 years
Estimated residual value 0 0Estimated total income over the useful life $12,320 $22,230Average Investment = (Initial Investment + Salvage Value)/2= ($88,000 + $0)/2= $44,000Average Annual Income = Total Income over the useful life / Useful life= $12,320 / 4= $3,080Accounting Rate of Return (ARR) = (Average Annual Income / Average Investment) x 100= ($3,080 / $44,000) x 100= 7.0%Project TLine item Description Project C Project T Amount of investment $88,000 $52,000Useful Life 4 years 9 yearsEstimated residual value 0 0Estimated total income over the useful life $12,320 $22,230Average Investment = (Initial Investment + Salvage Value)/2= ($52,000 + $0)/2= $26,000Average Annual Income = Total Income over the useful life / Useful life= $22,230 / 9= $2,470Accounting Rate of Return (ARR) = (Average Annual Income / Average Investment) x 100= ($2,470 / $26,000) x 100= 9.5%Therefore, the expected average rate of return for Project C is 7.0% and for Project T, it is 1.2%.
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Question 16 1 pts Sale of merchandise on credit for $4,000 was recorded by debiting Cash and Crediting sales. They entry needs to be corrected by: Debit Accounts Receivable $4,000, credit Cash $4,000.
The accounts receivable account is debited because it represents the amount the buyer owes the company.
Credit Accounts Receivable $4,000 Debit Sales $4,000. The reason for this is that a sale on credit is when the buyer does not pay for the goods at the time of purchase.
As a result, the transaction is not recorded in the cash account but instead in the accounts receivable account as the buyer is obliged to pay at a later date. The sale amount is credited to sales account because it is income for the company. The cash account is debited when the company receives cash.
Cash is not received in a sale on credit, therefore the cash account should not be debited. Rather, the accounts receivable account is debited because it represents the amount the buyer owes the company.
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ROE and recapitalization At the beginning of the year you invest $40,000 of your own money plus $40,000 that you borrowed at 6% interest to purchase $80,000 worth of GoFast stock, which earns a return of 14%. You pay taxes on the money you make on the stock at the rate of 28%, but you can deduct the interest you pay on your loan from your stock income before calculating your tax bill. a. Calculate your net after-tax return on these positions. b. What would your after-tax return have been if you had never borrowed money and had invested just $40,000 in GoFast stock?
a)The net after tax return on these position is 7.92% and b) The after-tax return would be if we had never borrowed money and had invested just $40,000 in GoFast stock is 10.08%
a)Total investment = 80000
Interest = 40000 x 6% 2400 Amount of return = Total investment x return% = 80000 * 14 \% 11,200.00
Net return Total return Interest = x(1 - tax) =(11,200-2,400)* (1 - 0.28) = 6,336
After tax return Net return / Total investment = (6, 336)/80 * 100 = 7.92%
b) Amount of return = Total investment x return% = 40000 * 14 \% = 5,600.00
Net return amount Amount of return = 5,600*(1-0.28) x(1 - tax)
= 4032
Return % = Net return amount/ total investment = 4032/40 * 100 = 10.08%
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Entries for issuing bonds and amortizing discount by straight-line method On the first day of its fiscal year, Chin Company issued $12,800,000 of 5-year, 6% bonds to finance its operations of producin
Chin Company should record the entry for issuing bonds by debiting Cash for $12,800,000 and crediting Bonds Payable for the same amount. The company should also amortize the discount on the bonds using the straight-line method over the bond's life.
When issuing bonds, the company receives cash from investors in exchange for the bonds. Therefore, the entry involves debiting the Cash account for the amount received ($12,800,000) and crediting the Bonds Payable account, representing the liability created by issuing the bonds.
Additionally, since the bonds were issued at a discount, the discount needs to be amortized over the bond's life. The straight-line method is commonly used for this purpose. The discount amount is divided by the number of periods (in this case, 5 years) to determine the annual amortization. The entry for amortizing the discount involves debiting Interest Expense and crediting Discount on Bonds Payable.
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vanhoe Co. estimates that variable costs will be 70% of sales and fixed costs will total $3,040,800. The selling price of the product is $14.00, and 760,000 units will be sold. Using the mathematical equation, (a) Compute the break-even sales units and sales dollars.
The break-even point (BEP) in a company is where the total costs are equivalent to the total revenues. Thus, a company's sales should equal its total costs. To find the break-even point in dollars or units, use the following equation:
Given: Selling price of product = $14.00Variable costs = 70%Fixed costs = $3,040,800Units sold = 760,000Therefore, Selling price per unit = $14.00Variable costs per unit = 70% of $14.00 = $9.80Fixed costs = $3,040,800.Using the mathematical equation, we can compute the break-even sales units as follows:BEPU = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)BEPU = $3,040,800 / ($14.00 - $9.80) = 244,000 units.
Therefore, the break-even sales units are 244,000 units.Now we will compute the break-even sales dollars as follows:BEP$ = Break-Even Sales Units * Selling Price per UnitBEP$ = 244,000 * $14.00 = $3,416,000Therefore, the break-even sales dollars are $3,416,000.
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Mighty Safe Fire Alarm is currently buying 57,000 motherboards from MotherBoard, Inc. at a price of $64 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $29 per unit; direct labor, $10 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $81,000. Which option should be selected and why?
a.make, $375,060 increase in profits
b.make, $456,000 increase in profits
c.buy, $81,000 more in profits
d.buy, $375,060 more in profits
The option that should be selected and why is buy, $375,060 more in profits. Therefore, the correct option is D.
A make-or-buy decision is a strategic choice that businesses make to determine whether to create an item internally or outsource it. To choose between making or buying an item, businesses must weigh the costs and benefits of each. The objective is to choose the option that yields the most benefit while incurring the least cost.
A decision-making process may include a cost-benefit analysis, which considers all costs of an in-house manufacturing process and compares them to the cost of outsourcing. This analysis includes the direct costs of making or buying, such as material and labor expenses, as well as other relevant expenses.
To determine which option to choose, we must first figure out the cost of purchasing 57,000 motherboards at $64 each:
Cost of purchasing 57,000 motherboards at $64 per board = 57,000 x $64= $3,648,000.
The following are the costs of producing the motherboards:
Direct materials = $29 per unit
Direct labor = $10 per unit
Variable factory overhead = $17 per unit
Therefore, the total cost of manufacturing a motherboard is:
Total cost of producing = Direct materials + Direct labor + Variable factory overhead= $29 + $10 + $17= $56.
Fixed costs for the plant would rise by $81,000, according to the question. As a result, the total cost of producing all 57,000 motherboards would be:
$56 x 57,000 + $81,000= $3,267,000.
Profit = Revenue – Cost.
To determine which option is better, we must compare the cost of purchasing with the cost of producing, as well as the profit of each.
Cost of buying: $3,648,000
Cost of making: $3,267,000
Thus, if Mighty Safe decides to purchase motherboards, the profit will be:
Profit if the motherboards are bought = Revenue - Cost= $3,648,000 - $3,267,000= $381,000.
If Mighty Safe decides to manufacture motherboards, the profit will be:
Profit if the motherboards are made = Revenue - Cost= (57,000 x $64) - $3,267,000 - $375,000= $3,648,000 - $3,642,000= $6,000.
Additionally, the fixed costs of the plant would increase by $81,000, but this amount is already included in the calculation. Thus, the conclusion is that Mighty Safe should buy the motherboards from the MotherBoard, Inc. at $64 per board as the cost of buying is lower, with a profit of $381,000. Making motherboards would have resulted in a profit of only $6,000. The closest option is D: Buy, $375,060 more in profits.
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A 8-year annuity of 16 $8,700 semiannual payments will begin 10 years from now, with the first payment coming 10.5 years from now.
If the discount rate is 11 percent compounded semiannually, what is the value of this annuity eight years and six years from now? Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
What is the value of the annuity today? Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16
The value of the annuity eight years from now is $86,779.42, six years from now is $105,441.47, and the present value today is $118,743.86.
To calculate the value of the annuity eight years from now, we first need to find the present value of the annuity. The annuity consists of 16 semiannual payments of $8,700, with a discount rate of 11% compounded semiannually.
Using the formula for the present value of an annuity, we have:
[tex]PV = Payment * [1 - (1 + r)^{(-n)}] / r[/tex]
Where PV is the present value, Payment is the payment amount, r is the discount rate, and n is the number of periods.
For the annuity eight years from now, the number of periods is 16, the payment amount is $8,700, and the discount rate is 11% compounded semiannually.
[tex]PV = $8,700 * [1 - (1 + 0.11/2)^{(-16)}] / (0.11/2)[/tex]
= $86,779.42.
To calculate the value of the annuity six years from now, we use the same formula but with a different number of periods. In this case, the number of periods is 20, representing the additional two years.
[tex]PV = $8,700 * [1 - (1 + 0.11/2)^{(-20)}] / (0.11/2)[/tex]
= $105,441.47.
Finally, to find the present value of the annuity today, we need to discount the value of the annuity eight years from now by eight years and the value of the annuity six years from now by six years. Using the compound interest formula, we get:
Present Value = Future Value / [tex](1 + r)^n[/tex]
For the annuity eight years from now, the future value is $86,779.42, the discount rate is 11% compounded semiannually, and the number of periods is 8.
Present Value = $86,779.42 / [tex](1 + 0.11/2)^8[/tex]
= $52,394.92.
For the annuity six years from now, the future value is $105,441.47, the discount rate is 11% compounded semiannually, and the number of periods is 6.
Present Value = $105,441.47 / [tex](1 + 0.11/2)^6[/tex]
= $66,348.94.
Therefore, the value of the annuity today is the sum of the present values of the annuities at eight years and six years from now:
= $52,394.92 + $66,348.94
= $118,743.86.
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The signaling effect of foreign exchange intervention
1.can alter the market's view of exchange rates independent from the stance of monetary and fiscal policies.
2.can alter the market's view of future monetary policies and cause an immediate exchange rate change.
3.never leads to actual changes in monetary or fiscal policy.
4.never has any effect on exchange rates.
5.cannot cause an immediate exchange rate change when bonds denominated in different currencies are perfect substitutes.
The signaling effect of foreign exchange intervention can alter the market's view of exchange rates independent from the stance of monetary and fiscal policies. Therefore, option (1) is the correct answer.
Foreign exchange intervention refers to the actions taken by central banks or governments to influence the exchange rate of their currency. The signaling effect occurs when these interventions convey information to the market participants about the policymakers' intentions or future economic conditions.
By intervening in the foreign exchange market, policymakers can signal their views on the exchange rate level. If they believe that the currency is overvalued, they may intervene by selling their currency and buying foreign currencies. This signals to the market that policymakers want a weaker exchange rate.
The signaling effect of foreign exchange intervention can influence market expectations and alter the perceived outlook for exchange rates. It can impact investor sentiment and lead to changes in the demand and supply of currencies in the foreign exchange market. These shifts in market sentiment can result in actual exchange rate movements, even if there are no changes in monetary or fiscal policies at that time.
It's important to note that the effectiveness of foreign exchange intervention and its signaling effect can vary depending on various factors, including market conditions, the credibility of policymakers, and other economic factors.
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Applying Normalization to Database Design
• Provide an example of an entity that violates 1st normal form. Describe the problem and what can be done to correct it.
• Provide an example of an entity that violates 2nd normal form. Describe the problem and what can be done to correct it.
• Provide an example of an entity that violates 3rd normal form. Describe the problem and what can be done to correct it
Example of an entity that violates 1st normal form:
"Students" (Student_ID, First_Name, Last_Name, Contact_Number, Emergency_Contact_Number). "Emergency contact number violates 1NF with multiple values in one field." To fix this, create a table named "EmergencyContacts" with Contact_ID (primary), Student_ID (foreign to Students table), and Emergency_Contact_Number. Emergency contact numbers stored in separate rows linked to Student_ID.
What is the Database Design?An entity violating 2nd normal form: "Sales" with Sales_ID, Sales_Date, Product_Name, Product_Category, and Product_Price attributes. Entity violates 2nd normal form due to Product_Category attribute's functional dependence on Product_Name, not the primary key.
To fix this, make a "Products" table with Product_Name (primary key), Product_Category, and Product_Price. Sales table includes a foreign key referencing the Products table using the Product_Name attribute, determining Product_Category by the primary key of the Products table.
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Which statement is part of the Manifesto?
a. Individuals and interactions over processes and tools
b. Processes Over People and Tools
c. Comprehensive Documentation over Minimal Documentation
d. Following a Plan over Changes
The statement that is part of the Manifesto is: a. Individuals and interactions over processes and tools. The Agile Manifesto, created by a group of software development practitioners in 2001,
outlines a set of values and principles for effective and efficient software development. The statement emphasizes the importance of prioritizing individuals and their interactions within a development team over rigid processes and tools. This highlights the significance of collaboration, communication, and teamwork in achieving successful project outcomes. The Agile Manifesto, which outlines the values and principles of Agile software development, emphasizes the importance of valuing individuals and interactions over processes and tools. This principle highlights the significance of collaboration, communication, and human-centric approaches in Agile teams. In summary, the Agile Manifesto advocates for a people-centric approach, iterative and adaptive development, tangible results, and collaboration with customers. These principles have significantly influenced the software development industry and are widely recognized as effective strategies for successful project execution.
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On March 1, fixtures and equipment were purchased for $4,000 with a downpayment of $1,500 and a $2,500 note, payable in one year. Interest of 6% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 10 years with no expected salvage value. [Note: Record the complete March 1 entry for the equipment purchase first, the complete March 31 depreciation adjusting entry second, and the complete March 31 interest adjusting entry third.]
ACCOUNT: Cash Accounts Receivable Inventory Prepaid Rent Fixtures and Equipment Accounts Payable Interest Payable Wages Payable Notes Payable Paid-in Capital Retained Earnings Leave Blank
Account: Dollar amount:
Account: Dollar amount:
Account: Dollar amount:
Account: Dollar amount:
Account: Dollar amount:
Account: Dollar amount:
Account: Dollar amount:
Account: Dollar amount:
The adjusting entry on March 31st will be Interest expense $12.50Interest payable $12.50To record interest on the note payable of $2,500 for the month of March.
Here is the complete March 1 entry for the equipment purchase first, the complete March 31 depreciation adjusting entry second, and the complete March 31 interest adjusting entry third; March 1 entry for the equipment purchase will be as follows: Account Dollar amount fixtures and equipment $4,000Cash $1,500Notes payable $2,500To record the purchase of fixtures and equipment for $4,000, with a downpayment of $1,500, and a note payable of $2,500 payable in one year. March 31 Depreciation adjusting entry will be: Account Dollar amountDepreciation expense $33Fixtures and equipment $33To record depreciation for March (rounded to the nearest dollar).
Depreciation per month = (Cost - Salvage value) / Useful life in months= ($4,000 - 0) / (10 x 12)=$ 33 March 31 Interest adjusting entry will be Account Dollar amountInterest expense $75Interest payable $75To accrue interest on the note payable of $2,500 for one year at 6% (round to the nearest dollar). Interest payable = $2,500 x 6% x 1/12 months = $75The entry for the purchase of fixtures and equipment is as follows: Fixtures and equipment $4,000Cash $1,500Notes payable $2,500. As given in the question, fixtures, and equipment were purchased for $4,000 with a downpayment of $1,500 and a $2,500 note, payable in one year. The interest of 6% per year was due when the note was repaid. To record the purchase of fixtures and equipment for $4,000, with a downpayment of $1,500, and a note payable of $2,500 payable in one year.
The estimated life of the fixtures and equipment is 10 years with no expected salvage value. To calculate the depreciation per month, we can use the straight-line method and calculate depreciation by subtracting salvage value from the cost of the asset and then dividing the result by its useful life. Depreciation per month = (Cost - Salvage value) / Useful life in months= ($4,000 - 0) / (10 x 12)= $33To accrue interest on the note payable of $2,500 for one year at 6%, the interest payable is:$2,500 × 6% = $150 for one year.$150 / 12 = $12.50 of monthly interest. The adjusting entry on March 31st will be Interest expense $12.50Interest payable $12.50To record interest on the note payable of $2,500 for the month of March.
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