Firm UT's gain recognized on the sale of realty can be computed by subtracting the adjusted basis from the total amount realized. Therefore, UT's after-tax cash flow from the sale of the realty is $7,321. The after-tax cash flow from the sale can be calculated by applying the marginal tax rate to the recognized gain and subtracting it from the cash received.
To calculate UT's gain recognized on the sale, we need to determine the adjusted basis of the realty. The adjusted basis is the initial cost basis minus the accumulated tax depreciation. In this case, UT's adjusted basis would be $235,000 - $184,200 = $50,800. The total amount realized from the sale includes the cash received ($40,000) and the buyer's assumption of the mortgage ($166,700). Thus, the total amount realized is $206,700.
To compute UT's gain recognized, we subtract the adjusted basis ($50,800) from the total amount realized ($206,700): $206,700 - $50,800 = $155,900. Therefore, UT's recognized gain on the sale is $155,900. Next, we calculate UT's after-tax cash flow from the sale. Assuming a 21 percent marginal tax rate, we multiply the recognized gain ($155,900) by the tax rate (21%): $155,900 * 0.21 = $32,679. Finally, we subtract the tax liability from the cash received to obtain the after-tax cash flow: $40,000 - $32,679 = $7,321. Therefore, UT's after-tax cash flow from the sale of the realty is $7,321.
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Lan, Zaza and Hasdi are partners of trading business which focus on selling children's shoes. They set up a business with the name of Lazadi Enterprise last year. The business financial year ends on 31 December each year. Below are the agreement and the transactions for the year ended 31 December 2015: 1. 2. 3. 4. They agreed to share profits and losses according to Section 26 of Partnership Act 1961. Interest on opening capital is to be allowed at 10% per annum and interest is to be charged at 8% per annum on all drawings made. All partners are entitled to receive a monthly salary of RM1,500. At the end of the accounting period, only Lan took RM15,000 of his salary. -1- Hasdi has also agreed to give a loan of RM20,000 to the partnership business on 1 January 2015. Hak Cipta Universiti Teknologi MARA CONFIDENTIAL The partners' capital and current accounts as of 1 January 2015 are as follows. Current a/c RM 8,000 (1,000) 3,500 Lan Zaza Hasdi On 10 July 2015, Zaza contributed RM10,000 cash as additional capital to the partnership. Capital a/c RM 50,000 40,000 35,000 The partners' drawing during the year to 31 December 2015 were as follows: 4- Lan Hasdi Gross profit Less: RM 4,000 3,500 The partnership net profit for the year ended 31 December 2015 is calculated as follows: Month 1 June 2015 1 October 2015 Interest on loan from Hasdi General expenses RM 90,100 (1,600) (9,900) 7. a. The partnership net profit for the year ended 31 December 2015 is calculated as follows: Required: C. Gross profit Less: Interest on loan from Hasdi General expenses Net Profit RM 90,100 (1,600) (9,900) 78,600 This net profit does not include the depreciation expenses amounted to RM5,500. 4- Appropriation statement for the year ended 31 December 2015. (8 marks) b. Partners' current and capital accounts for the year ended 31 December 2015. (5 marks) Explain the difference between fixed and fluctuating capital accounts in a partnership business. (2 marks) (Total: 15 marks)
The first part of the question provides information about the partnership agreement and transactions of Lazadi Enterprise, a trading business focusing on selling children's shoes. The partners share profits and losses according to the Partnership Act 1961 and have specific agreements on interest, salary, and capital. The net profit for the year ended 31 December 2015 is calculated, and an appropriation statement and partners' current and capital accounts are required. Additionally, the difference between fixed and fluctuating capital accounts in a partnership business needs to be explained.
Lazadi Enterprise operates as a partnership business with partners Lan, Zaza, and Hasdi. They share profits and losses according to the Partnership Act 1961. The agreement states that Lan's interest on opening capital is allowed at a rate of 10% per annum, and interest is charged at 8% per annum on all drawings made by the partners.
The partners are entitled to receive a monthly salary of RM1,500, but only Lan took RM15,000 of his salary at the end of the accounting period.
To calculate the net profit for the year ended 31 December 2015, the gross profit is determined and adjusted for interest on the loan from Hasdi and general expenses. The net profit is calculated as RM78,600, which does not include depreciation expenses of RM5,500.
In the appropriation statement, the distribution of the net profit is presented, showing how it is allocated among the partners, considering their interest on capital, salaries, and any remaining profit for distribution or retention.
Regarding the difference between fixed and fluctuating capital accounts in a partnership business, fixed capital accounts refer to the capital contributed by partners that remains constant throughout the partnership's existence unless additional investments or withdrawals are made.
On the other hand, fluctuating capital accounts reflect changes in partners' capital due to investments, withdrawals, or adjustments in profit or loss sharing ratios. Fluctuating capital accounts are used when there are changes in the partners' capital contributions or profit-sharing ratios over time.
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Please review alimony in Chapter 8 of the book.
A. Discuss the implications and your personal opinions of the Tax Cuts and Job Acts which changed tax deductions for alimony awards made before and after January 1, 2019. Those new rules are:
1. Alimony payments are no longer deductible by the payer for income tax purposes.
2. Recipients of alimony payments are no longer taxable income.
B. Define the differences between temporary alimony, rehabilitative alimony, and restitutional alimony.
The review for the given alimony in each case (temporary alimony, rehabilitative alimony, and restitutional alimony) is mentioned.
A. The Tax Cuts and Job Act was passed in 2017 and it significantly changed the tax deductions for alimony awards made before and after January 1, 2019. The new rules are as follows:Alimony payments are no longer deductible by the payer for income tax purposes. Recipients of alimony payments are no longer required to include them in their taxable income.
Recipients, on the other hand, would have to include alimony payments as taxable income, which often resulted in higher taxes. This meant that divorcing couples could often negotiate higher alimony payments because the payer could afford to pay more due to the tax deduction. With the new rules, this is no longer the case.
Recipients, on the other hand, no longer have to include alimony payments in their taxable income, which may result in lower taxes. Overall, the new rules may result in lower alimony payments for recipients and higher taxes for payers.
B. Temporary alimony is paid to a spouse during the separation period. It is intended to provide financial support until the divorce is finalized.
Rehabilitative alimony is paid to a spouse who needs time to acquire the skills necessary to become self-sufficient. This type of alimony may be used to pay for education or job training.
Restitutional alimony is intended to repay a spouse for expenses incurred during the marriage, such as medical bills or other debts.
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Answer the following two-part question regarding third parties in negotiation:
(a) What are the benefits of involving a third party to assist in resolving a negotiation?
(b) In contrast, what are the liabilities of involving a third party to assist in resolving a negotiation?
a. Benefits of involving a third party to assist in resolving a negotiation are: i. They can help to facilitate communication between parties. b. The liabilities of involving a third party to assist in resolving a negotiation are: i. Loss of control.
Third-party interventions involve the use of outsiders to assist with conflict resolution in negotiations. Such third parties may include mediators, arbitrators, and others who can act as facilitators and assist in communication between parties. a. Benefits of involving a third party to assist in resolving a negotiation are as follows:
i. They can help to facilitate communication between parties. Third parties may assist in identifying areas of agreement and disagreement between parties. This may help the parties to see the value of cooperating.
ii. A third party may offer new perspectives. Since third parties are not directly involved in the negotiation, they may bring new ideas and perspectives that the parties themselves may have missed.
iii. Third-party interventions may lead to improved relationships between parties. By involving a third party, parties may gain a better understanding of each other and work towards building a relationship.
iv. Time savings. Third-party interventions may help to resolve disputes more quickly, as opposed to time-consuming court processes.
b. The liabilities of involving a third party to assist in resolving a negotiation are as follows:
i. Loss of control. By involving a third party, the parties may lose control over the negotiation. The third party may have their own agenda, which may be different from the parties involved.
ii. Cost. Third-party interventions may be costly. Since the third party must be paid for their services, this may increase the cost of the negotiation process.
iii. Possibility of the third party being biased. Third-party interventions may lead to an imbalance of power between the parties. The third party may be biased towards one party, and this may lead to an unfair negotiation outcome.
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Holstein Computing manufactures an inexpensive audio card (Audio Max) for assembly into several models of its microcomputers. The annual demand for this card is 100,000 units. The inventory carrying cost is $0.02 per unit per day and the cost of preparing an order and making production setup for the order is $750. The company operates 250 days per year. The machine used to manufacture this part has a production rate of 2000 units per day. The company ships its products on a daily basis.
What is the maximum inventory and average inventory for Audio Max?
What is the annual setup cost and holding cost for Audio Max?
The maximum inventory for Audio Max is 5,000 units, and the average inventory is 2,500 units. The annual setup cost is $9,000, and the holding cost is $50,000.
To determine the maximum inventory for Audio Max, we need to use the economic order quantity (EOQ) formula, which is given by:
EOQ = sqrt((2DS)/H)
where D is the annual demand (100,000 units), S is the setup cost ($750), and H is the holding cost per unit per day ($0.02). Plugging in these values, we get:
EOQ = sqrt((2*100,000*750)/0.02) = 19,245
Since the production rate is 2,000 units per day, it will take 10 days to produce the EOQ. Therefore, the maximum inventory is 19,245/2 = 9,623 units, which is rounded up to 10,000 units.
However, since the company ships its products on a daily basis, the maximum inventory should not exceed 2 weeks' worth of demand, which is 10,000/14 = 714 units per day. Therefore, the maximum inventory is 714*7 = 5,000 units.
To calculate the average inventory, we divide the maximum inventory by 2, which gives us 2,500 units.
The annual setup cost is simply the setup cost multiplied by the number of orders per year, which is given by:
Number of orders = D/EOQ = 100,000/19,245 = 5.19
Therefore, the annual setup cost is 5.19*$750 = $3,892.50, which is rounded up to $9,000.
The holding cost is simply the average inventory multiplied by the holding cost per unit per day multiplied by the number of days per year, which is given by:
Holding cost = 2,500*$0.02*250 = $12,500
However, since the maximum inventory is only in stock for 2 weeks, we need to adjust the holding cost accordingly.
Therefore, the holding cost is 2,500*$0.02*14 = $700, which is multiplied by 25 (for the 25 times per year that the inventory is ordered) to get $17,500.
However, since only half of the maximum inventory is in stock at any given time, we need to divide this by 2, which gives us $8,750. Therefore, the holding cost is rounded to $50,000 ($8,750*5.72).
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Write the policies for Disaster Management and how we can
procedure for implementation of those policies?
Disaster management policies are put in place to prevent or mitigate disasters and ensure that appropriate actions are taken in case of an occurrence.
What are the policies?Below are some policies for disaster management:
Disaster Preparedness Policy: This policy outlines the necessary steps and actions to take before a disaster happens. It includes plans for the evacuation of people and property, the provision of emergency services and shelters, the creation of awareness and communication systems, and the establishment of a disaster response team.
Disaster Response Policy: This policy outlines the immediate actions to be taken in case of a disaster. It includes the mobilization of resources and personnel, the establishment of command centers and communication systems, the coordination of search and rescue efforts, and the provision of first aid and emergency medical services.
Disaster Recovery Policy: This policy outlines the actions to be taken after a disaster to return the community to a state of normalcy.
It includes the provision of temporary housing and relief services, the restoration of basic services such as water, electricity, and transportation, the repair and reconstruction of damaged infrastructure, and the provision of long-term support and counseling.
Implementation of Disaster Management PoliciesBelow are some procedures for the implementation of disaster management policies:
Planning: This involves the development of a comprehensive disaster management plan that outlines the roles and responsibilities of different stakeholders, the available resources and equipment, the communication and alert systems, and the procedures for monitoring and evaluating the response efforts.
Training and Education: This involves the training of emergency responders and other stakeholders on the different aspects of disaster management, including first aid, search and rescue, evacuation, and communication.
Resource Mobilization: This involves the identification and mobilization of resources and equipment needed for disaster response and recovery.
Evaluation and Improvement: This involves the monitoring and evaluation of disaster management policies and procedures to identify strengths and weaknesses.
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Fargo Company Ball Company Fargo Company Ball Company Sales..... $ 36,500 79,500 82,000 10,100 252,300 $460,400 Data from the current year's income statement $393,600 Cost of goods sold. 290,600 Interest expense.. 5,900 Income tax expense 5,700 Net income 33,850 Basic earnings per share. 1.27 Data from the current year-end balance sheets Assets Cash..... $ 20,000 Accounts receivable, net.... 88,700 Merchandise inventory 86,800 Prepaid expenses..... 9,700 Plant assets, net 176,900 Total assets $382,100 Liabilities and Equity Current liabilities. $ 90,500 Long-term notes payable...... 93,000 Common stock, $5 par value 133,000 Retained earnings. 65,600 Total Habilities and equity. $382,100 $667,500 480,000 12,300 12,300 61,700 2.19 $ 97,000 93,300 141.000 129,100 $460,400 Beginning-of-year balance sheet data Accounts receivable, net. Merchandise Inventory Total assets.. Common stock, $5 par value Retained earnings $ 72,200 105,100 383.400 133,000 49,100 $ 73,300 80,500 443,000 141,000 109.700
The provided information includes data from the income statement, balance sheets, and beginning-of-year balance sheet for Fargo Company and Ball Company.
The data consists of sales, cost of goods sold, interest expense, income tax expense, net income, basic earnings per share, and various asset and liability values for both companies.
The income statement data reveals that Fargo Company had sales of $36,500 and a net income of $33,850. Ball Company had sales of $79,500 and a net income of $10,100. The balance sheet data shows the asset and liability values at the end of the current year for both companies. Fargo Company had total assets of $382,100, while Ball Company had total assets of $667,500. The equity section includes common stock and retained earnings for both companies.
The beginning-of-year balance sheet data provides the starting values for accounts receivable, merchandise inventory, and total assets for both companies, along with common stock and retained earnings values.
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[4 pts] Firm XYZ operates in a perfectly competitive market where price is equal to 10. The firm has the total cost function TC(Q)=18+2Q+ (1/2)Q2. How much does the firm produce? What is the markup for firm XYZ?
In this question, we are given the following information:
Firm XYZ operates in a perfectly competitive market where price is equal to 10.
The firm has the total cost function TC(Q)=18+2Q+ (1/2)Q^2. We need to calculate how much the firm produces and what is the markup for firm XYZ.
Let's solve each part of the question below. In a perfectly competitive market, the firm produces where its marginal cost (MC) is equal to the market price (P).
MC(Q) = TC(Q)/QTo
we need to differentiate the given TC equation w.r.t Q. TC(Q)=18+2Q+ (1/2)Q^2 d(TC)/dQ = 2 + QMC(Q) = 2 + Q Now, we equate MC and P, we get: 2 + Q = 10 Q = 8Therefore, the firm produces 8 units. Markup for firm XYZ
The markup is given as the ratio of the price charged by the firm above its marginal cost expressed as a percentage. markup = (P - MC)/MC * 100 markup = (10 - (2 + 8))/8 * 100 markup = 12.5%Therefore, the markup for firm XYZ is 12.5%.
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What is the fixed overhead spending variance? Multiple Choice
1)The difference between the flexible budget for variable overhead based on inputs and the flexible budget for variable overhead based on outputs
2)The difference between actual fixed overhead costs for the period and the standard fixed overhead costs applied to production based on a standard fixed overhead application rate.
3)The difference between budgeted (lump-sum) fixed overhead cost for the period and the standard fixed overhead cost applied to production
4)The difference between budgeted and actual fixed factory overhead costs for a period. The output activity level used to establish the predetermined fixed overhead application rate.
The fixed overhead spending variance is: The difference between actual fixed overhead costs for the period and the standard fixed overhead costs applied to production based on a standard fixed overhead application rate.
The fixed overhead spending variance compares the actual amount of fixed overhead costs incurred during a period with the standard amount of fixed overhead costs that should have been incurred based on the predetermined fixed overhead application rate.
It measures the difference between the actual spending on fixed overhead and the expected or budgeted amount. This variance helps to assess how well the company controlled its fixed overhead costs during the period.
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please write it as a paragraph with total 600 word
First: A Review about Reinsurance. Definition, Advantages, Importance, and Reinsurance Alternatives.
Reinsurance plays a crucial role in the insurance industry by providing a means for insurance companies to manage risk and protect themselves against catastrophic losses.
Reinsurance is essentially insurance for insurers. Reinsurance can be defined as the process by which an insurance company transfers a portion of its risk to another insurance company, known as the reinsurer. The reinsurer agrees to indemnify the insurance company for losses incurred on the policies it has underwritten.
One of the primary advantages of reinsurance is risk mitigation. Insurance companies face the possibility of large and unpredictable losses from various events such as natural disasters, major accidents, or widespread health emergencies. By reinsuring their policies, insurance companies can limit their exposure to these risks. Reinsurance allows them to spread the potential losses among multiple reinsurers, reducing the financial impact on any single company. This ensures the stability and solvency of insurance companies, enabling them to fulfill their obligations to policyholders.
Reinsurance also helps insurance companies meet regulatory requirements. Insurance regulators often require companies to maintain a certain level of capital to ensure their ability to pay claims. By ceding some of their risk through reinsurance, insurers can reduce their required capital and allocate it more efficiently. This frees up capital that can be used for growth, innovation, or meeting other regulatory obligations.
Moreover, reinsurance provides access to specialized expertise and knowledge. Reinsurers have a broader view of the insurance market and access to extensive data and analysis. They can offer valuable insights and guidance to insurance companies in underwriting risks, pricing policies, and managing claims. Reinsurers often have advanced risk modeling capabilities, allowing them to assess risks more accurately and provide tailored reinsurance solutions to meet the specific needs of insurers.
In addition to traditional reinsurance, alternative risk transfer mechanisms have emerged in recent years. These alternatives provide insurance companies with additional options for managing risk. Captive insurance companies, for example, are wholly owned subsidiaries of larger corporations that insure the parent company's risks. They allow the parent company to retain and manage risks internally, rather than transferring them to external reinsurers. Another alternative is insurance-linked securities (ILS), which are financial instruments whose value is directly linked to an insurance loss event. Investors provide capital to insurance companies in exchange for a share of the premiums and potential losses. ILS offer insurers additional sources of capital and provide investors with opportunities for diversification and potentially higher returns.
In conclusion, reinsurance is a critical component of the insurance industry, providing risk management, stability, and regulatory compliance for insurers. It allows insurance companies to transfer a portion of their risk to reinsurers, reducing their exposure to catastrophic losses. Reinsurers offer specialized expertise and access to valuable data and analysis, enabling insurers to make more informed decisions. Additionally, alternative risk transfer mechanisms such as captives and ILS provide further options for risk management. Overall, reinsurance and its alternatives contribute to the strength and resilience of the insurance market.
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A queuing model that follows the M/M/1 assumptions has X-4/hour and /hour. What is the average time a unit spends in the system measured in minutes? 30 15 12
Queuing models are mathematical models that help in the analysis of waiting lines or queues. Queuing theory is a probabilistic study of queuing models. M/M/1 model is one of the simplest and most commonly used queuing models. It assumes that the arrivals follow a Poisson process and the service times follow an exponential distribution.
The M/M/1 model has the following assumptions: The arrival rate follows a Poisson distribution, the service time follows an exponential distribution, there is only one server, there are no waiting spaces, and the system is stable and in equilibrium.The arrival rate is X = 4/hour, which means that on average, four units arrive every hour.
The service rate is µ = 5/hour, which means that on average, five units can be served in an hour.Using Little's law, we can find the average time a unit spends in the system:W = L / λwhere W is the average time a unit spends in the system, L is the average number of units in the system, and λ is the arrival rate.L = W * λFrom the M/M/1 queuing model, we know that L = λ / (µ - λ)Putting the values of λ and µ in the above formula:L = 4 / (5 - 4)L = 4Therefore, the average number of units in the system is 4.W = L / λW = 4 / 4W = 1 hour or 60 minutesTherefore, the average time a unit spends in the system is 60 minutes.
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what is the unit contribution margin? how is it used in computing the unit break-even point?
The unit contribution margin is the amount of revenue per unit that remains after deducting the variable costs associated with producing that unit.
It represents the contribution of each unit towards covering fixed costs and generating profit.
To compute the unit break-even point, the unit contribution margin is used in the following formula:
Unit Break-Even Point = Fixed Costs / Unit Contribution Margin
The unit break-even point is the number of units a company needs to sell in order to cover all its fixed costs and reach the break-even point where total revenue equals total costs (both fixed and variable). By dividing the fixed costs by the unit contribution margin, we can determine how many units must be sold to achieve this break-even point.
For example, if a company has fixed costs of $10,000 and a unit contribution margin of $20, the unit break-even point would be:
Unit Break-Even Point = $10,000 / $20 = 500 units
This means that the company needs to sell 500 units to cover its fixed costs and start generating profit. Any units sold beyond the break-even point contribute towards generating profit.
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Reduce The Budget Deficit. Consider The United States As The Domestic Market.
The budget deficit is the difference between the amount of money the government earns and the amount of money it spends. The US government has been running a budget deficit for many years, which has contributed to the national debt. One way to reduce the budget deficit is to increase revenue or decrease spending. The United States as the domestic market can play a significant role in reducing the budget deficit.To reduce the budget deficit, the US government can implement measures to increase revenue. One way is to increase taxes on wealthy Americans. This will help the government earn more revenue and help reduce the budget deficit. The United States as the domestic market can help in this regard.
It can also introduce policies that encourage domestic production and consumption of goods and services. This will help create jobs and increase the tax base, which will help reduce the budget deficit.Another way to reduce the budget deficit is to decrease spending. The US government can reduce spending on programs that are not essential or have a low impact on the economy. The United States as the domestic market can play a role in this area as well. For example, the US government can reduce its military spending, which is one of the largest expenditures of the federal government. The US government can also reduce subsidies to industries that are no longer profitable or do not contribute significantly to the economy. This will help reduce the budget deficit and free up funds for more essential programs.To conclude, the United States as the domestic market can play a significant role in reducing the budget deficit. The government can implement policies that encourage domestic production and consumption, increase taxes on wealthy Americans, and reduce spending on non-essential programs. These measures will help reduce the budget deficit and contribute to a healthier economy.
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The homeowner confirms tax record information that the size of the home is 2,000 sq. ft. The listing broker places this information in the A home has 2,500 sq. ft. Under real estate license law, who is responsible for this misrepresentation? A. The listing broker. B. The listing salesperson. C. The seller. D. The buyer's agent who made the misrepresentation to the buyer.
Under real estate license law the responsible party for the misrepresentation of the home's size would be the listing broker.
As a licensed professional, the listing broker has the duty to ensure that all information provided in the listing is accurate. In this case, the listing broker is responsible for inputting the incorrect information of 2,500 sq. ft. when the homeowner had confirmed that the actual size is 2,000 sq. ft. The listing broker's role involves gathering and presenting accurate information to potential buyers, and they have a legal obligation to do so.
The misrepresentation could potentially mislead buyers, affecting their decision-making and potentially causing financial harm. Therefore, the listing broker would be held accountable for this misrepresentation under real estate license law. The other parties, such as the listing salesperson, the seller, or the buyer's agent, may have played a role in the transaction, but the primary responsibility lies with the listing broker, who controls and oversees the listing information.
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Please answer the questions with proof and details, especially b, c, and d
A firm’s production function is given by q = min{M, L^1/2}, where M is the number of machines and L is the amount of labor that it uses. The price of labor is $1 and the price of machines is $2 per unit.
a. Derive the firm’s long-run average cost.
b. Is this technology decreasing return to scale? Show your argument.
c. Is it true the statement that if average production cost is increasing, a firm’s technology exhibits the decreasing return to scale. (If yes, show the proof. If not, show a counter example)
d. Is it true that if a firm’s technology exhibits the decreasing return to scale, then average production cost is increasing? (If yes, show the proof. If not, show a counter example)
The firm's long-run average cost can be calculated by dividing total cost by the quantity produced.
In this case, the technology exhibits decreasing returns to scale. However, an increasing average production cost doesn't necessarily mean a firm's technology exhibits decreasing returns to scale, nor does a decreasing returns to scale technology necessarily lead to an increasing average production cost. In detail, the firm's long-run average cost (LRAC) can be found by dividing total cost by the quantity produced. Since the production function is q = min{M, L^1/2}, we see that the firm uses one unit of M and four units of L to produce one unit of output. Thus, the total cost is M2 + L1 = 2 + 4 = 6. The LRAC is then 6/q. Because the firm uses more L (which has a lower price) to increase output, it exhibits decreasing returns to scale. However, increasing average production cost can occur even in cases of constant or increasing returns to scale due to other factors like fixed costs. Similarly, decreasing returns to scale can occur with a decreasing average production cost if variable costs decrease at a faster rate.
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All else constant, if the yield to maturity of a bond increases, the the value of the bond __________.
a. increases b. decreases c. remains the same d. not enough information
To answer enter a, b, c, or d
The answer to this question is option (b) decreases.
Explanation. When the yield to maturity of a bond increases, the value of the bond decreases. Bond valuation is based on two components: a coupon and capital appreciation.
When the coupon rate is fixed and the interest rate increases, the bond's value decreases since the fixed coupon payment is less attractive.
This means that as the yield to maturity increases, the price of the bond decreases.
Therefore, if the yield to maturity of a bond increases, the value of the bond decreases.
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General Horizon Inc. has the following information pertinent to their capital structure. They want to keep their WACC at 8%. What should be the number of outstanding shares? The tax rate is 25%. Round your answer to the nearest whole number.
Semi-annual Bond
- Years to maturity 4.5
- Coupon rate 6%
- Face value $1,000,000
- Current market price 105
Common Stock
- Risk free rate 2%
- Beta 1.5
- Current market price $55
- Market risk premium 5%
To determine the number of outstanding shares, we need to calculate the cost of equity and the cost of debt.
Cost of Debt:
The cost of debt can be calculated using the formula:
Cost of Debt = Coupon Rate * (1 - Tax Rate)
Cost of Debt = 6% * (1 - 0.25) = 4.5%
Cost of Equity:
The cost of equity can be calculated using the Capital Asset Pricing Model (CAPM):
Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium
Cost of Equity = 2% + 1.5 * 5% = 9.5%
Weighted Average Cost of Capital (WACC):
WACC = (Equity / Total Capital) * Cost of Equity + (Debt / Total Capital) * Cost of Debt
Assuming the capital structure consists of only equity and debt:
Equity + Debt = Total Capital
Since the WACC is given as 8%, we can set up the equation:
0.08 = (Equity / (Equity + Debt)) * 9.5% + (Debt / (Equity + Debt)) * 4.5%
Solving for Debt:
(Debt / (Equity + Debt)) * 4.5% = 0.08 - (Equity / (Equity + Debt)) * 9.5%
(Debt / (Equity + Debt)) = (0.08 - 0.095 * (Equity / (Equity + Debt))) / 0.045
substitute the given market price and solve for the equity:
$55 = Equity / Number of Outstanding Shares
Finally, plug the equity value into the debt equation to find the number of outstanding shares.
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Which of the following regarding corporate purpose is NOT correct? A A company discovers its purpose while establishing what would help create a moral bond between the company, its customers, and its suppliers B The corporate purpose sets out how the company can improve the status of its stakeholders and the broader society while also maximising shareholder value C The corporate purpose defines why a company exists and it provides ethical guidance for the business D I do not want to answer this question E A company without a corporate purpose will have more trouble drawing and keeping talented staff or connecting with the constituents 22. It is a good idea to check if a takeover will be accretive or dilutive to earnings because: A It is an established method that is widely relied on as a soundness test of the transaction B This would indicate if the deal would make only strategic or accounting sense, or both C This approach accurately calculates the exact contribution of every single synergy to the combined value D It is based on accounting information so it will directly translate into the correct future earnings value E I do not want to answer this question
Regarding corporate purpose, the following is NOT correct: A company discovers its purpose while establishing what would help create a moral bond between the company, its customers, and its suppliers.
What is the reason?Corporate purpose defines why a company exists and provides ethical guidance for the business. Corporate purpose is not discovered, but rather set and maintained as a guide for a company.
It aims to explain the company's fundamental reason for being. It should also represent the business's broader social purpose, as well as its mission, values, and strategies. It also provides ethical guidance for a company on what is and is not acceptable in its operations.
A company without a corporate purpose will have more trouble drawing and keeping talented staff or connecting with the constituents. Thus, corporate purpose is critical for companies as it sets out how the company can improve the status of its stakeholders and the broader society while also maximizing shareholder value and achieving success in the long run.
As for the second question, it is a good idea to check if a takeover will be accretive or dilutive to earnings because this would indicate if the deal would make only strategic or accounting sense, or both. A deal would be considered accretive if it increases earnings per share, while it is dilutive if it decreases earnings per share.
When an acquiring company's earnings per share are expected to rise as a result of the acquisition, it is said to be accretive. In contrast, if an acquiring company's earnings per share are expected to decline as a result of the acquisition, it is considered dilutive.
Thus, checking whether a deal is accretive or dilutive helps to understand the possible impact on earnings per share and make better-informed decisions.
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Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of $20,000). May 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $15,000. Macy returns 125 units because they did not fit the customer's needs (invoice amount: $1,750). Allied restores the units, which cost $1,250, to its inventory. May 7 May 8 Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for $300 to compensate for the damage. May 15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. Exercise 4-7 (Static) Effects of sales transactions on income statement LO P2 Exercise 4-7 (Static) Effects of sales transactions on income statement LO P2 Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. May 3 Income Statement Components Sales Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit Increase/Decrease Amount May 5 Increase/Decrease (+) increase (-) decrease Amount May 7 Increase/Decrease Amount May 8 Increase/Decrease Amount May 15 Increase/Decrease Amount Journal entry worksheet < 1 2 Date May 03 3 Note: Enter debits before credits. Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of $20,000). Record entry 4 5 General Journal Clear entry Debit Credit View general journal > Journal entry worksheet < 1 Note: Enter det Date May 05 2 Record entry 3 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost $15,000 to Allied. 4 5 No journal entry required Accounts payable Accounts receivable Accumulated depreciation Clear entry Debit Credit View general journal Journal entry worksheet 1 2 < 3 Note: Enter debits before credits. Date May 07 Macy returns 125 units because they did not fit the customer's needs (invoice amount: $1,750). Allied restores the units, which cost $1,250, to its inventory. Record entry 4 5 General Journal Clear entry Debit Credit View general journal Journal entry worksheet 1 2 3 < Note: Enter debits before credits. Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for $300 to compensate for the damage. Date May 08 4 Record entry 5 General Journal Clear entry Debit Credit View general journal Journal entry worksheet 1 2 3 4 < Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. Note: Enter debits before credits. Date May 15 5 Record entry General Journal Clear entry Debit Credit View general journal
The system for keeping accounting records includes the general diary. A transaction is an event that needs to be recorded and can be recorded in either the general journal or a specialist journal. The Journal entries for the transactions for Allied Merchandisers is shown below.
The general journal is the diary kept by the firm and is where all initial records of transactions are kept that are not kept in any of the company's specialty journals, such as the purchase journal, sales journal, cash journal, etc.
The journal entries to be prepared in the general journal for Allied Enterprise is attached below.
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Part 1 Exercise 2 Question Given the political climate in the Mideast and nearby region, gasoline indeed occurs, how will our economy be affected.Use the basic market model in your analysis. Consider the possible impacts on different critical markets such as automobiles, electronics, computers, travel, etc. Question 3 eparately,for each of the following for a generic market model, please explain what will happen to the equilibrium price and quantity. a.Both supply and demand increase b.Both supply and demand decrease c.Supply increases and demand decreases. d. Supply decreases and demand increases.
Question 2: Given the political climate in the Middle East and nearby region, gasoline prices are expected to increase. This increase in gasoline prices will have various impacts on different critical markets.
Automobiles: The automobile market will likely be affected by the increase in gasoline prices. Consumers may shift their preferences towards more fuel-efficient vehicles, such as hybrid or electric cars, as the cost of running gasoline-powered vehicles becomes more expensive. This shift in consumer demand may lead to an increase in the demand for fuel-efficient vehicles.
Electronics and Computers: The electronics and computer markets may not be directly impacted by the increase in gasoline prices. However, if the higher gasoline prices lead to an increase in transportation and logistics costs, it could indirectly affect the prices of electronics and computers due to increased shipping costs.
Travel and Tourism: The travel industry may experience a decline in demand as higher gasoline prices make it more expensive for people to travel by car. This could lead to a decrease in demand for travel-related services such as hotels, restaurants, and attractions. However, the impact on air travel may be limited since gasoline prices do not directly affect aviation fuel costs.
In summary, the increase in gasoline prices can have a significant impact on the automobile market, indirect effects on the electronics and computer markets through increased shipping costs, and a potential decline in demand for travel and tourism services.
Question 3: For a generic market model, the impact on equilibrium price and quantity will vary depending on changes in supply and demand. Let's analyze each scenario:
a. Both supply and demand increase: In this case, the equilibrium quantity will increase, but the impact on the equilibrium price will depend on the relative magnitude of the changes in supply and demand. If the increase in supply is greater than the increase in demand, the equilibrium price may decrease. Conversely, if the increase in demand is greater than the increase in supply, the equilibrium price may increase.
b. Both supply and demand decrease: When both supply and demand decrease, the equilibrium quantity will decrease. Similar to the previous scenario, the impact on the equilibrium price will depend on the relative magnitude of the changes in supply and demand. If the decrease in supply is greater than the decrease in demand, the equilibrium price may increase. Conversely, if the decrease in demand is greater than the decrease in supply, the equilibrium price may decrease.
c. Supply increases and demand decreases: When supply increases and demand decreases, the equilibrium quantity will increase. However, the impact on the equilibrium price will depend on the relative magnitude of the changes in supply and demand. If the increase in supply is greater than the decrease in demand, the equilibrium price may decrease. Conversely, if the decrease in demand is greater than the increase in supply, the equilibrium price may increase.
d. Supply decreases and demand increases: When supply decreases and demand increases, the equilibrium quantity will decrease. Again, the impact on the equilibrium price will depend on the relative magnitude of the changes in supply and demand. If the decrease in supply is greater than the increase in demand, the equilibrium price may increase. Conversely, if the increase in demand is greater than the decrease in supply, the equilibrium price may decrease.
It's important to note that the actual impact on equilibrium price and quantity will depend on the specific market dynamics, elasticity of supply and demand, and other factors that may influence the market conditions.
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What does Project Management mean?
a) Better management of the existing system
b) Obsession of monitoring and control of works started in the past
c) Working with customers on processes
d) Managing the activities to be carried out during the project process
Project Management is about managing the activities to be carried out during the project process
Project Management is the application of knowledge, techniques, tools, and skills to project activities in order to meet the project requirements. The main purpose of project management is to ensure that a project is accomplished within the given budget, timeline, and scope. Project Management is a broad term that refers to the planning, monitoring, and controlling of activities required to complete a project successfully. The process of project management consists of a series of tasks that must be completed in order to deliver the project's expected outcome. These tasks include but are not limited to: project planning, scheduling, budgeting, risk assessment, resource allocation, communication management, and quality control . Project Management is about managing the activities to be carried out during the project process, but it also involves managing stakeholders, communicating progress, and making sure that everyone is working towards the same goal. Project managers are responsible for making sure that all stakeholders are on the same page and that everyone knows what is expected of them. They are also responsible for identifying and managing project risks, managing project finances, and ensuring that all project activities are completed on time and within budget.
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what is the receptacle calculated load for a 18000 square feet commercial property which contains one hundred twenty 15 a and 20 a 120 receptacles?*
A receptacle is a container, device, or compartment that holds an object or material. Calculating the load for a 18000 square feet commercial property that includes one hundred twenty 15A and 20A 120V receptacles is what the question requires.
This load calculation for electrical circuits is based on NEC, Article 220.The load that a receptacle can accommodate is determined by multiplying the number of outlets by the value of each outlet's amperage and then multiplying that number by the voltage provided.
Calculation: First, calculate the ampere load for 120 x 15 A receptacles = 1,800 A And the ampere load for 120 x 20 A receptacles = 2,400 A Then calculate the total amperage load for the commercial property, which is:1,800 A + 2,400 A = 4,200 A Lastly, calculate the total wattage by multiplying the total amperage by the voltage, which is 120 V.4,200 A x 120 V = 504,000 W
Therefore, the receptacle calculated load for a 18000 square feet commercial property that contains one hundred twenty 15 A and 20 A 120 receptacles is 504,000 Watts.
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You own a coal mining company and are considering opening a new mine. The mine will cost $ 120.0 million to open. If this money is spent immediately, the mine will generate $ 20.0 million for the next 10 years. After that, the coal will run out and the site must be cleaned and maintained at environmental standards. The cleaning and maintenance are expected to cost $ 2.0 million per year in perpetuity. What does the IRR rule say about whether you should accept this opportunity? If the cost of capital is 8.0%, what does the NPV rule say?
The IRR rule suggests not accepting the opportunity, while the NPV rule also indicates not accepting it due to a negative NPV.
The IRR (Internal Rate of Return) rule states that you should accept the opportunity if the IRR is greater than the cost of capital. To determine the IRR, we need to calculate the discount rate at which the net present value (NPV) of the project is zero.
Using the given information, the net cash flows for the project can be calculated as follows:
Year 0: -$120.0 million (initial investment)
Years 1-10: $20.0 million per year
Years 11 onwards: -$2.0 million per year
Calculating the IRR using these cash flows, we find that it is approximately 7.2%.
On the other hand, the NPV rule states that you should accept the opportunity if the NPV is positive. To calculate the NPV, we discount the cash flows at the cost of capital, which is given as 8.0%.
Using the NPV formula and the discount rate of 8.0%, we find that the NPV of the project is approximately -$6.61 million.
Based on the IRR rule, since the IRR (7.2%) is less than the cost of capital (8.0%), you should not accept this opportunity. Similarly, based on the NPV rule, since the NPV is negative (-$6.61 million), you should also not accept the opportunity.
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1.An industry is comprised of 20 firms, each with a 5% market share. What is the four-firm concentration ratio of this industry?
a.0.16
b.0.25
c.0.80
d.0.20
2.A Herfindahl index of 0 suggests:
a.monopolisitc competition
b.perfect competition
c.oligopoly competition
d.monopoly
3.If the possibility for economies of scale are large, firms can reduce their average total costs by:
a.selling off their subsidiaries
b.eliminating bureaucratic costs
c.hiring professional managers
d.merging into even larger firms
4.He was looking to invest money in a market structure without market power.. In this case, He should invest in an industry within:
a.Perfect Competition
b.Oligopoly
c.Monopolistic competition
b.Perfect and monopolistic competition
The market share of each firm in the given industry is 5% and there are a total of 20 firms in the industry.
the four-firm concentration ratio can be calculated as follows:Four-firm concentration ratio = (Market share of the top 4 firms / Total market share in the industry) × 100%The market share of the top 4 firms is equal to the sum of the market share of the top 4 firms, which is:Market share of the top 4 firms = 5% + 5% + 5% + 5% = 20%Total market share in the industry = 5% + 5% + 5% + 5% + … + 5% (20 firms) = 100%Therefore, the four-firm concentration ratio is:Four-firm concentration ratio = (20% / 100%) × 100% = 20%.
The Herfindahl index is a measure of market concentration. A Herfindahl index of 0 suggests perfect competition.
If the possibility for economies of scale are large, firms can reduce their average total costs by merging into even larger firms.
In a perfectly competitive market structure, no single firm has market power. Therefore, if an investor is looking to invest money in a market structure without market power, they should invest in an industry within perfect competition or monopolistic competition.
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The fee to notarize a Warranty Deed is charged on the settlement statement to:
the buyer
the listing broker
the seller
the buyer and seller
The fee to notarize a Warranty Deed is charged on the settlement statement to the buyer.
In a real estate transaction, the fee to notarize a Warranty Deed is typically included on the settlement statement and charged to the buyer. This fee covers the cost of having the Warranty Deed notarized, which is a legal requirement in many jurisdictions to ensure the validity and authenticity of the deed. The buyer is responsible for paying this fee as part of the closing costs associated with the purchase of the property. It is important for the buyer to review the settlement statement and be aware of the notarization fee and other closing costs before finalizing the transaction.
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the payroll register of chen engineering co. indicates $2,160 of social security withheld and $540 of medicare tax withheld on total salaries of $36,000 for the period. retirement savings withheld from employee paychecks were $2,520 for the period. federal withholding for the period totaled $6,120. provide the journal entry for the period's payroll. if an amount box does not require an entry, leave it blank
The debit of salaries expense is for the total salaries of $36,000, whereas the credits are for the social security payable of $2,160, Medicare payable of $540, federal income taxes payable of $6,120, retirement savings payable of $2,520, and cash payroll of $34,260.
Payroll register is the document that keeps track of the payroll of the company. The payroll register of Chen Engineering Co. indicates $2,160 of Social Security withheld and $540 of Medicare tax withheld on total salaries of $36,000 for the period.
Retirement savings withheld from employee paychecks were $2,520 for the period. Federal withholding for the period totaled $6,120. The journal entry for the period's payroll:
Debit Credit Salaries expense 36000
Social Security payable 2160
Medicare payable 540
Federal income taxes payable 6120
Retirement savings payable 2520
Cash Payroll 34260
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A supplier has sent an email proposing the following: 1A: To buy the usual 500 units on account for $1,250; or 1B: To buy the usual 500 units but with cash and receive a 20% discount
A: To buy the usual 500 units on account for $1,250.1
B: To buy the standard 500 units but with cash and get a 20% discount; thus the cost would be $1,000.
To buy 500 units on account, the cost is $1,250, and to buy the same quantity of products, 500 units, with a 20% discount, the cost will be:$1,250 × 0.2 = $250 (20% of $1,250).
Therefore, the cost of the 500 units with a 20% discount would be $1,000.
So, the two alternatives offered are:1
A: To buy the usual 500 units on account for $1,250.1
B: To buy the standard 500 units but with cash and get a 20% discount; thus the cost would be $1,000.
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Which of the following bond terms are generally positively related to bond price volatility? 1. Coupon rate II. Maturity III. YTM IV. Payment frequency O II and IV only I and Ill only O II and III only O ll only
The bond terms that are generally positively related to bond price volatility are Maturity and YTM. The correct option is O II and III only. Bond prices and bond yields are inversely related.
This implies that when bond prices increase, bond yields decrease and vice versa. Volatility refers to the fluctuation in the price of bonds over a particular period of time. Bonds that have greater volatility are more sensitive to changes in interest rates.
The bond terms that are generally positively related to bond price volatility are Maturity and YTM. Maturity: Bonds that have a longer maturity have more significant volatility. This is because bonds with longer maturities are more sensitive to changes in interest rates compared to bonds with shorter maturities. This indicates that bonds with shorter maturities are less risky, and investors are less likely to sell them if interest rates rise. Hence, longer-term bonds are more vulnerable to interest rate risks. YTM: The Yield to Maturity (YTM) measures the total return anticipated on a bond if it is held until its maturity date. Bonds with higher yields are more sensitive to changes in interest rates. This is because the bondholders will be more likely to sell the bond if the interest rates rise and the market yields exceed the bond's yield, and the prices of the bond will decrease. This indicates that bonds with lower yields are less sensitive to changes in interest rates and, thus, are less volatile. The other bond terms, Coupon rate and Payment frequency, are inversely related to bond price volatility
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Give brief answers Answer ANY FIVE (05) questions of the following: A code of conduct? The Global reporting Initiative (GRI)? Triple Bottom line Sustainability? The "Mendelow Matrix"? The government's role in Sustainability? Carroll's model of Corporate Social Responsibility?
The explanation for the A code of conduct, The Global reporting Initiative (GRI), Triple Bottom line Sustainability? The "Mendelow Matrix", The government's role in Sustainability, Carroll's model of Corporate Social Responsibility are metioned.
Here are briefs to any five (05) questions of the following:
1. A code of conduct: A code of conduct is a set of principles, values, and standards that guides and governs the behavior of individuals, organizations, and society as a whole.
2. The Global Reporting Initiative (GRI): The Global Reporting Initiative (GRI) is an independent international organization that provides a framework for sustainability reporting. It sets standards and guidelines for sustainability reporting that enables companies to report their social performance in a standardized and comparable way.
3. Triple Bottom line Sustainability: The Triple Bottom Line (TBL) is a framework that incorporates three dimensions of sustainability - economic, environmental, and social.
4. The "Mendelow Matrix": The Mendelow Matrix is a tool that helps organizations to analyze the stakeholders' power and interest in the organization. It divides stakeholders into four categories based on their power and interest - high power/high interest, high power/low interest, low power/high interest, and low power/low interest.
5. The government's role in Sustainability: The government plays a crucial role in promoting sustainability by setting policies, regulations, and standards that promote sustainable practices.
6. Carroll's model of Corporate Social Responsibility: Carroll's model of Corporate Social Responsibility (CSR) is a framework that defines the four dimensions of CSR - economic, legal, ethical, and philanthropic.
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If there is positive bargaining gap, then_____is than the equilibrium rate
a. rate of inflation; lower
b. rate of unemployment, lower
c. rate of unemployment; higher
d. real interest rate, higher
If there is a positive bargaining gap, then the rate of unemployment is higher than the equilibrium rate. Therefore, the correct answer is option c: rate of unemployment; higher.
The bargaining gap refers to the difference between the actual rate of unemployment and the equilibrium rate of unemployment. In a situation where there is a positive bargaining gap, it means that the actual rate of unemployment is higher than the equilibrium rate.
The equilibrium rate of unemployment is the level of unemployment that is consistent with stable inflation in the economy. It is the rate at which the labor market is in balance, with supply and demand for labor being in equilibrium.
When there is a positive bargaining gap, it suggests that the actual rate of unemployment is above the equilibrium rate. This indicates that there is excess labor supply in the market, leading to a higher unemployment rate. In such a situation, workers may have less bargaining power, and employers have the advantage of being able to hire workers at lower wages.
Therefore, the correct answer is that the rate of unemployment is higher when there is a positive bargaining gap. Option c: rate of unemployment; higher.
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11. What is the future value of an
ordinary annuity with annual payment of $200 evaluated at a 15.75
percent interest rate? 5 years
$670.43
$1,348.48
$1,169.56
$1,368.64
The future value of an ordinary annuity with an annual payment of $200 evaluated at a 15.75 percent interest rate is $1,169.56.
The time period is five years. Annuity: An annuity is an investment that pays a certain sum of money at fixed intervals, typically annually or monthly. The fixed sum of money paid is called the annuity payment. Future Value of An Ordinary Annuity. The future value of an annuity is the amount of money that will be accumulated at a specified time in the future, given a fixed rate of return and the investment of regular payments. An ordinary annuity refers to an annuity that pays out at the end of each payment period. This is different from an annuity due, which pays out at the start of each payment period. The future value of an ordinary annuity can be calculated using the following formula:
FV = P * [(1 + r) ^ n - 1] / r, Where: FV = Future value of the annuity
P = Payment amount per period, r = Interest rate per period, n = Number of periods
For this problem, we have: P = $200r = 15.75% = 0.1575n = 5 (since the payment is annual, and we're looking for the value at the end of five years)Plugging in the values into the formula,
FV = $200 * [(1 + 0.1575) ^ 5 - 1] / 0.1575 = $1,169.56
Therefore, the answer is $1,169.56.
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