Given the currency drain ratio is 20% of deposit and desired reserve ratio is 5%.
The increase in money supply due to this open market purchase can be calculated as follows:
Increase in Money Supply = MPC x Open Market Purchase
Where
MPC = 1 / (CR + RR)Where CR = Currency Drain Ratio and RR = Desired Reserve Ratio
MPC = 1 / (0.20 + 0.05) = 1 / 0.25 = 4Thus,Increase in Money Supply = 4 x $50 million= $200 million
So, the total increase in money supply due to this open market purchase is $200 million.The impact of this increase in money supply on money market equilibrium is as follows:
As the money supply increases, the supply curve of money shifts to the right, from MS to MS'. This leads to a fall in the interest rate from r to r'. The reduction in interest rate encourages the households to hold less money and more bonds. This, in turn, leads to an increase in investment and consumption expenditures.
The increase in consumption and investment leads to an increase in aggregate demand and output. This is how an increase in the money supply impacts the money market equilibrium.
In the long run, money is neutral, which means that changes in the money supply do not affect real variables such as output, employment, and the real interest rate. In other words, in the long run, changes in the money supply only affect the nominal variables such as the price level.
This proposition is explained by the Quantity Theory of Money. According to this theory, the quantity of money in an economy is directly proportional to the price level.
Therefore, a change in the money supply only leads to a proportional change in the price level, while the real variables remain unchanged.
To learn more about Quantity theory of money : https://brainly.com/question/33254308
#SPJ11
In what ways do the demand schedules for a purely competitive
firm and a pure monopolist differ? What significance does this have
for the price-output behavior of each?
The demand schedules for a purely competitive firm and a pure monopolist differ in several ways. 1. Number of buyers: In a purely competitive market, there are numerous buyers, each with a negligible impact on the market price.
2. Market power: A purely competitive firm has no market power and must accept the market price as given. In contrast, a pure monopolist has substantial market power and can influence the market price through its control over the supply.
3. Elasticity of demand: The demand curve faced by a purely competitive firm is perfectly elastic, meaning that the firm can sell any quantity of output at the prevailing market price. However, a pure monopolist faces a downward-sloping demand curve, indicating that it must lower the price to sell more output.
4. Price-output behavior: Due to the differences in their demand schedules, the price-output behavior of a purely competitive firm and a pure monopolist varies.
In summary, the demand schedules for a purely competitive firm and a pure monopolist differ in terms of the number of buyers, market power, elasticity of demand, and price-output behavior. These differences have significant implications for how each firm operates and determines its price and output levels.
To know more about monopolist visit:
https://brainly.com/question/7217942
#SPJ11
1. Price Floor a. Suppose this market exists as a free market without any government intervention and with no market failure. What will be the outcome for the market? In other words, what price will consumers be charged and will producers receive for each unit, how much of the good will be bought and sold, how much economic surplus will be earned by consumers, how much economic surplus will be earned by producers and how much economic surplus will be earned by society as a result of the free functioning of this market? b. What will be the impact of $4 price floor? (Please calculate new CS, PS, TS, Qs, Qd, Resource Misallocation, and DWL)
Without government intervention, the market outcome is determined by supply and demand. Imposing a $4 price floor leads to a new equilibrium with increased producer surplus, decreased consumer surplus, and resource misallocation. Specific values require demand and supply information.
a. Without any government intervention or market failure, the outcome of the market would be determined by the interaction of supply and demand. The price charged to consumers and received by producers would be determined at the equilibrium point where the quantity demanded equals the quantity supplied. The amount of the good bought and sold would be the equilibrium quantity. Economic surplus earned by consumers would be the area below the demand curve and above the equilibrium price, while economic surplus earned by producers would be the area above the supply curve and below the equilibrium price. The total economic surplus earned by society would be the sum of consumer surplus and producer surplus.
b. If a $4 price floor is imposed, it means that the price cannot fall below $4 per unit. This will lead to a new equilibrium point where the quantity supplied exceeds the quantity demanded. The new consumer surplus (CS) will be smaller because consumers will pay a higher price, and the producer surplus (PS) will increase due to the higher price received by producers. The new total surplus (TS) will be the sum of the new CS and PS.
The quantity supplied (Qs) will be higher than the quantity demanded (Qd) at the price floor. This leads to resource misallocation as more of the good is supplied than demanded. The deadweight loss (DWL) represents the loss of economic efficiency due to the price floor.
To calculate the specific values for CS, PS, TS, Qs, Qd, Resource Misallocation, and DWL, we would need additional information such as the demand and supply curves or equations.
To know more about deadweight loss
https://brainly.com/question/31668302
#SPJ11
What is capital budgeting and explain the significance of
budgeting to an organization
Capital budgeting is the process through which organizations evaluate and select long-term investment projects to allocate their financial resources effectively. It involves analyzing the potential risks and returns associated with investment opportunities to make informed decisions about allocating capital.
The significance of budgeting to an organization lies in several key aspects. Firstly, budgeting allows organizations to set financial goals and objectives, providing a roadmap for resource allocation. It helps prioritize projects and initiatives, ensuring that limited resources are utilized efficiently. Budgeting also facilitates financial control and monitoring, enabling organizations to track performance, identify variances, and take corrective actions when necessary. Moreover, budgeting supports decision-making by providing a framework to evaluate investment opportunities, assess financial feasibility, and allocate resources strategically. Overall, effective budgeting enhances financial discipline, planning, and transparency within an organization, contributing to its long-term sustainability and success.
Learn more about Capital budgeting here:
brainly.com/question/23476099
#SPJ11
Explain the difference between Gross Account Receivables Vs Net
Account Receivables.
Gross Accounts Receivable refers to the total amount owed to a company by its customers for goods or services sold on credit.
It represents the total outstanding balances without considering any adjustments or deductions. On the other hand, Net Accounts Receivable refers to the actual amount of money the company expects to collect after considering adjustments, such as allowances for doubtful accounts and sales returns.
1. Gross Accounts Receivable: This represents the total amount owed by customers to the company, without considering any deductions. It includes all outstanding balances from credit sales, regardless of whether they are fully collectible or not.
Example: Let's say a company has total outstanding balances of $10,000 from credit sales. This amount would be considered the Gross Accounts Receivable.
2. Net Accounts Receivable: This represents the actual amount the company expects to collect from its customers after considering adjustments. These adjustments include allowances for doubtful accounts and sales returns.
Example: If the company estimates that $1,000 of the outstanding balances is not collectible due to customers' financial difficulties, this amount would be deducted from the Gross Accounts Receivable. The resulting amount, $9,000, would be considered the Net Accounts Receivable.
In summary, Gross Accounts Receivable is the total amount owed by customers, while Net Accounts Receivable is the amount expected to be collected after considering adjustments. Net Accounts Receivable provides a more accurate picture of the company's actual receivables and helps in assessing its financial health.
Learn more about Gross Accounts Receivable: https://brainly.com/question/32156363
#SPJ11
At the beginning of the current period, Moon Ltd sold Equipment to its wholly-owned subsidiary, Sun Ltd, for $960,000. Moon Ltd had initially paid $2,400,000 for this asset, and at the time of sale to Sun, Ltd had charged depreciation of $1,800,000. This asset is used differently in Sun Ltd from how it was used in Moon Ltd; thus, whereas Moon Ltd used a 15% p.a. straight-line depreciation method, Sun Ltd uses a 25% straight-line depreciation method. In calculating the depreciation expense for the consolidated group, the group accountant is unsure which depreciation rate should be applied and which depreciation rate to use.
2. On 1 October 2021, Sun Ltd sold inventory for $75,000 to Moon Ltd at cost plus 25%. On 30 June 2022, Moon Ltd sold two-thirds of the inventory to other entities for $25,000 but still holds one-third of these inventories as of 30 June 2022. Can we debit Sales for $150,000, credit the Cost of Sales for $75,000 on 30 June 2022? Do we need to do anything else?
1. In this scenario, Moon Ltd sold Equipment to its subsidiary, Sun Ltd. Moon Ltd initially paid $2,400,000 for this asset and has charged depreciation of $1,800,000.
2. On 30 June 2022, Moon Ltd sold two-thirds of the inventory it purchased from Sun Ltd to other entities for $25,000. However, Moon Ltd still holds one-third of the inventory as of 30 June 2022.
To calculate the depreciation expense for the consolidated group, you should consider the following:
- For Moon Ltd: The depreciation expense is calculated using a 15% straight-line depreciation method. This means that Moon Ltd would charge a depreciation expense of $360,000 per year ($2,400,000 * 15%) for the asset.
- For Sun Ltd: The depreciation expense is calculated using a 25% straight-line depreciation method. Since Sun Ltd acquired the asset from Moon Ltd, the depreciation should be based on the original cost of the asset. Therefore, Sun Ltd would charge a depreciation expense of $600,000 per year ($2,400,000 * 25%).
When calculating the depreciation expense for the consolidated group, you should use the depreciation rate applicable to each subsidiary. In this case, Moon Ltd would contribute $360,000 to the group's depreciation expense, and Sun Ltd would contribute $600,000.
2. On 30 June 2022, Moon Ltd sold two-thirds of the inventory it purchased from Sun Ltd to other entities for $25,000. However, Moon Ltd still holds one-third of the inventory as of 30 June 2022.
Based on the information provided, we cannot debit Sales for $150,000 and credit the Cost of Sales for $75,000 on 30 June 2022. This is because the sales transaction you mentioned does not align with the details given.
To accurately record the sales transaction, you need to consider the cost of the inventory sold and the remaining inventory held by Moon Ltd. Since Moon Ltd sold two-thirds of the inventory for $25,000, you should calculate the cost of the inventory sold by applying the same cost-plus percentage to the selling price.
For example, if the cost-plus percentage is 25%, you would calculate the cost of the inventory sold as follows:
Cost of inventory sold = Selling price / (1 + cost-plus percentage)
= $25,000 / (1 + 0.25)
= $20,000
Once you have determined the cost of the inventory sold, you can debit Sales for the selling price ($25,000) and credit the Cost of Sales for the cost of the inventory sold ($20,000). However, you would need to adjust these amounts based on the actual cost-plus percentage and any additional costs associated with the sales transaction.
It's important to carefully review the specific details and calculations in the question to ensure accurate recording of the sales transaction.
Learn more about asset here: https://brainly.com/question/14826727
#SPJ11
The first question involves the depreciation of equipment sold by Moon Ltd to its subsidiary, Sun Ltd. The second question pertains to a sales transaction between Sun Ltd and Moon Ltd, and whether Sales and Cost of Sales should be recorded as described.
In the case of the equipment sold by Moon Ltd to Sun Ltd, the group accountant needs to determine the appropriate depreciation rate to use in the consolidated group's financial statements. Since the asset is used differently in Sun Ltd than in Moon Ltd, the depreciation rates may differ. The group accountant should consult accounting standards and regulations to determine the appropriate treatment.
It may be necessary to consider the purpose and nature of the asset's use in Sun Ltd and assess whether the 25% straight-line depreciation rate used by Sun Ltd aligns with the accounting principles and requirements.
Regarding the sales transaction between Sun Ltd and Moon Ltd, if Moon Ltd still holds one-third of the inventory as of June 30, 2022, it means that $50,000 worth of inventory has not been sold. Therefore, Sales should not be debited for $150,000 and Cost of Sales should not be credited for $75,000 on that date.
Instead, the appropriate accounting entry would be to debit Sales for $100,000 ($150,000 - $50,000) and credit Cost of Sales for $50,000 ($75,000 - $25,000) to reflect the portion of inventory that was actually sold. Additionally, any remaining inventory held by Moon Ltd needs to be appropriately recorded and valued on the balance sheet.
Learn more about transaction here: https://brainly.com/question/13013949
#SPJ11
Which document or record is used in the write-off of uncollectible accounts classes of transactions?
A) general journal
B) remittance advice
C) sales transaction file
D) sales order
General journal is used in the write-off of uncollectible accounts classes of transactions. So, the correct option is A.
In the process of dealing with uncollectible accounts, the general journal serves as the document or record to record the necessary entries. The general journal is a key component of the accounting system and is used to chronologically record various types of transactions, including the write-off of accounts that are deemed uncollectible.
When an account is considered uncollectible, it means that the company has determined that it is highly unlikely to receive payment from that particular customer. To accurately reflect the financial position of the company, the uncollectible accounts need to be removed from the accounts receivable balance.
The write-off entry in the general journal involves debiting the allowance for doubtful accounts or bad debt expense account to recognize the loss and crediting the specific customer's accounts receivable to remove the outstanding balance.
By recording the write-off in the general journal, the company not only acknowledges the financial impact of uncollectible accounts but also ensures that the financial statements accurately represent the true financial position of the business. It allows for proper tracking and analysis of bad debts and helps in making informed business decisions.
Learn more about General journal
https://brainly.com/question/32960840
#SPJ11
QUESTION 3
a) There are people who have the opinion that marketing has a psychological perspective? Explain your agreement or disagreement with this.
b) Different marketing techniques will be used for different products depending on what comes with it. This is important because the marketing technique will influence the perception about the product quality. Why is marketing a university more difficult than marketing a shoe?
c) A critical debate about the differences between goods and services have always been discussed. Why is determining the difference between goods and services important in marketing?
d) A graduate was asked to choose between being a marketing officer and an accounting officer, he chose to be an accounting officer. What makes marketing difficult in organizations?
a) I agree that marketing has a psychological perspective as it involves understanding the target audience's behavior and perception towards a product or service. A marketer needs to understand how their audience thinks, what motivates them, and how they perceive their product or service.
b) Different products require different marketing techniques as each product has its unique set of features and benefits. Marketing a university is difficult as it is not a tangible product. It is a service that is intangible and does not have a physical form that can be touched or felt. Therefore, marketing a university requires a more extensive effort to convince people about its value.
c) The difference between goods and services is essential in marketing as it helps to determine the marketing strategies required for a specific product or service. Goods are tangible products that can be touched, whereas services are intangible, and involve an experience. Understanding the difference between goods and services helps to determine the marketing mix, which includes product, price, promotion, and place, required for each product or service.
d) Marketing is difficult in organizations because it involves creating a positive perception of a product or service. It is essential to understand the target audience, their needs, and their preferences. It involves extensive research and analysis, which requires time and resources. Marketing also involves a lot of competition, which means that marketers need to be creative and innovative to stand out from their competitors.
To know more about Marketing, click here
brainly.com/question/6988222
#SPJ11
24 points) Bicycle production consists of two steps: components production, and assembly. Both steps require skilled and unskilled labor. Until now, bikes were produced entirely in Santa Cruz to serve the consumers in Santa Cruz. Unskilled workers earn $15 an hour, while skilled workers earn $30 an hour in Santa Cruz. With technological advances, manufacturers are now able to relocate their production process in Kona where the wages are lower: unskilled workers earn $7 an hour, while skilled workers earn $15 an hour. The following summarizes the unit labor requirements: Suppose that shipping components between Santa Cruz and Kona costs $16 per stock, while shipping assembled bikes costs $30 per bike. The firm's expected demand for bike in Santa Cruz (Q
SC
) is 1.2 million. (a) (6 points) Assume that there is no fixed cost of building a factory in Kona. Where will you manufacture components and assemble bikes for consumers in Santa Cruz? What will be the production cost of a bike? (b) (6 points) Now assume that relocating the production process to Kona, in fact, involves a fixed cost of setting up a plant, which is $15 million. Is it better to move (a part or all of) the production process to Kona? (c) (6 points) Kona is a big market for bicylces. While the expected demand Q
KONA
is unknown, you know that you can charge P
KONA
=$510 per bike in Kona. What is the minimum level of Q
KONA
that would justify your operations in Kona? (d) (6 points) Now suppose that both countries decide on imposing import tariffs: a specific tariff of $9 per bike components and $45 per assembled bike. How does your answer in part (c) change?
(a) Manufacture components and assemble bikes in Kona due to lower labor costs compared to Santa Cruz, resulting in reduced production cost per bike.
(b) When considering a fixed cost of $15 million for setting up a plant in Kona, a cost-benefit analysis should be conducted to determine if moving the production process to Kona is financially advantageous.
(c) The minimum level of expected demand QKONA in Kona that would justify operations can be calculated based on the revenue generated by charging PKONA = $510 per bike, ensuring it covers production costs and allows for a reasonable profit.
(d) With import tariffs of $9 per bike component and $45 per assembled bike, the analysis in part (c) needs to be adjusted to account for the increased production costs due to tariffs, affecting the minimum level of expected demand necessary to justify operations in Kona.
To know more about fixed costs, visit:
https://brainly.com/question/17100497
#SPJ11
The Resource Based View (RBV) of the firm starts from the concept that a firm’s performance is determined by the resources it has at its disposal.
The way these resources are used and configured enables the firm to perform and can provide a distinct competitive advantage.
Choose a business organisation that you are familiar with and attempt the following:
Question 1
Conduct a situational analysis using the Resource Based View (RBV). In your analysis, you are expected to discuss and demonstrate the following:
➢ The organisational resources – Tangibles and Intangibles
➢ The organisational processes
➢ The managerial and organisational capabilities
➢ Leadership styles
➢ The organisational core competencies
For a comprehensive analysis through the RBV Model, various specific tools are being utilised to derive outcomes pertaining to the organisational resources and processes.
You are also expected to make use of those specific tools to generate those outcomes.
QUESTION 2
The Resource Based View (RBV) is a managerial framework used to determine the strategic resources/ processes a firm can exploit to achieve sustainable competitive advantage.
Based on the outcomes derived from Question 1, demonstrate how your chosen organisation is capitalising on them to derive a sustainable competitive advantage.
------------------------------------------------------------------------------------------------------------------------------
RBV assess the out there quantity of strategic business plus and helps verify the corporate competitive advantage by victimization all the economical resources. Therefore, it helps interpret the inner resources and emphasizes on the resources.
For a company to succeed, a helpful competitive advantage should be developed. This helps in distinctive product and services from the competitors. The resource-based read (RBV) proposes ways in which of victimization resources at intervals an organization thus it will facilitate the competitive advantage supported the 2 assumptions, that include; immobility and resource variability. for instance, if a company needs to make a decision whether or not a brand new IT product is to implement, the corporate may check whether or not its competitors have constant product. If they are doing not have it, the corporate can considerably like the merchandise.
The resource-based read (RBV) allows the corporate to own sufficient human capital management practices by making specific information, skills, and cultural practices that ar tough to imitate for the competitors.
According to RBV proponents, it's far more possible to use external opportunities victimization existing resources in an exceedingly new manner instead of making an attempt to amass new skills for every totally different chance. In RBV model, resources ar given the key role in serving to firms to attain higher structure performance. There ar 2 sorts of resources: tangible and intangible.
Tangible assets ar physical things. Land, buildings, machinery, instrumentation and capital – of these assets ar tangible. Physical resources will simply be bought within the market so that they confer very little advantage to the businesses within the end of the day as a result of rivals will presently acquire the identical assets.
Intangible assets ar everything else that has no physical presence however will still be owned by the corporate. complete name, trademarks, material possession ar all intangible assets. in contrast to physical resources, complete name is made over an extended time and are a few things that alternative firms cannot obtain from the market. Intangible resources typically keep at intervals an organization and ar the most supply of property competitive advantage.
if the organization has effective leadership styles and managerial capabilities, it can better utilize its resources and create value. These factors contribute to the organization's competitive advantage.
RBV helps organizations understand their internal resources and how to effectively use them to achieve sustainable competitive advantage.
The Resource Based View (RBV) is a framework that emphasizes how a firm's performance is determined by its resources. In conducting a situational analysis using RBV for a chosen organization, we would consider the following:
1. Organizational resources: Tangibles, such as physical assets, and intangibles, like brand reputation or patents.
2. Organizational processes: The specific ways in which the organization uses its resources to create value.
3. Managerial and organizational capabilities: The skills, knowledge, and expertise of the managers and employees.
4. Leadership styles: The approach and behaviors of the leaders in the organization.
5. Organizational core competencies: Unique strengths and capabilities that give the organization a competitive advantage.
By analyzing these aspects using RBV, we can identify how the organization leverages its resources to gain a sustainable competitive advantage.
For example, if an organization has a strong brand reputation (an intangible resource), it can differentiate its products or services from competitors.
Additionally, if the organization has effective leadership styles and managerial capabilities, it can better utilize its resources and create value. These factors contribute to the organization's competitive advantage.
RBV helps organizations understand their internal resources and how to effectively use them to achieve sustainable competitive advantage.
to learn more about Resource Based View
https://brainly.com/question/30799012
#SPJ11
Which of the following is included in M1?
a. gold
b. checkable deposits
c. stock
d. credit cards
e. money market mutual funds
Answer:
B: checkable deposits
Explanation:
Checkable deposits
As relative prices in various industries change due to trade, the marginal product of fixed resources used in the expanding industry __________, and the marginal product of fixed resources used in the contracting industry __________.
rises; falls
changes by exactly the same percentage; changes by exactly the same percentage
falls; rises
remains the same; remains the same
I do not understand this, can anyone help me?
As relative prices in various industries change due to trade, the marginal product of fixed resources used in the expanding industry rises, and the marginal product of fixed resources used in the contracting industry falls .
Certainly! I can help explain the relationship between relative prices in industries and the marginal product of fixed resources.
Let's break it down:
Expanding Industry: As relative prices increase in an expanding industry (due to increased demand or favorable market conditions), firms in that industry have greater incentives to expand their production.
To meet the increased demand, firms allocate more of their fixed resources, such as capital or labor, to the expanding industry. As a result, the marginal product of these fixed resources in the expanding industry rises.
Contracting Industry: Conversely, as relative prices decrease in a contracting industry (due to reduced demand or unfavorable market conditions), firms in that industry have less incentive to produce.
They may reduce their production levels or reallocate their fixed resources to more profitable industries. This leads to a decrease in the marginal product of fixed resources in the contracting industry.
Therefore, the correct answer is: rises; falls. The marginal product of fixed resources used in the expanding industry rises, while the marginal product of fixed resources used in the contracting industry falls as relative prices change in various industries due to trade.
To learn more about resources
brainly.in/question/17572307
#SPJ11
The cash account of Vaughn Co, showed a ledger balance of $4,749.42 on June 30,2020 . The bank statement as of that date showed a balance of $4.980. Upon comparing the statement with the cash records, the following facts were determined.
1. There were bank service charges for June of $30.
2. A bank memo stated that Bao Dai's note for $1,440 and interest of $43.20 had been collected on June 29, and the bank had made a charge of $6.60 on the collection. (No entry had been made on Vaughris books when Bao Dai's note was sent to the bank for collection.)
3. Receipts for June 30 for $4,068 were not deposited until July 2.
4. Checks outstanding on June 30 totaled $2,563,26.
5. The bank had charged the Vaughn Co.'s account for a customer's uncollectible check amounting to $303.84 on June 29.
6. A customer's check for $108 (as payment on the customer's Accounts Receivable) had been entered as $72 in the cash receipts journal by Vaughn on June 15.
7. Check no. 742 in the amount of $491 had been entered in the cash journal as $419, and check no. 747 in the amount of $69.84 had been entered as $698.40. Both checks had been issued to pay for purchases and were payments on Vaughn's Accounts Payable.
The cash account of Vaughn Co. had a ledger balance of $4,749.42 on June 30, 2020. However, the bank statement showed a balance of $4,980 on the same date. After comparing the statement with the cash records, the following facts were determined:
1. Bank service charges for June amounted to $30.
2. A bank memo indicated that Bao Dai's note of $1,440 and interest of $43.20 had been collected on June 29. The bank made a charge of $6.60 on this collection. However, Vaughn Co. had not recorded this transaction in their books.
3. Receipts totaling $4,068, which were received on June 30, were not deposited until July 2.
4. Checks totaling $2,563.26 were issued by Vaughn Co. but had not cleared the bank as of June 30. These are considered outstanding checks.
5. The bank charged Vaughn Co.'s account for a customer's uncollectible check amounting to $303.84 on June 29.
6. On June 15, Vaughn Co. entered a customer's check for $108 as a payment on the customer's Accounts Receivable. However, it was mistakenly recorded as $72 in the cash receipts journal.
7. Check no. 742, with an amount of $491, was incorrectly entered in the cash journal as $419. Check no. 747, with an amount of $69.84, was also incorrectly entered as $698.40. Both checks were issued to pay for purchases and were payments on Vaughn Co.'s Accounts Payable.
To reconcile the bank statement balance with the ledger balance, we need to adjust for the following items:
- Subtract the bank service charges of $30 from the bank statement balance.
- Add the collection of Bao Dai's note and interest, which amounts to $1,440 + $43.20 - $6.60.
- Add the receipts that were not deposited until July 2, totaling $4,068.
- Subtract the outstanding checks of $2,563.26.
- Subtract the uncollectible check charge of $303.84.
- Adjust the cash receipts journal entry for the customer's check from $72 to $108.
- Adjust the cash journal entries for checks no. 742 and 747 to their correct amounts of $491 and $69.84, respectively.
By making these adjustments, we can determine the accurate cash balance for Vaughn Co. on June 30, 2020.
For more such questions on ledger balance
https://brainly.com/question/29473582
#SPJ8
On January 1, 2021, Pink Corp. 'sold' a machine for $19000 to Slink Corp., its wholly-owned subsidiary. Pink paid $24000 for this machine. At January 1, 2021, accumulated depreciation was $8000. The remaining useful life is assumed to be 5 years. Straight line depreciation is used by both companies. In Pink's December 31, 2021 consolidated balance sheet, at what amount should the MACHINE be reported?
In Pink Corp.'s December 31, 2021, consolidated balance sheet, the machine should be reported at $12,800.
In Pink Corp.'s consolidated balance sheet as of December 31, 2021, the machine should be reported at its carrying value, which is the original cost minus accumulated depreciation.
To calculate the carrying value of the machine, we need to follow these steps:
1. Determine the carrying value at the time of the sale:
The original cost of the machine was $24,000, and the accumulated depreciation at January 1, 2021, was $8,000. Therefore, the carrying value of the machine at the time of the sale was $24,000 - $8,000 = $16,000.
2. Calculate the annual depreciation expense:
Since the remaining useful life of the machine is assumed to be 5 years, we divide the carrying value by the remaining useful life to find the annual depreciation expense. In this case, the annual depreciation expense is $16,000 / 5 = $3,200.
3. Determine the depreciation expense for the year:
The machine was sold on January 1, 2021, so the depreciation expense for the year 2021 will be calculated based on the number of months the machine was used. Since it was used for the entire year, the depreciation expense for 2021 is $3,200.
4. Calculate the carrying value at December 31, 2021:
To calculate the carrying value at the end of the year, subtract the depreciation expense for the year from the carrying value at the time of the sale. In this case, the carrying value at December 31, 2021, is $16,000 - $3,200 = $12,800.
For more such questions on balance sheet
https://brainly.com/question/1113933
#SPJ8
(c) Risk event that happens deviates largely with the assessed risk in the risk management plan. Propose (7) seven ways to improve the risk analysis (7 marks)
To improve risk analysis, implement 7 strategies: review and update assessments, enhance data collection, use multiple techniques, involve stakeholders, consider uncertainties and assumptions, include emerging risks, and learn from past events.
These strategies focus on proactive measures such as frequent reviews, comprehensive data collection, diverse assessment techniques, stakeholder engagement, accounting for uncertainties, addressing emerging risks, and continuous learning from past experiences. By implementing these practices, organizations can strengthen their risk analysis processes and improve the alignment between assessed risks and actual risk events.
Learn more about risk analysis here:
https://brainly.com/question/31802891
#SPJ11
Discuss process for resolving disputes and grievances. (e.g.
negotiation, mediation, arbitration)"
In most workplaces, disagreements, disputes, and grievances are inevitable. Employers should be aware of the most efficient way of dealing with these situations. There are three typical ways of resolving disputes and grievances, namely negotiation, mediation, and arbitration.NegotiationNegotiation refers to the process of discussing and agreeing on the terms and conditions that both parties find acceptable.
Negotiations usually involve discussion on pay, promotion, working conditions, and other work-related topics. The process often includes a union representative, and an employer representative, and other parties may be present. Negotiation is a collaborative approach that allows all parties to express their opinions and work together towards a mutually acceptable outcome.MediationMediation is another way of resolving disputes and grievances. It is a non-binding and confidential way of settling disputes.
Mediation involves a neutral third party, known as the mediator, who assists the two conflicting parties in reaching a mutually acceptable agreement. In mediation, the mediator helps the parties involved to explore and discuss the issues that caused the dispute. They then work together to reach a mutually acceptable solution.ArbitrationArbitration is a more formal approach that involves an independent arbitrator who listens to the arguments presented by both parties. After listening to the arguments, the arbitrator will make a binding decision.
The arbitrator’s decision is usually final and cannot be appealed. The arbitration process can be lengthy and expensive, but it is considered a more formal way of resolving disputes and grievances.In conclusion, each approach has its own pros and cons, and employers must decide which process is most appropriate depending on the nature of the dispute. Employers should also consider any relevant agreements, contracts, or policies that may have an impact on the dispute resolution process.
to know more about arbitration pls visit-
https://brainly.com/question/24847253
#SPJ11
Question 15
Select all the statements that are correct:
A company would find an investment with an NPV of -20
desirable
A company with a discount rate of 5% would find an investment
with a
A company would not find an investment with a negative NPV of -20 desirable. NPV (Net Present Value) is a measure used to evaluate the profitability of an investment by comparing the present value of cash inflows and outflows. A negative NPV indicates that the present value of cash outflows exceeds the present value of cash inflows, resulting in a loss. Therefore, a company would generally consider an investment with a negative NPV as undesirable because it indicates that the investment is not expected to generate a positive return and may result in a financial loss.
On the other hand, a company with a discount rate of 5% would find an investment with a positive NPV desirable. The discount rate represents the company's required rate of return or the minimum acceptable rate of return for an investment. When the discount rate is used to calculate the NPV, it reflects the time value of money and the risk associated with the investment. If an investment has a positive NPV at a discount rate of 5%, it suggests that the investment is expected to generate returns that exceed the company's required rate of return. This indicates that the investment is potentially profitable and aligns with the company's financial objectives.
In summary, a company would not find an investment with a negative NPV desirable, while a company with a discount rate of 5% would find an investment with a positive NPV desirable.
Learn more about NPV
brainly.com/question/29423457
#SPJ11
Desirability is a subjective concept that is influenced by personal preferences, contextual factors, and cultural/societal influences. It is important to recognize that what is desirable can vary greatly from person to person and across different contexts.
Desirable means something that is highly valued or sought after. It refers to qualities, characteristics, or outcomes that are considered to be advantageous or appealing. Desirability can vary depending on different contexts, such as personal preferences, cultural norms, or societal expectations.
To explain further, let's break it down into three steps: 1. Subjective nature: Desirability is subjective, meaning what one person finds desirable may not be the same for another. For example, some people may find intelligence desirable, while others may prioritize physical attractiveness or kindness.
2. Contextual factors: Desirability can also be influenced by contextual factors. For instance, in a job interview, certain skills or qualifications may be more desirable depending on the requirements of the position or industry.
3. Cultural and societal influences: Desirability can be shaped by cultural and societal influences. For instance, in some cultures, having a fair complexion may be considered desirable, while in others, tanned skin may be more sought after.
To know more about societal influences refer here:
https://brainly.com/question/17610103#
#SPJ11
The IPO Investment Bank has the following financing outstanding. Debt: 60,000 bonds with a coupon rate of 9 percent and a current price quote of 109.5: the bonds have 20 years to maturity. 230,000 zero coupon bonds with a price quote of 20.5 and 30 years until maturity. Both bonds have a par value of $1,000 and semiannual coupons. Preferred stock: 150,000 shares of 7 percent preferred stock with a current price of $76, and a par value of $100. Common stock: 2,600,000 shares of common stock; the current price is $62, and the beta of the stock is 1.35. Market: The corporate tax rate is 25 percent, the market risk premium is 5 percent, and the risk-free rate is 2 percent. What is the WACC for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
The WACC for the company is approximately 8.90%. To calculate the Weighted Average Cost of Capital (WACC), we need to determine the weight of each financing component and multiply it by its respective cost.
Let's calculate the WACC for the company using the given information.
First, let's calculate the weights for each financing component:
Debt: Number of bonds * Bond price quote * Par value = 60,000 * 109.5% * $1,000 = $65,700,000
Preferred stock: Number of shares * Stock price = 150,000 * $76 = $11,400,000
Common stock: Number of shares * Stock price = 2,600,000 * $62 = $161,200,000
Total capital: Debt + Preferred stock + Common stock = $65,700,000 + $11,400,000 + $161,200,000 = $238,300,000
Next, let's calculate the cost of each financing component:
Debt cost: Coupon rate * Bond price quote = 9% * 109.5% = 9.855%
Preferred stock cost: Preferred stock dividend rate = 7%
Common stock cost: Risk-free rate + Beta * Market risk premium = 2% + 1.35 * 5% = 8.75%
Now, let's calculate the WACC:
WACC = (Weight of Debt * Cost of Debt) + (Weight of Preferred stock * Cost of Preferred stock) + (Weight of Common stock * Cost of Common stock)
WACC = ($65,700,000 / $238,300,000) * 9.855% + ($11,400,000 / $238,300,000) * 7% + ($161,200,000 / $238,300,000) * 8.75%
WACC ≈ 0.2762 * 9.855% + 0.0479 * 7% + 0.6760 * 8.75%
WACC ≈ 2.724% + 0.334% + 5.843%
WACC ≈ 8.901%
Therefore, the WACC for the company is approximately 8.90%.
Learn more about calculating WACC here:
brainly.com/question/33116653
#SPJ11
How poverty is linked with natural capital?
How economic tools will help to reduce poverty?
Poverty and natural capital are closely linked. Natural capital refers to the natural resources that provide goods and services that are essential for human well-being. These goods and services include food, water, shelter, energy, and ecosystem services such as pollination, climate regulation, and flood control.
Poverty is often concentrated in areas that are rich in natural capital, but where people have limited access to these resources. This is because natural capital is often exploited by those who have the means to do so, leaving the poor with little or nothing to benefit from.
For example, in many developing countries, forests are being cleared for agriculture or logging, which can lead to soil erosion, flooding, and the loss of biodiversity. This can have a devastating impact on the poor, who often rely on forests for food, water, and other resources.
Economic tools can help to reduce poverty by providing access to natural capital and by ensuring that the benefits of natural capital are shared more equitably. Some examples of economic tools that can be used to reduce poverty include:
Payments for ecosystem services: These are payments made to people who protect or restore natural resources. For example, farmers in Kenya have been paid to plant trees on their land, which has helped to reduce soil erosion and improve water quality.
Natural resource tenure reform: This involves giving people secure rights to land and other natural resources. This can help to reduce poverty by giving people the incentive to invest in and manage natural resources sustainably.
Environmental taxes and subsidies: These can be used to encourage people to use natural resources more efficiently and to protect the environment. For example, a tax on carbon emissions can help to reduce greenhouse gas emissions and mitigate climate change.
By using economic tools to protect and manage natural capital, we can help to reduce poverty and improve the lives of millions of people around the world.
Here are some additional examples of how economic tools can help to reduce poverty:
Microcredit: Microcredit is a small loan that is given to people who are unable to access traditional forms of credit. Microcredit can help people to start their own businesses or to invest in education or training, which can help them to escape poverty.
Social safety nets: Social safety nets are government programs that provide financial assistance to people who are unable to work or who are living in poverty. Social safety nets can help to prevent people from falling into poverty and can help them to escape poverty once they are there.
Investment in infrastructure: Investment in infrastructure such as roads, schools, and hospitals can help to improve the lives of people in poverty. This is because infrastructure can make it easier for people to get to work, to access education, and to receive healthcare.
These are just a few examples of how economic tools can help to reduce poverty. By using these tools effectively, we can help to create a more just and equitable world for all.
Learn more about the links between poverty and natural capital here:
https://brainly.com/question/2789686
#SPJ11
Assume an organization’s debt-to-equity ratio is less than 1.0. Which of the following statements is most correct?
a.The organization’s creditors have provided less than $1 in capital per dollar of equity capital.
b.The organization has more equity than debt in its capital structure.
c. An increase in the debt-to-equity ratio would increase the riskiness of the creditors’ position.
d. Answers a. and b. are correct.
e. Answers a., b., and c. are correct.
(Hint: Option D is incorrect. It has been marked as incorrect.)
The most correct statement is option (b): The organization has more equity than debt in its capital structure.
A debt-to-equity ratio measures the proportion of debt and equity in a company's capital structure. A ratio less than 1.0 indicates that the organization has more equity than debt.
Option (a) is incorrect because a debt-to-equity ratio less than 1.0 means that creditors have provided more than $1 in capital per dollar of equity capital, not less.
Option (c) is incorrect because an increase in the debt-to-equity ratio would actually decrease the riskiness of the creditors' position, as it would mean a higher proportion of equity compared to debt.
Option (d) is incorrect because only option (b) is correct, while option (e) includes incorrect statements. Therefore, the most accurate statement is that the organization has more equity than debt in its capital structure.
Learn more about organization here:
https://brainly.com/question/33444004
#SPJ11
"southwest tires declares a 2 for 1 stock split. the current price
is $80 per share, and you own 600 shares. what is the expected
share price after the split? what is your wealth before the split?
After a 2-for-1 stock split, the expected share price is $40 per share. Your wealth before the split is $48,000, calculated by multiplying the number of shares owned (600) by the current price per share ($80).
When a 2-for-1 stock split is declared, each existing share is divided into two shares. Therefore, the number of shares owned doubles, while the price per share is halved.
In this case, you own 600 shares of Southwest Tires, and the current price is $80 per share. After the 2-for-1 stock split, you would have 1,200 shares (600 shares x 2) and the expected share price would be $40 per share ($80 / 2).
To calculate your wealth before the split, you multiply the number of shares owned by the current price per share:
Wealth before the split = Number of shares owned x Current price per share
Wealth before the split = 600 shares x $80 per share
Wealth before the split = $48,000
Therefore, your wealth before the split is $48,000.
learn more about share price here:
https://brainly.com/question/31793966
#SPJ11
Do you think the advantages or the disadvantages of the gold
standard are more important? Explain.
The importance of the advantages or disadvantages of the gold standard depends on the specific circumstances and goals of a country. For instance, during periods of economic stability, the advantages may outweigh the disadvantages. However, during times of economic crisis, the disadvantages could be more significant. Consequently, the relative importance of the advantages and disadvantages of the gold standard can vary.
The gold standard, which was prevalent during the 19th and early 20th centuries, has both advantages and disadvantages. In order to determine which is more important, it is necessary to consider the context and perspective.
Advantages:
1. Stability: The gold standard provided stability to currency values by pegging them to a fixed amount of gold. This reduced inflation and maintained a consistent purchasing power.
2. International Trade: It facilitated international trade as countries had a common medium of exchange, making transactions more predictable and reliable.
3. Discipline: It imposed discipline on governments, preventing them from printing excessive amounts of money and promoting fiscal responsibility.
Disadvantages:
1. Economic Fluctuations: The gold standard limited a government's ability to use monetary policy to respond to economic fluctuations, such as recessions or depressions.
2. Limited Money Supply: The gold supply was finite, and this restricted the expansion of the money supply to meet the needs of a growing economy.
3. Unstable Exchange Rates: The gold standard could lead to volatile exchange rates, especially if a country experienced a significant change in its gold reserves.
Learn more about gold standard from the given link:
https://brainly.com/question/2222040
#SPJ11
Providing employees with choice and encouragement for personal initiative is known as
A)intrinsic motivation.
B)extrinsic motivation.
C)autonomy support.
D)controlled motivation.
E)autonomous motivation.
The correct answer is C) autonomy support. Autonomy support refers to providing employees with the freedom to make choices and encouraging their personal initiative within the workplace. It involves fostering an environment that values employee autonomy, independence, and self-direction. This approach recognizes that individuals are motivated by a sense of control over their work and encourages them to take ownership of their tasks and decisions. Autonomy support promotes intrinsic motivation, which is driven by internal factors such as personal interest, satisfaction, and a sense of competence, rather than external rewards or pressures (extrinsic motivation). By empowering employees and giving them the freedom to exercise their initiative, autonomy support can enhance their job satisfaction, engagement, and overall performance.
In summary, providing employees with choice and encouragement for personal initiative is known as autonomy support. It involves fostering an environment that values employee autonomy and promotes intrinsic motivation. By giving employees the freedom to make decisions and exercise their initiative, autonomy support can enhance their job satisfaction and overall performance.
Learn more about autonomy here :
brainly.com/question/17174025
#SPJ11
In which market structure is non-price competition is most
prevalent in:
Question options:
Perfect competition.
Monopolistic competition.
Oligopoly.
Monopoly.
Second option is the correct answer. Non-price competition is most prevalent in monopolistic competition, where firms focus on differentiating their products to gain a competitive edge in the market.
In the market structure where non-price competition is most prevalent is monopolistic competition.
Monopolistic competition is characterized by a large number of sellers offering similar but differentiated products. Each firm in this market structure tries to differentiate its product from competitors to attract customers. Non-price competition is a strategy employed by firms to increase market share and distinguish their products based on factors other than price.
Examples of non-price competition in monopolistic competition include advertising, branding, product differentiation, packaging, customer service, and quality. These strategies aim to create a unique brand image and attract loyal customers.
In conclusion, non-price competition is most prevalent in monopolistic competition, where firms focus on differentiating their products to gain a competitive edge in the market.
Learn more about Non-price competition from the given link:
https://brainly.com/question/12230035
#SPJ11
What is your personal experience in trying to understand English Phrasal Verbs/Idioms used in the following 2 questions: (Answer (a) & (b) below) (This is about Idioms & phrasal verbs, not general English Language and please do not give instructions on phrasal verbs or a list of phrasal verbs.
(a) in Conversation?
(b) in English Movies or TV shows you've watched?
It's English course.
The answer for the English Phrasal Verbs/idioms is given below:
(a) In Conversation:
1. Pay attention to context: Phrasal verbs and idioms often have different meanings depending on the context. Look for clues in the conversation to understand the intended meaning.
2. Break it down: Identify the verb and the particle or preposition in the phrasal verb. Understanding the individual words will help you grasp the overall meaning.
3. Practice: Engage in conversations with native English speakers or watch videos of conversations to expose yourself to different phrasal verbs and idioms in context.
4. Use resources: Online dictionaries, textbooks, and language learning apps provide definitions and examples of phrasal verbs and idioms used in conversation.
(b) In English Movies or TV Shows:
1. Contextual clues: Pay attention to the situation, expressions, and gestures used in the scene. They can give you hints about the meaning of the phrasal verb or idiom.
2. Subtitles: If available, read the subtitles to understand the exact words being spoken. Subtitles can provide a literal translation of the phrasal verb or idiom.
3. Take notes: Write down unfamiliar phrasal verbs and idioms while watching. Look them up later to understand their meanings and usage.
4. Watch with native speakers: Discuss the movie or TV show with native English speakers. They can explain the meanings and nuances of the phrasal verbs and idioms used.
Learn more about Pay attention to context from the given link:
https://brainly.com/question/22373338
#SPJ11
Higher capital requirement is a ____________ for new entrants.
Group of answer choices
Bargaining power
Substitute product
Supplier power
Threat of entry
Higher capital requirement is a Threat to entry for new entrants. Option D is the correct answer.
Obstacles that make it difficult for new companies to enter a given market are known as Barriers to entry and they may include technology challenges, government regulations, patents, start-up costs, or education and licensing requirements.
Some other barriers to entry include:
Economies of scale:Network effect: High research and development costs:High set-up costsOwnership of key resources or raw materialsThe threat of entry will be lower when the capital necessities of the business are higher because it acts as a barrier to entry for many potential entrants, as only those with the resources to make the high initial investment will attempt to enter the competitive fray.
To learn more about Barriers to entry:
https://brainly.com/question/28386718
#SPJ4
An annuity pays 150 at the end of each of the next 5 years and 200 at the end of each of the five following years. If i 6%, find the present value of the annuity.
The present value of an annuity can be calculated by finding the present value of each cash flow and then summing them up. In this case, the annuity pays $150 at the end of each of the next 5 years and $200 at the end of each of the five following years, for a total of 10 cash flows.
To find the present value of each cash flow, we need to discount them back to the present using the given interest rate of 6%. We can use the formula for the present value of an annuity:[tex](1 + 0.06)^{-5}[/tex]
For the first 5 cash flows of $150, the present value would be:
PV = 150 * (1 - (1 + 0.06)^-5) / 0.06
For the next 5 cash flows of $200, the present value would be:
PV = 200 * (1 - [tex](1 + 0.06)^{-5}[/tex]) / 0.06
Finally, we can sum up the present values of both sets of cash flows to find the total present value of the annuity.
To calculate the present value of an annuity, we need to find the present value of each cash flow and then sum them up. This is because the value of money decreases over time due to inflation and the opportunity cost of not being able to invest the money elsewhere. By discounting each cash flow back to the present, we can determine the value of the annuity in today's dollars.
In this case, we have two sets of cash flows: $150 at the end of each of the next 5 years and $200 at the end of each of the five following years. We are given an interest rate of 6% to use in our calculations.
To find the present value of the cash flows, we use the formula for the present value of an annuity. This formula takes into account the cash flow, interest rate, and number of periods.
For the first set of cash flows, we have $150 at the end of each of the next 5 years. Plugging these values into the formula, we get:
PV = 150 * (1 - [tex](1 + 0.06)^{-5}[/tex]) / 0.06
For the second set of cash flows, we have $200 at the end of each of the five following years. Using the same formula, we get:
PV = 200 * (1 - [tex](1 + 0.06)^{-5}[/tex]) / 0.06
Finally, we sum up the present values of both sets of cash flows to find the total present value of the annuity. This represents the value of the annuity in today's dollars.
In conclusion, the present value of the annuity can be found by calculating the present value of each cash flow and summing them up using the formula for the present value of an annuity.
Learn more about present value of an annuity: https://brainly.com/question/32281434
#SPJ11
When the government gives sellers a per-unit subsidy
1) producer surplus increases, consumer surplus decreases and there is no dead weight loss.
2) producer surplus decreases, consumer surplus increases, and there is no dead weight loss.
3) producer surplus increases, consumer surplus increases, and there is no dead weight loss.
4) producer surplus increases, consumer surplus increases, and there is a dead weight loss.
When the government provides sellers with a per-unit subsidy, the correct answer is 3) producer surplus increases, consumer surplus increases, and there is no deadweight loss.
When the government provides sellers with a per-unit subsidy, it has several effects on the market. Firstly, the subsidy reduces the costs of production for sellers. By lowering the cost per unit, sellers can afford to supply more goods at a given price or maintain the same level of supply while offering a lower price.
This decrease in price benefits consumers by increasing their consumer surplus. Consumer surplus represents the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. As prices decrease due to the subsidy, consumers can enjoy greater benefits by paying less than their maximum willingness to pay.
Secondly, the per-unit subsidy serves as an incentive for producers to increase their output. With lower costs, sellers are motivated to produce more units of the subsidized good. This expansion of production leads to an increase in producer surplus. Producer surplus is the difference between the price at which sellers are willing to sell a good and the actual price they receive. As sellers receive a higher price for each unit sold due to the subsidy, their overall surplus increases. Therefore, both producers and consumers experience gains from the per-unit subsidy.
To summarize, when the government provides sellers with a per-unit subsidy, both producer surplus and consumer surplus increase. Producers benefit from lower costs and higher prices, while consumers benefit from lower prices and increased availability of the subsidized good. Additionally, the subsidy encourages a more efficient allocation of resources, as there is no deadweight loss.
To learn more about subsidy click here:
brainly.com/question/29670273
#SPJ11
(a) Completely SWOT Analysis a strategic planning tool used to evaluate certain elements. Compare the (4) four major elements that used in SWOT analysis. (8 marks)
SWOT analysis is a strategic planning tool used to evaluate the internal strengths, weaknesses, and external opportunities and threats of a business or project.
The four major elements of SWOT analysis are strengths, weaknesses, opportunities, and threats. Strengths refer to the internal positive attributes of a business or project, such as unique qualities, resources, and capabilities. Weaknesses are internal factors that put a business at a disadvantage compared to its competitors, highlighting areas of improvement. Opportunities are external factors that have the potential to positively impact a business, while threats are external factors that may pose challenges or risks. By conducting a SWOT analysis, businesses gain insights into their current position, identify areas for improvement, capitalize on opportunities, and mitigate risks, leading to informed decision-making and effective strategies.
Learn more about SWOT analysis here:
https://brainly.com/question/31088966
#SPJ11
(5) Suppose a firm's production function is given by \( y=x_{1}^{\frac{1}{2}} x_{2}^{\frac{1}{2}} \), with \( w_{1}=4 \) and \( w_{2}=1 \). Find the firm's cost function.
The firm's cost function is given by `C = 4x₁ + x₂`.
a firm's production function is given by `y = x₁¹/² x₂¹/²`, with `w₁ = 4` and `w₂ = 1`. Let's determine the firm's cost function.Cost function is given by the formula:`C = w₁ x₁ + w₂ x₂`For the given production function `y = x₁¹/² x₂¹/²`, let's take the logarithm of both sides to make it a linear function.
`ln(y) = ln(x₁¹/² x₂¹/²)`Using the logarithmic property of multiplication, we can simplify the above expression as:`ln(y) = ln(x₁¹/²) + ln(x₂¹/²)`We can further simplify it as:`ln(y) = 1/2 ln(x₁) + 1/2 ln(x₂)`Differentiating the above expression with respect to `x₁`, we get:`1/y dy/dx₁ = 1/2x₁⁻¹/² x₂¹/²`Multiplying both sides by `x₁¹/²`, we get:`1/y dy/dx₁ x₁¹/² = 1/2 x₂¹/²`Differentiating the above expression with respect to `x₂`, we get:`1/y dy/dx₁ x₁¹/² dx₂/dx₂ = 1/2 x₁¹/² x₂⁻¹/²`Multiplying both sides by `x₂¹/²`, we get:`1/y dy/dx₁ x₁¹/² x₂¹/² = 1/2 x₁¹/²`
Solving for `dy/dx₁`, we get:`dy/dx₁ = y/x₁`Similarly, differentiating the expression `ln(y) = 1/2 ln(x₁) + 1/2 ln(x₂)` with respect to `x₂`, we get:`dy/dx₂ = y/x₂`Now, let's substitute the given values of `w₁ = 4` and `w₂ = 1` into the cost function to obtain:`C = 4x₁ + x₂`We can further rewrite it as:`C = w₁ x₁ + w₂ x₂`Therefore, the firm's cost function is given by `C = 4x₁ + x₂`.
To know more about cost function :
https://brainly.com/question/29358512
#SPJ11
The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $17 million and realizes after-tax inflows of $4.5 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 13%.
A) The value of the company would decrease by approximately $1.92 million if it accepts the better machine.
B) The equivalent annual annuity for Machine A is approximately $5.12 million, and for Machine B, it is approximately $6.78 million.
A) To determine the value increase if the company accepts the better machine, we need to calculate the net present value (NPV) of each machine and compare them. The NPV represents the present value of the cash inflows minus the initial cost of the investment.
For Machine A:
Cost = $8 million
Annual cash inflow = $4.5 million (after-tax) for 4 years
Discount rate = 13%
Using the formula for NPV:
NPV(A) = (Cash inflow - Cost) / (1 + Discount rate)^n
where n is the number of years.
NPV(A) = (4.5 - 8) / (1 + 0.13)^4
NPV(A) = -3.5 / 1.7247
NPV(A) ≈ -2.03 million
For Machine B:
Cost = $17 million
Annual cash inflow = $4.5 million (after-tax) for 8 years
Discount rate = 13%
NPV(B) = (4.5 - 17) / (1 + 0.13)^8
NPV(B) = -12.5 / 3.1721
NPV(B) ≈ -3.95 million
To determine the value increase, we compare the NPV of the better machine with the other:
Value Increase = NPV(B) - NPV(A)
Value Increase = -3.95 million - (-2.03 million)
Value Increase ≈ -1.92 million
Therefore, the value of the company would decrease by approximately $1.92 million if it accepts the better machine.
B) The equivalent annual annuity (EAA) represents the equal annual cash flow that would have the same NPV as the investment.
For Machine A:
EAA(A) = NPV(A) / ((1 - (1 +[tex]Discount rate)^(^-^n^))[/tex] / Discount rate)
EAA(A) ≈ -2.03 million / ((1 - [tex](1 + 0.13)^(^-^4^))[/tex] / 0.13)
EAA(A) ≈ -2.03 million / 0.3972
EAA(A) ≈ -5.12 million
For Machine B:
EAA(B) = NPV(B) / ((1 - (1 +[tex]Discount rate)^(^-^n^))[/tex] / Discount rate)
EAA(B) ≈ -3.95 million / [tex]((1 - (1 + 0.13)^(^-^8^))[/tex] / 0.13)
EAA(B) ≈ -3.95 million / 0.5829
EAA(B) ≈ -6.78 million
The equivalent annual annuity for Machine A is approximately $5.12 million, and for Machine B, it is approximately $6.78 million.
For more such information on: annual annuity
https://brainly.com/question/14908942
#SPJ8
The question probable may be:
The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $17 million and realizes after-tax inflows of $4.5 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 13%.
A)By how much would the value of the company increase if it accepted the better machine? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
B)What is the equivalent annual annuity for each machine? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to two decimal places.
