The present value of the interest tax shield from the debt for MM Ltd is approximately £744,462.86.
To calculate the present value of the interest tax shield from the debt, we need to consider the tax shield effect of the interest payments. The tax shield arises from the tax deduction a company receives on the interest payments it makes on its debt.
Here's how you can calculate the present value of the interest tax shield from the debt for MM Ltd:
Calculate the annual interest expense: Multiply the outstanding debt (£60 million) by the interest rate (7%) to get the annual interest expense.
Annual interest expense = £60 million * 7% = £4.2 million
Calculate the tax shield from the interest expense: Multiply the annual interest expense by the corporate tax rate (19%) to determine the tax shield.
Tax shield = Annual interest expense * Tax rate = £4.2 million * 19% = £798,000
Calculate the present value of the tax shield: Since MM Ltd plans to repay 10% of the remaining balance each year, we can calculate the present value of an annuity that decreases by 10% each year. We'll assume a discount rate (cost of debt) of 7% to match the interest rate.
Using the formula for the present value of an annuity:
Present value of tax shield = Tax shield * [1 - (1 + r)^(-n)] / r
Where:
r = discount rate = 7% = 0.07
n = number of years (assuming a perpetuity, where MM Ltd repays 10% each year indefinitely)
Present value of tax shield = £798,000 * [1 - (1 + 0.07)^(-1)] / 0.07
Present value of tax shield ≈ £798,000 * [1 - (1.07)^(-1)] / 0.07
Present value of tax shield ≈ £798,000 * [1 - 0.9346] / 0.07
Present value of tax shield ≈ £798,000 * 0.0654 / 0.07
Present value of tax shield ≈ £744,462.86
Therefore, the present value of the interest tax shield from the debt for MM Ltd is approximately £744,462.86.
Learn more about Stock Here-
https://brainly.com/question/14697297
#SPJ11
how would you classify an office building that was not new but still competitive and had a vacant lot adjacent also available for sale?
Classification of an office building that was not new but still competitive and had a vacant lot adjacent also available for sale is as follows:Classifying a real estate property as an office building depends on the building’s use.
There are various classifications of commercial properties that exist in the real estate market, and an office building is one of them. An office building can be defined as a building used primarily for commercial purposes, with the primary purpose being the provision of a workspace or an office space. Office buildings may also have additional uses, such as storage, warehousing, retail, and manufacturing. Office buildings may be categorized based on the age, size, location, and number of floors.An office building that is not new but still competitive, and has a vacant lot adjacent to it for sale can be classified as a commercial real estate property that has potential. The property is suitable for investment, and the vacant lot adjacent to it provides an opportunity for expansion, depending on the needs of the buyer. The property is also considered competitive, which means it is in a good location with proper amenities and infrastructure. Real estate is a valuable asset for investors, and as such, it is important to classify the property before investing. One of the classifications of commercial real estate is office buildings. An office building can be defined as a building used primarily for commercial purposes, with the primary purpose being the provision of a workspace or an office space. Office buildings may also have additional uses, such as storage, warehousing, retail, and manufacturing. Office buildings may be categorized based on the age, size, location, and number of floors. When an office building is not new but still competitive, and has a vacant lot adjacent to it for sale, it can be classified as a commercial real estate property that has potential. The property is suitable for investment, and the vacant lot adjacent to it provides an opportunity for expansion, depending on the needs of the buyer. The property is also considered competitive, which means it is in a good location with proper amenities and infrastructure.
In conclusion, when classifying an office building that is not new but still competitive, and has a vacant lot adjacent to it for sale, it is essential to consider its potential and the opportunity for expansion it provides. This will help investors make informed decisions that will yield high returns.
To know more about high returns visit:
brainly.com/question/29547549
#SPJ11
DISCUSS
three (3)
main differences between the money market and the capital
market.
The three main differences between the money market and the capital market are as follows:1. Security types. 2. Risk.
3. Liquidity.
The three main differences between the money market and the capital market are as follows:
1. Security types: The capital market is a type of financial market where debt securities, stocks, and other financial instruments with long-term maturities are traded. In contrast, the money market deals in short-term debt instruments like Treasury bills and commercial paper.
2. Risk: The money market is less risky than the capital market. In the money market, short-term debt instruments are available for a shorter time and are less exposed to default risk. However, capital markets are more exposed to credit risk, which is the risk of default on a debt obligation.
3. Liquidity: Money market securities are more liquid than capital market securities. Since most of the money market instruments have a short maturity period, they have a high degree of liquidity.
On the other hand, capital market securities have longer maturities, and therefore, they are less liquid compared to money market securities.
In conclusion, these are the three significant differences between the money market and the capital market.
Read more about Financial Market at https://brainly.com/question/28481995
#SPJ11
Secure Investments, Inc., a U.S. firm, expands into international markets through a joint venture. In this situation, Secure owns:
a. all of the operation, and its profits and liabilities.
b. all of the operation, and none of its profits and liabilities.
c. none of the operation, and none of its profits and liabilities.
d. part of the operation, and shares its profits and liabilities.
In this situation, Secure owns part of the operation, and shares its profits and liabilities. Option d is correct.
A joint venture is a contractual arrangement in which two or more parties pool their resources for the purpose of accomplishing a specific task. Joint ventures can be limited to a single project or can last for many years. In a joint venture, both parties must agree to the project's objectives and share the risks, expenses, and rewards.
The joint venture participants share the risks, profits, and losses associated with the project they are working on. Both parties' contributions are combined to achieve a common goal. So, in this situation, Secure Investments, Inc. has part of the operation, and shares its profits and liabilities with the other party.
Therefore, d is correct.
Learn more about joint venture https://brainly.com/question/30154434
#SPJ11
now that patricia has received her doctorate and been hired to teach at a university, she has become professor plum, a __________ leader with __________ power.
Now that Patricia has received her doctorate and been hired to teach at a university, she has become Professor Plum, an informational leader with expert power.
What is an informational leader?An informational leader is one who has a lot of knowledge or expertise in a particular subject or field and can provide guidance to others based on that expertise. Such people are regarded as being trustworthy because of their expertise and are frequently asked for advice or to lead discussions and activities.
Expert power is the ability of an individual to influence others based on their knowledge, skills, or expertise in a particular area. Because of their abilities and experience, individuals with expert power are frequently consulted and respected in their areas of competence. Expert power can be used to persuade others to do something or to avoid doing something.
Learn more about Expert power
https://brainly.com/question/30054210
#SPJ11
An advertiser bids $10 CPM, achieves a 1% CTR and achieves a 5% conversion rate. What would an equivalent CPA bid be for this advertiser be?
A $20
B $100
C $200
D $10
The equivalent CPA bid for this advertiser would be option (A) $20. To calculate the equivalent CPA bid, we need to consider the CPM (cost per thousand impressions), the CTR (click-through rate), and the conversion rate.
Given:
Bid CPM: $10
CTR: 1% (0.01)
Conversion rate: 5% (0.05)
CPM represents the cost for 1,000 impressions, so the cost per impression can be calculated as:
Cost per impression = Bid CPM / 1000
Cost per impression = $10 / 1000
Cost per impression = $0.01
The CPA (cost per acquisition) can be calculated by dividing the cost per impression by the product of the CTR and the conversion rate:
CPA = Cost per impression / (CTR x Conversion rate)
CPA = $0.01 / (0.01 x 0.05)
CPA = $0.01 / 0.0005
CPA = $20
Therefore, the equivalent CPA bid for this advertiser would be A) $20.
To know more about CPA please refer:
https://brainly.com/question/30468499
#SPJ11
David Happy has developed a new product that he is considering the production and selling of it. To proceed with this project, David will be renting a small building to rent for $1,250 a month that will house production facilities. Utility cost of building is expected to be $400 per month. One major piece of equipment that will be used to manufacture the product will be rented for $600 a month. Material costs to make the product are estimated at $8 per unit. Monthly advertising costs for the product are estimated at $1,000. David will be using salespeople for selling the product. Sales commission is $4.00 per unit. David has rented a truck for delivery of the products to customer at $350 per month. David will be paying himself $5,000 per month as salary. David will be spending about 75% of his time for manufacturing the product and 25% for promotion and delivery of the product. Answer the following independent questions.
1. How much is David’s period costs per month?
2. What should be David’s minimum selling price per unit for it product? Hint: to breakeven
3. Assume David has set a selling price per unit of $20 for his new product. How many units must be produced and sold each month in order to make $8,000 profit per month?
4. Assume David has set a selling price per unit of $20 for his new product. David believes hiring a salesperson on salary basis of $5,000 per month could increase the monthly sales considerably. Sales volume must increase by minimum of how many units in order to justify hiring of the additional salesperson?
1. David's period costs per month amount to $9,600.
2. David's minimum selling price per unit should be $16.80.
3. David must produce and sell 1,200 units each month to make an $8,000 profit.
4. David would need to increase sales volume by a minimum of 2,000 units to justify hiring an additional salesperson.
How much are David's total monthly costs for his new product?David's period costs for his new product, including rent, utilities, equipment rental, material costs, advertising costs, truck rental, and his salary, amount to $9,600 per month.
To calculate David's period costs per month, we need to consider all the expenses involved in producing and selling his new product. These costs include the rent for the production facility ($1,250), the utility costs for the building ($400), the rental cost of a major manufacturing equipment ($600), the material costs per unit ($8), monthly advertising costs ($1,000), truck rental for product delivery ($350), and David's salary ($5,000).
To determine the total period costs, we add up all these expenses: $1,250 + $400 + $600 + $8 + $1,000 + $350 + $5,000 = $9,600.
What should be the minimum selling price per unit for David's product?To break even, David needs to cover all his costs, including his period costs, through the sale of his product. Considering the costs involved and aiming to cover the costs, David's minimum selling price per unit should be $16.80.
To calculate the minimum selling price per unit for David's product, we need to consider his total period costs per month, which amount to $9,600. Since David wants to break even, the selling price per unit should cover these costs.
By dividing the total period costs ($9,600) by the number of units produced and sold, we can determine the minimum selling price per unit. Assuming no profit margin is included, David's minimum selling price per unit would be $9,600 divided by the number of units.
How many units must David produce and sell each month to make a $8,000 profit?Assuming David has set a selling price per unit of $20 for his new product, he would need to produce and sell 1,200 units each month to make an $8,000 profit.
To determine the number of units David needs to produce and sell in order to make an $8,000 profit, we consider the selling price per unit ($20) and the desired profit amount ($8,000).
By subtracting the total period costs per month ($9,600) and the desired profit ($8,000) from the total revenue generated by selling the units, we can calculate the required number of units. In this case, the formula would be: (Total Revenue - Total Costs) / Selling Price per Unit = Required Number of Units.
In this scenario, the equation becomes: ($20 * X) - ($9,600 + $8,000) = 0, where X represents the required number of units. Solving for X, we find that David must produce and sell 1,200 units each month to achieve an $8,000 profit.
What is the minimum increase in sales volume required to justify hiring an additional salesperson?Assuming David has set a selling price per unit of $20 for his new product, he would need to increase sales volume by a minimum of 2,000 units to justify hiring an add To determine the minimum increase in sales volume required to justify hiring an additional salesperson, we need to consider the impact of the additional salesperson's cost ($5,000 per month) and the commission per unit sold ($4.00).By dividing the additional cost of the salesperson ($5,000) by the commission per unit ($4.00), we can calculate the minimum increase in sales volume needed. The formula would be: Additional Cost of Salesperson / Commission per Unit = Minimum Increase in Sales Volume. In this case, the equation becomes: $5,000 / $4.00 = 1,250 units. However, since David wants to justify hiring the salesperson and significantly increase sales, we would consider a minimum increase of 2,000 units to ensure a more substantial impact on sales.
Learn more about period costs
brainly.com/question/30503896
#SPJ11
Growth in the retail market is centered firmly in the middle market, leaving luxury retailers and discounting specialists struggling.
a. true
b. false
False
The statement "Growth in the retail market is centered firmly in the middle market, leaving luxury retailers and discounting specialists struggling" is false. The retail market has been expanding, with growth being recorded in various sectors. Luxury retailers have also recorded growth in the market, mainly due to the increasing demand for luxury goods and services. Similarly, discounting specialists have also continued to record growth as they offer consumers lower-priced alternatives to premium goods and services. However, the growth in the middle market has been more pronounced, with more consumers seeking to purchase goods and services within this price range.
we mean the market that incorporates that multitude of exercises that include the offer of labor and products by an organization straightforwardly to the shopper that are generally bought for individual or family use. Retailers can be both retail and institutional.
Know more about retail market, here:
https://brainly.com/question/15331601
#SPJ11
Holland Construction Co. has an outstanding 180-day bank loan of $400,000 at an annual interest rate of 9.6%. The company is required to maintain a 14% compensating balance in its checking account. Wh
Holland Construction Co. has an outstanding 180-day bank loan of $400,000 at an annual interest rate of 9.6%. The company is required to maintain a 14% compensating balance in its checking account. What effective annual interest rate does the firm pay on its loan?
The effective annual interest rate is the true interest rate earned or paid on an investment or loan. It is a measure that takes into account the compounding of interest. It is calculated by taking into consideration the nominal or stated rate of interest and the frequency with which interest is compounded over a year. The compensating balance is a minimum average balance that a bank account holder must maintain in order to avoid paying some fee or to receive some benefit, such as earning interest.
The compensating balance is often expressed as a percentage of the loan amount. The effective annual interest rate on Holland Construction Co.'s loan can be calculated using the following formula: Effective annual interest rate = [(1 + nominal annual interest rate / number of compounding periods) ^ number of compounding periods] - 1The nominal annual interest rate is 9.6%. The compounding period is 180 days, or 0.5 years.
The loan amount is $400,000, and the compensating balance required is 14% of the loan amount, or $56,000. Therefore, the effective loan amount is $400,000 - $56,000 = $344,000.The effective annual interest rate can be calculated as follows: Effective annual interest rate = [(1 + 0.096 / 2) ^ 2] - 1 = 0.1007 or 10.07%Therefore, the effective annual interest rate that Holland Construction Co. pays on its loan is 10.07%.
To know more about compensating visit :
https://brainly.com/question/28250225
#SPJ11
The financial statements should be prepared in what order?
A. Income statement, statement of owner's equity, balance sheet, statement of cash flows
B. Balance sheet, statement of owner's equity, income statement, statement of cash flows
C. Statement of owner's equity, balance sheet, income statement, statement of cash flows
D. Balance sheet, income statement, statement of owner's equity, statement of cash flows
The financial statements should be prepared in order of A. Income statement, statement of owner's equity, balance sheet, statement of cash flows
What is Financial statements ?Financial statements are official records of a person, business, or other entity's financial situation and actions. An easy-to-understand format is used to provide pertinent financial data in a systematic manner.
The main goal of financial statements is to give information about an organization's financial situation, operating outcomes, and cash flow.
Learn more about Financial statements at;
https://brainly.com/question/26240841
#SPJ4
The ABC Company manufactures and sells 95" Television sets and uses standard costing. Budgeted level of production is 1,000 units per month. The actual data from January,February and March is as follows: January February March Beginning Inventory Production Sales 300 800 800 300 1,250 1,500 1,000 700 Variable Costs Manufacturing cost per unit Operating(marketing) cost per unit 900$ 600$ 900$ 600 900 600 Fixed Costs Manufacturing Costs Perating(marketing)costs 400,000$ 400,000 140,000 5 140,000 400,000 140,000 Selling Price per unit 3,000 Prepare the statement of income for each of January,February and March as follows 1.Variable Costing 2.Absorption Costing
To prepare the statement of income for each of January, February, and March using variable costing and absorption costing, we need to calculate the relevant costs and revenues for each month. Here's how you can calculate it:
January:
Variable Costing:
Sales revenue: 800 units * $3,000 = $2,400,000
Variable manufacturing cost: 800 units * $900 = $720,000
Variable operating (marketing) cost: 800 units * $600 = $480,000
Total variable costs: $720,000 + $480,000 = $1,200,000
Contribution margin: Sales revenue - Total variable costs = $2,400,000 - $1,200,000 = $1,200,000
Fixed manufacturing costs: $400,000
Fixed operating (marketing) costs: $140,000
Total fixed costs: $400,000 + $140,000 = $540,000
Operating income (loss): Contribution margin - Total fixed costs = $1,200,000 - $540,000 = $660,000
Absorption Costing:
Sales revenue: $2,400,000
Manufacturing cost per unit: $900
Cost of goods sold: 800 units * $900 = $720,000
Gross profit: Sales revenue - Cost of goods sold = $2,400,000 - $720,000 = $1,680,000
Operating (marketing) cost per unit: $600
Total operating (marketing) costs: 800 units * $600 = $480,000
Operating income (loss): Gross profit - Total operating (marketing) costs = $1,680,000 - $480,000 = $1,200,000
The statement of income for January using variable costing and absorption costing is as follows:
Variable Costing:
Sales revenue: $2,400,000
Variable costs: $1,200,000
Contribution margin: $1,200,000
Fixed costs: $540,000
Operating income: $660,000
Absorption Costing:
Sales revenue: $2,400,000
Cost of goods sold: $720,000
Gross profit: $1,680,000
Operating (marketing) costs: $480,000
Operating income: $1,200,000
You can follow the same steps to calculate the statement of income for February and March using both variable costing and absorption costing methodologies.
To know more about Gross profit:. here
https://brainly.com/question/942181
#SPJ4
REQUIRED Use the following information provided by Ashton Enterprises to prepare the: 5.1 Debtors Collection Schedule for January and February 2021. 5.2 Cash Budget for January and February 2021. Note: Where applicable, round off amounts to the nearest Rand. INFORMATION The bank balance on 31 December 2020 is expected to be R40 000 (favourable). Expected credit sales are as follows: December 2020 R360 000 1. 2. 3. 4. 5. 6. 7. 8. 9. * * January 2021 R390 000 February 2021 R420 000 11 Credit sales usually make up 60% of the total sales. Cash sales make up the balance. Credit sales are normally collected as follows: 20% in the month in which the transaction took place. These debtors are entitled to a 5% discount. 75% in the following month. The rest is usually written off as bad debts. The mark-up is 25% on cost. The goods that are sold each month are replaced in the same month. The ratio of cash purchases to credit purchases is 3:1 respectively. Creditors are paid in the month after the purchase. Cash purchases of inventory are subject to a 10% discount. The salaries for February 2021 are expected to amount to R114 480, after an 8% increase takes effect on 01 February 2021. Interest at 15% per annum on the loan balance is paid at the end of each month. The loan balance on 01 January 2021 is expected to be R200 000 and capital repayments of R20 000 are made at the end of each month. Part of the building is sublet to a tenant. The rent expense for the year ended 31 December 2020 is R131 000. The rental increases by 10% on 01 February each year. Rent is received monthly. Other operating expenses are estimated at R28 000 per month. This amount excludes R2 000 for depreciation. Sixty percent (60%) of the operating expenses are paid for in the month in which they are incurred. The rest is paid in the following month.
Sixty percent (60%) of the operating expenses are paid for in the month in which they are incurred. The rest is paid in the following month
Debtors Collection Schedule for January and February 2021:
DEBTORSCREDIT SALESCREDITCOLLECTIONMONTH
December 2020
R360 000R 0
January 2021R390 000R252 000
February 2021R420 000R315 000
The following things are to be kept in mind while preparing the Debtors Collection Schedule:
Credit sales usually make up 60% of the total sales. Cash sales make up the balance.
Credit sales are normally collected as follows:
20% in the month in which the transaction took place. These debtors are entitled to a 5% discount.75% in the following month. The rest is usually written off as bad debts.The mark-up is 25% on cost. The goods that are sold each month are replaced in the same month.
Cash Budget for January and February 2021:
JANUARYFEBRUARYBANK BALANCECASH RECEIPTSCASH PURCHASESINTERESTCREDITORSRENTSALARIESTOTAL (ROUND OFF TO THE NEAREST RAND)The following things are to be kept in mind while preparing the Cash Budget:
Credit sales usually make up 60% of the total sales. Cash sales make up the balance.
Credit sales are normally collected as follows:
20% in the month in which the transaction took place. These debtors are entitled to a 5% discount.75% in the following month. The rest is usually written off as bad debts.
The mark-up is 25% on cost. The goods that are sold each month are replaced in the same month.
Cash purchases of inventory are subject to a 10% discount.
The ratio of cash purchases to credit purchases is 3:1 respectively.
Creditors are paid in the month after the purchase.
The salaries for February 2021 are expected to amount to R114 480, after an 8% increase takes effect on 01 February 2021.
Interest at 15% per annum on the loan balance is paid at the end of each month.
The loan balance on 01 January 2021 is expected to be R200 000 and capital repayments of R20 000 are made at the end of each month.
Part of the building is sublet to a tenant.
The rent expense for the year ended 31 December 2020 is R131 000.
The rental increases by 10% on 01 February each year.
Rent is received monthly.
Other operating expenses are estimated at R28 000 per month.
This amount excludes R2 000 for depreciation.
Thus,
Sixty percent (60%) of the operating expenses are paid for in the month in which they are incurred. The rest is paid in the following month.
Learn more about loan visit:
brainly.com/question/11794123
#SPJ11
What is budgetary Control? Explain its Process and Advantages?
Budgetary control is a method of management accounting, that helps to control the operations and budgets of an organization, in order to ensure that the organization's financial goals are met. The process of budgetary control involves setting budgets and targets for various departments and functions within an organization, then monitoring the actual performance against those budgets and targets, and taking corrective action as necessary to ensure that the organization stays on track.Budgetary control has several advantages, including the following:1. It helps to ensure that the organization is operating within its financial means, by providing a framework for managing expenses and revenues.2. It provides a way to measure the performance of individual departments and functions within an organization, which can help to identify areas for improvement.3. It helps to identify potential areas of risk or opportunity, which can be addressed in a timely manner.4. It provides a basis for decision-making, by providing information about the financial impact of various options or courses of action.5. It helps to promote accountability within an organization, by establishing clear targets and responsibilities for each department and function.
Learn more about Budgetary here: brainly.com/question/14838036
#SPJ11
John is looking to sell his car and Mary is looking to buy it. John values the car at $2000 and Mary values it at $3000. John places an add in the newspaper and Mary must either accept the offer or ignore it. Which of the following prices would be the best price for John to advertise the car for? a. $2000 b. $2500 c. $3500 d. $2999 e. John is indifferent between any of these prices.
The best price for John to advertise the car for would be $2999. Option D is answer.
In this scenario, John wants to maximize his selling price for the car, while Mary wants to minimize her buying price. John values the car at $2000, while Mary values it at $3000. The price John advertises will determine whether Mary decides to accept or ignore the offer.
If John advertises the car for $2000 (option a), Mary will definitely accept the offer since it matches her valuation. However, John would be selling the car below its actual value, resulting in a lower profit.
If John advertises the car for $3500 (option c), Mary would ignore the offer as it exceeds her valuation. John will not be able to sell the car in this case.
Between the remaining options (b, d, and e), the best price for John to advertise the car is $2999 (option d). At this price, John is offering the car slightly below Mary's valuation, creating an attractive deal for her. This increases the likelihood of Mary accepting the offer and allows John to maximize his selling price.
Option D is answer.
You can learn more about price at
https://brainly.com/question/1153322
#SPJ11
f. give three examples of decisions that management of the bike rental agency might make from this data.
1. Increase the fleet size in areas with high demand: By analyzing the data, management may identify regions or specific stations with consistently high bike rental demand. They can make the decision to allocate more bikes to those areas to meet customer needs and maximize revenue.
2. Adjust pricing based on peak and off-peak hours: The data can reveal patterns in rental activity throughout the day. Management can leverage this information to introduce dynamic pricing, charging higher rates during peak hours and offering discounts during off-peak hours. This strategy can optimize revenue generation and encourage utilization during slower periods.
3. Enhance marketing efforts in underperforming areas: If certain locations or stations show lower rental rates compared to others, management can focus on targeted marketing campaigns to increase awareness and drive customer engagement in those areas. By promoting discounts, special offers, or highlighting nearby attractions, the agency can attract more customers and improve rental activity in those specific regions.
Learn more about marketing here:
https://brainly.com/question/32094123
#SPJ11
Please Give Me 3 Examples Of Decisions That Management Of The Bike Rental Agency Might Make From This Data! Explain How
Consider a market with two firms, A and B. The market demand is p = 150 - Q, where Q = 9A + 9B, që is the quantity of firm A, and ¶³ is the quantity of firm B. Assume both firms have the same marginal cost MC-30. How much will each firm choose to produce in Cournot equilibrium?
Each firm will produce 33.33 units and 38.89 units of output respectively in Cournot equilibrium.
According to the Cournot Model, the optimal amount produced by each firm is given by:
qi = a - bqi
where a = (α + β) / 2β and b = 1 / 2β
In this case, we have two firms, A and B. So the output of each firm is given by:
qa = (α + βqb)/2β and
qb = (α + βqa)/2β
Substituting values in the above two equations, we getqa = (150-3qa - 3qb)/6 and
qb = (150-3qa - 3qb)/6
Simplifying the above two equations, we get
qa = (150 - qb)/3 ---------(1)
qb = (150 - qa)/3 ---------(2)
To find the equilibrium output, we need to substitute equation (2) into (1)
qa = (150 - (150 - qa)/3)/3
qa = 300/9
qa = 33.33
and qb = (150 - qa)/3
qb = (150 - 33.33)/3
qb = 38.89
Learn more about Equilibrium of Cournot at;
https://brainly.com/question/30547623
#SPJ11
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:
Standard
Quantity Standard Price
(Rate) Standard
Unit Cost
Direct materials (plastic) 12 sq ft. $ 0.72 per sq. ft. $ 8.64
Direct labor 0.25 hr. $ 12.20 per hr. 3.05
Variable manufacturing overhead
(based on direct labor hours) 0.25 hr. $ 1.20 per hr. 0.30
Fixed manufacturing overhead
($378,000 ÷ 900,000 units) 0.42
Parker Plastic had the following actual results for the past year:
Number of units produced and sold 1,000,000
Number of square feet of plastic used 11,800,000
Cost of plastic purchased and used $ 8,260,000
Number of labor hours worked 245,000
Direct labor cost $ 2,891,000
Variable overhead cost $ 318,500
Fixed overhead cost $ 355,000
Required:
Calculate Parker Plastic’s direct labor rate and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
The direct labor rate variance is unfavorable (U) by $98,000, and the direct labor efficiency variance is favorable (F) by $61,000.
To calculate Parker Plastic's direct labor rate and efficiency variances, we'll use the following formulas:
Direct Labor Rate Variance:
Direct Labor Rate Variance = (Actual Rate - Standard Rate) × Actual Hours
Direct Labor Efficiency Variance:
Direct Labor Efficiency Variance = (Actual Hours - Standard Hours) × Standard Rate
Given the following information:
Standard Direct Labor Rate = $12.20 per hour
Standard Direct Labor Hours = 0.25 hours per unit
Actual Direct Labor Rate = Total Direct Labor Cost / Actual Hours
Actual Direct Labor Hours = Actual Units Produced and Sold × Standard Direct Labor Hours
Let's calculate the variances:
Direct Labor Rate Variance:
Actual Rate = Total Direct Labor Cost / Actual Hours
Actual Rate = $2,891,000 / 245,000 = $11.80 per hour
Direct Labor Rate Variance = ($11.80 - $12.20) × 245,000
Direct Labor Rate Variance = -$98,000 (U)
The direct labor rate variance is unfavorable (U) by $98,000.
Direct Labor Efficiency Variance:
Standard Hours = Actual Units Produced and Sold × Standard Direct Labor Hours
Standard Hours = 1,000,000 × 0.25 = 250,000 hours
Direct Labor Efficiency Variance = (245,000 - 250,000) × $12.20
Direct Labor Efficiency Variance = -$61,000 (F)
The direct labor efficiency variance is favorable (F) by $61,000.
Therefore, the direct labor rate variance is unfavorable (U) by $98,000, and the direct labor efficiency variance is favorable (F) by $61,000.
To know more about standard cost click here:-
https://brainly.com/question/24174272
#SPJ4
True or False:
A CDS is a standardized contract that could be used by parties
to trades of a credit derivatives contract.
True.
A CDS is a standardized contract used for trading credit derivatives, providing a means for parties to transfer and manage credit risk.
How is a CDS (Credit Default Swap) contract used?A CDS (Credit Default Swap) is indeed a standardized contract that can be used by parties involved in trading credit derivatives. A CDS is a financial instrument that allows investors to protect themselves against the risk of default on a debt instrument, such as a bond or loan.
It involves one party (the protection buyer) making periodic payments to another party (the protection seller) in exchange for protection against the default of a specified reference entity. The terms and conditions of CDS contracts are typically standardized to facilitate trading and ensure consistency in the market.
Learn more about:Credit Default
brainly.com/question/22312750
#SPJ11
According to the accountability principle, the file clerk supervisor shall oversee the information governance program.
a. true
b. false
According to the accountability principle, the file clerk supervisor shall oversee the information governance program, the given statement is False.
What is the accountability principle?The accountability principle is one of the information governance (IG) principles. An organization's workforce should be assigned clearly defined duties and responsibilities for IG. The accountability principle is concerned with establishing a clear chain of responsibility for decisions and actions that affect information governance (IG) practices.
According to the accountability principle, everyone in the organization is responsible for information governance. Although specific tasks and duties should be allocated, it is everyone's responsibility to adhere to best practices and policies in their day-to-day activities.
A file clerk supervisor is someone who is responsible for maintaining order and organization among filing clerks. A supervisor in charge of file clerks, as the name implies, oversees file clerks, ensuring that their tasks are completed accurately and on time and ensuring that records are kept in good order.
Learn more about accountability principle at https://brainly.com/question/30929798
#SPJ11
Consider each of the transactions below independently. All of the expenditures were made in cash.
1. During 2020, PC Software Inc. developed a new personal computer database management software package. Total expenditures on the project were $150,000, of which 40% occurred after the technological feasibility of the product had been established.
2. Xon Corporation paid $20,000 in 2020 for unusual and infrequent repairs due to damage from flood; repairs did not increase the use, value, or the economic life of the asset.
3. The Johnson Company disposed of an old machine with an original cost of $9,400 and a book value of $5,000 and received $6,000. Required: Prepare all necessary journal entries to record each of the above transactions.
Note: You may create a table as follows to organize your journal entries.
1: PC Software Inc. development expenditure
Account Debit ($) Credit ($)
Development Expenditure 150,000
Cash 60,000
Prepaid Expenditure 90,000
Transaction 2: Xon Corporation unusual and infrequent repairs
Account Debit ($) Credit ($)
Repairs Expense 20,000
Cash 20,000
Transaction 3: The Johnson Company disposal of an old machine
Account Debit ($) Credit ($)
Accumulated Depreciation 4,400
Loss on Disposal 600
Equipment 9,400
Cash 6,000
Please note that the specific accounts used may vary based on the company's chart of accounts and accounting policies. The entries provided are based on the information provided in the question.
Learn more about expenditures here-
https://brainly.com/question/24466382
#SPJ4
Pharma Drug Store is a pharmacy in Portland, Maine, owned by Jane Smith, a local pharmacist. Pharma business has been good, but Ms. Smith finds that she frequently runs out of cash. To date, she has dealt with this cash shortfall by delaying payment to the drug suppliers, which is starting to cause problems. Instead of delaying payment, Ms. Smith has decided that she should borrow from the bank to have cash ready when needed. To have an estimate of how much she must borrow over the next three months, she must prepare a cash budget. All of Pharma's sales are made on a cash basis, but drug purchases must be paid for during the following month. Ms. Smith pays herself a salary of $4,800 per month, the rent on her store is $2,000 per month, and a $12,000 payment for taxes is due in December. On December 1, there is $400 cash on hand, but Ms. Smith wants to maintain a target cash balance of $6.000. Pharma's estimated sales are $160,000 for December, $40,000 for January, and $60.000 for February. Estimated drug purchases are $140,000 for November. $40,000 for December, $40,000 for January, and $40,000 for February.
Prepare a cash budget for December, January, and February and find the cumulative surplus cash loan balance at the end of February.
The cash budget for the months of December, January, and February are shown in the table below:Month December January February Opening cash balance4006,4002,000Add collections from customers160,00040,00060,000Total cash available160,40046,40062,000Less payments for drug purchases140,00040,00040,000Total disbursements140,00040,00040,000Closing cash balance20,4006,40022,000
The cumulative surplus cash loan balance at the end of February is $13,600. To prepare the cash budget, the following points are considered: Starting cash balance Target cash balance Collections from customers Payments for drug purchases Opening cash balance The opening cash balance on December 1 is $400.Target cash balance Ms. Smith wants to maintain a minimum balance of $6,000 in her bank account. Collections from customers All sales are on a cash basis, therefore, the entire amount of sales is collected in cash.
The estimated sales for December, January, and February are $160,000, $40,000, and $60,000, respectively. Payments for drug purchases Drug purchases must be paid for during the following month. The estimated purchases for November, December, January, and February are $140,000, $40,000, $40,000, and $40,000, respectively. To prepare the cash budget, all of these factors are used. The cash budget for the months of December, January, and February are shown in the table below: Month December January February Opening cash balance4006,4002,000Add collections from customers160,00040,00060,000Total cash available160,40046,40062,000Less payments for drug purchases140,00040,00040,000Total disbursements140,00040,00040,000Closing cash balance20,4006,40022,000At the end of December, the surplus cash is $20,400 - $6,000 = $14,400At the end of January, the surplus cash is $6,400 - $6,000 = $400At the end of February, the surplus cash is $22,000 - $6,000 = $16,000Therefore, the cumulative surplus cash at the end of February is $14,400 + $400 + $16,000 = $30,800.The cash balance for all three months indicates a positive balance. Therefore, Ms. Smith does not need to borrow any money from the bank. In fact, there is a cumulative surplus of $30,800 at the end of February.
To know more about budget visit:
https://brainly.com/question/31952035
#SPJ11
Liz and Doug were divorced on July 1 of the current year after 10 years of marriage. Their current year's income received before the divorce included: Doug's salary $41,000, Liz's salary 55,000, Rent on apartments purchased by Liz 15 years ago 8,000, Dividends on stock Doug inherited from his mother 4 years ago 1,900, Interest on a savings account in Liz's name funded with her salary 2,400. Allocate the income to Liz and Doug assuming that they live in:
a. California
b. Texas
The income to Liz and Doug can be allocated assuming that they live in a. California
Doug's salary: $41,000
Liz's salary: $55,000
Rent on apartments purchased by Liz: $8,000
Dividends on stock inherited by Doug: $1,900
Interest on savings account funded by Liz: $2,400
Because community property rules are in effect in California, income produced during the marriage is often regarded as community property and is shared equally between the parties in the event of a divorce.
Calculating total income received before the divorce-
= $41,000 + $55,000 + $8,000 + $1,900 + $2,400
= $108,300
Therefore,
Liz's share: $108,300 / 2 = $54,150
Doug's share: $108,300 / 2 = $54,150
Read more about income on:
https://brainly.com/question/28390284
#SPJ4
In order to assess the performance of a diversified mutual fund invested in stocks, one would use the ________ because it is a broad benchmark.
To evaluate the performance of a diversified mutual fund invested in stocks, one would use the index as it is a broad benchmark.
A benchmark is a standard that is used to compare the performance of an investment portfolio or mutual fund against the average rate of return for a similar portfolio or mutual fund. It is the most popularly employed tool for comparing a fund's performance with others, and it is used to determine whether the portfolio manager has outperformed, underperformed, or matched the market.
An index is a statistical measure that tracks the stock market's overall performance by averaging the prices of several different stocks. The index indicates how well an entire market, market segment, or mutual fund is doing, and it may serve as a benchmark for evaluating the performance of an investment or mutual fund.
As a result, to assess the performance of a diversified mutual fund invested in stocks, one would use the index as it is a broad benchmark.
For more questions on: benchmark
https://brainly.com/question/5561623
#SPJ8
McConnell Corporation has bonds on the market with 17 years to maturity, a YTM of 9.4 percent, a par value of $1,000, and a current price of $1,216.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?
Multiple Choice
19.73%
11.98%
24.00%
9.84%
12.08%
The coupon rate on these bonds of McConnell Corporation is option B) 11.98%.
Given data:
Bond price, P = $1,216.50
Par value of the bond,
M = $1,000
Years to maturity, n = 17 years
Yield to maturity, YTM = 9.4%
Number of coupon payments, C = 2 (semiannual)
Let C be the coupon payment, so the total annual coupon payment is C x 2 = $2C.
Also, the bond's par value is $1,000.
Since the bond makes semiannual payments, the required return is the semiannual yield.
By using the given formula to calculate the price of a bond, we can calculate the coupon rate of the bond.
The formula is:
P = C x (1 - 1/(1+r)^n)/r + M/(1+r)^n
Where, P = price of the bond
C = periodic coupon payment
M = par value of the bond
r = periodic yield or the periodic interest rate (YTM/2)
n = total number of coupon payments (years to maturity x 2)
Therefore, substituting the given values in the above formula, we have:
$1,216.50 = [C x (1 - 1/(1+r)^n)]/r + $1,000/(1+r)^n
On solving the above equation, we get the periodic coupon payment as $46.15.
So, the annual coupon payment = 2 x $46.15
= $92.30
Therefore, the coupon rate = (Annual coupon payment / Par value) x 100
= ($92.30 / $1,000) x 100
= 9.23%
To know more about YTM visit :
brainly.com/question/30762654
#SPJ11
Suppose the terms of trace for nation X rises from 100 to 110.
Explain how this will impact the terms of trade for nation
Y.
The rise in the terms of trade for nation X may put upward pressure on the terms of trade for nation Y.
If the terms of trade for nation X rise from 100 to 110, it implies that nation X now needs fewer units of its exports to obtain a given quantity of imports. This improvement in the terms of trade for nation X can have an impact on the terms of trade for nation Y.
When nation X's terms of trade improve, it means that it can receive more imports for a given amount of its exports. As a result, nation X can afford to import more goods from nation Y without exporting as much. This increased demand for imports from nation Y puts upward pressure on the terms of trade for nation Y.
In response to the improved terms of trade for nation X, nation Y might negotiate for better terms to maintain a balance in their trading relationship. Nation Y might seek to increase the price of its exports to nation X or negotiate for a larger quantity of imports from nation X in exchange for a given amount of its exports. By doing so, nation Y aims to capture some of the gains from nation X's improved terms of trade.
However, the impact on nation Y's terms of trade will ultimately depend on various factors, including the relative bargaining power of the two nations, the elasticity of demand for their respective exports, and the availability of alternative trading partners. If nation Y has limited bargaining power or faces competition from other countries, it may not be able to fully capitalize on nation X's improved terms of trade.
In summary, when the terms of trade for nation X rise, it puts upward pressure on the terms of trade for nation Y. However, the actual impact on nation Y's terms of trade will depend on several factors and the bargaining dynamics between the two nations.
To learn more about trade for nation refer here:
https://brainly.com/question/14433548
#SPJ11
Find the present value of a 15-year annuity-immediate with semi-annual payments. During the first year the semi-annual payment amount is $100 and in each subsequent year the semi-annual payment amount is $5 more than the previous year. Assume an interest rate of 6% p.a. compounded semi-annually. (Please solve without using excel table)
Since we need to find the present value of the 15-year annuity-immediate with semi-annual payments, the total number of periods will be 15 x 2 = 30.
Given :
During the first year the semi-annual payment amount is $100 and in each subsequent year the semi-annual payment amount is $5 more than the previous year, an interest rate of 6% p.a.
compounded semi-annually. We need to find the present value of a 15-year annuity-immediate with semi-annual payments.
To find the present value of a 15-year annuity-immediate with semi-annual payments using semi-annual interest rate we can use the formula:
PV = (P/i) x (1 - (1+i)^(-n)),
where P is the periodic payment, i is the interest rate per period and n is the number of periods.
For the first year, semi-annual payment amount = $100
Interest rate per period = 6%/2 = 3%
Number of periods = 1 x 2 = 2
Using the formula we can find the Present Value of the payments in the first year:
P1 = (100/0.03) x (1 - (1.03)^(-2))
P1 = $1962.71
Now we can use the formula to find the Present Value of the payments for the second year:
P2 = [(100 + 105)/(2 x 0.03)] x [1 - (1.03)^(-2 x 2)]
P2 = $3988.76
In the same way, we can find the Present Value of the payments for the third year:
P3 = [(100 + 105 + 110)/(2 x 0.03)] x [1 - (1.03)^(-2 x 3)]
P3 = $6111.18
Continuing in this way, we can find the Present Value of all payments for the 15-year annuity-immediate.
Now, add all the present values to find the total present value of the 15-year annuity-immediate.
Since we need to find the present value of the 15-year annuity-immediate with semi-annual payments, the total number of periods will be
15 x 2 = 30.
Thus, the required present value of a 15-year annuity-immediate with semi-annual payments is as follows:
PV = P1 + P2 + P3 +... + P30
PV = $1962.71 + $3988.76 + $6111.18 + ...
Present Value of last semi-annual payment are required to explain this question.
The formula and calculation is clearly shown and it's a simple calculation using the formula.
to know more about annuity visit:
https://brainly.com/question/23554766
#SPJ11
b) The company ALTA Ltd issued a bank accepted bill to fund its working capital requirement. The bill is issued for 60 days, with a face value of $150,000 and a yield of 2.5% per annum to the original discounter. After 25 days, the bank bill is sold by the original discounter into the secondary market for $138,222. The purchaser holds the bill to maturity. What is the yield received by the holder of the bill at the date of maturity? c) The Atony Ltd. company raised $1.5m through a 10-year bond issue on the 31st of December 2020. The bond pays 3.4% per annum in coupons, with coupons paid quarterly. Calculate the price of the bond on the 12th of August 2025, given a market yield of 4.5% per annum. In your answer, identify whether the bond is trading at a discount or a premium, and explain the logic as to why this is the case. Note: You can write down the calculations by hand and attach a photo of your answer in the answer sheet.
b) the yield received by the holder of the bill at the date of maturity is approximately 10.15%.
c) Since the calculated price of the bond is less than the face value of $1.5 million, the bond is trading at a discount.
b) To calculate the yield received by the holder of the bill at the date of maturity, we need to use the formula for yield to maturity. The formula is:
Yield to Maturity = (Face Value - Purchase Price) / Purchase Price * (365 / Days to Maturity)
In this case:
Face Value = $150,000
Purchase Price = $138,222
Days to Maturity = 60 - 25 = 35
these values in the formula, we can calculate the yield to maturity:Yield to Maturity = ($150,000 - $138,222) / $138,222 * (365 / 35)
Yield to Maturity ≈ 0.1015 or 10.15%
Therefore, the yield received by the holder of the bill at the date of maturity is approximately 10.15%.
c) To calculate the price of the bond on the 12th of August 2025, given a market yield of 4.5% per annum, we can use the present value of a bond formula. The formula is:
Bond Price = (Coupon Payment / Market Yield) * (1 - (1 / (1 + Market Yield)^n)) + (Face Value / (1 + Market Yield)^n)
In this case:
Coupon Payment = ($1.5m * 3.4%) / 4 (since coupons are paid quarterly)
Market Yield = 4.5%
n = 10 years * 4 (since coupons are paid quarterly)
Using these values in the formula, we can calculate the price of the bond:
Bond Price = (($1.5m * 0.034) / 4) * (1 - (1 / (1 + 0.045)^(104))) + ($1.5m / (1 + 0.045)^(104))
Bond Price ≈ $1,361,012.85
Since the calculated price of the bond is less than the face value of $1.5 million, the bond is trading at a discount. This is because the market yield of 4.5% is higher than the coupon rate of 3.4%.
When the market yield is higher than the coupon rate, the bond's price tends to decrease, resulting in a discount. Investors require a higher yield to compensate for the lower coupon payments compared to the market rate.
For more such questions on trading visit:
https://brainly.com/question/27968241
#SPJ11
Question 2 High-Flying Advertising Inc, contracted with Big Burger Restaurants to fly an advertisement above the Connecticut beaches. The advertisement offered $5,000 to any person who could swim from the Connecticut beaches to Long Island across the Long Island Sound in less than a day. McElfresh saw the streamer and accepted the challenge. He started his marathon swim that same day at 10 a.m. After he had been swimming for four hours and was about halfway across the sound, McElfresh saw another plane pulling a streamer that read, "Big Burger revokes." Is there a contract between McElfresh and Big Burger? If there is a contract, classify it by types. (See Types of Contracts.)
According to the case given, there was a contract between McElfresh and Big Burger. The type of contract involved in the case is a Unilateral Contract.
A unilateral contract is a one-sided agreement in which only one party promises to do something if the other party performs some act, and the other party is not legally obligated to perform that act. The party making the promise in a unilateral contract does not incur any obligation or liability unless the other party accepts the terms by fulfilling the promise.
In this case, Big Burger offered a reward of $5,000 to any person who could swim from the Connecticut beaches to Long Island within a day. McElfresh accepted the challenge by starting his swim.
By starting the swim, McElfresh is providing the required performance to accept the offer and potentially receive the $5,000 reward. The contract becomes binding once McElfresh fully performs the swim within the specified time limit.
However, when McElfresh was halfway across the sound, he saw a streamer indicating that Big Burger had revoked the offer. Revocation generally takes effect upon communication to the offeree, which occurred in this case.
Therefore, there was initially a unilateral contract between McElfresh and Big Burger, and the offer was revoked before McElfresh completed the swim, resulting in the termination of the contract.
Therefore, the advertisement made by Big Burger Restaurants is a unilateral contract.
To learn more about Unilateral Contract, visit:
https://brainly.com/question/31135099
#SPJ11
Queen & Ace Games (Q&A Games) runs its business from January 1 to December 31 (year-end). On January 1, 2020, Q&A Games pays $12,000 for a one-year insurance policy that covers January 1, 2020 to December 31, 2020. Record the journal entries for the following: 1. Record the initial entry on January 1, 2020, when Q&A Games pays for the insurance policy.
Journal entries:1On January 1, 2020, the journal entry made to record the payment for the one-year insurance policy is :Date Account Titles Debit Credit January 1, 2020Prepaid Insurance12,000Cash12,000.
Explanation:As per the question, the Q&A Games pays $12,000 for a one-year insurance policy that covers January 1, 2020, to December 31, 2020.The payment made for the one-year insurance policy is considered as prepaid expenses. Hence, the prepaid insurance account is debited for $12,000. At the same time, the Cash account is credited for the same amount of $12,000. This is because the insurance premium has already been paid in cash and recorded in the books of Q&A Games.
Know more about insurance policy here:
https://brainly.com/question/19496671
#SPJ11
Stella Liebeck, an elderly grandmother, received third-degree burns when she spilled coffee purchased at a McDonald's drive-through. At trial, experts testified that McDonald's coffee was too hot to be consumed at the point of purchase, was hotter than any other restaurant's coffee or coffee brewed at home, and was so hot that third-degree burns would result within three to five seconds of coming into contact with the skin. McDonald's also conceded that the coffee was brewed extremely hot for commercial (profit) reasons, because most customers wanted coffee to be hot throughout their commute. After finding the company liable, the jury awarded Mrs. Liebeck two days' worth of coffee sales at McDonald's, an amount equivalent to $2.7 million, in punitive damages. The award, although reduced to much less than that, set off a firestorm of criticism that has not died down to this day. Hence, now why your coffee cups say "Caution Hot". Do you believe that it's possible for coffee to be unreasonably dangerous? Find this information through the internet and write your answers and cite your sources. • What was the tort committed here? . Was there duty owed? • Do you believe that the jury's award of $2.7 million for third-degree burns was excessive? Why do you believe that such an award is necessary? Can you identify any standards which have changed in the industry based upon this case? • What ethical issues come to mind when you think of this case?
The tort committed in the given case is negligence.
A tort is a legal term that refers to an action that causes harm to another person resulting in the violation of another person's rights. In this case, the tort committed by McDonald's was negligence. The McDonald's owes a duty of care to its customers, and it is essential to determine if there was a breach of that duty in this case. The issue of whether a duty of care existed was central to the case, and the jury ultimately concluded that it did. McDonald's was responsible for ensuring that its coffee was reasonably safe for its customers to consume. The temperature of the coffee was far too hot, making it unreasonably dangerous and capable of causing severe burns.
The jury's award of $2.7 million for third-degree burns was not excessive because it was necessary to hold McDonald's accountable for its negligence. The jury found that the temperature of the coffee was unreasonably hot and that it posed a significant risk to the safety of McDonald's customers. The award was necessary to hold McDonald's accountable for its negligence and to compensate the plaintiff for the harm she suffered. Ethical issues that come to mind when thinking of this case include corporate responsibility, consumer protection, and the role of government in regulating businesses that provide goods and services to the public. Companies have an ethical obligation to ensure that their products are safe and do not pose unreasonable risks to the public.
Learn more about tort visit : brainly.com/question/28960514
#SPJ11
suppose that a bank holds no excess reserves and receives a deposit from a customer of $ 250 . how does this impact the money supply?
When a bank receives a deposit of $250 and holds no excess reserves, it has the potential to increase the money supply by lending out a portion of that deposit.
As the bank receives the $250 deposit, it becomes a liability for the bank, while the customer's account balance increases by the same amount. Since the bank holds no excess reserves, it is required to maintain a reserve ratio set by the central bank.
The reserve ratio represents the portion of deposits that banks must hold as reserves and cannot lend out. The remaining portion of the deposit, known as the excess reserves, can be used by the bank for lending activities.
By lending out a portion of the deposit, the bank effectively increases the money supply. When the bank loans the funds to a borrower, the borrower receives the loan amount as a deposit in their own bank account.
This increases the overall money supply in the economy. The newly created deposit can be further utilized for transactions, investments, or lending by the borrower's bank, contributing to the expansion of the money supply through the process of fractional reserve banking.
To know more about investments click here
brainly.com/question/15353704
#SPJ11
