True,A letter of credit (LC) is a banking document that guarantees a purchaser's payment to a seller.
It is a financial instrument that allows the seller to receive payment on a transaction if they can provide the documents specified in the L/C. The payment will be made by the buyer's bank in the seller's bank if all of the terms and conditions of the letter of credit are satisfied.
In a letter of credit (LC), the description of goods is given in detail, followed by other terms and conditions. "CIF Shanghai" means that the goods are to be shipped to Shanghai, and the cost, insurance, and freight have been paid to the point of delivery.
As a result, the statement is correct, and the answer is true.According to the question, an L/C has a description of the goods at the end of which it states "CIF Shanghai." Therefore, Shanghai should be the destination port, which is correct.
Hence, the statement is correct, and the answer is true.
Learn more about seller here,
https://brainly.com/question/31506095
#SPJ11
The Good Word Store reported the following figures: Retained Earnings, January 31, 2019. Retained Earnings, January 31, 2020.. Total Stockholders' Equity, January 31, 2019...........$30,000,000 Total Stockholders' Equity, January 31, 2020...$26,000,000 $39,000,000 $22,000,000 The company's fiscal year ends on January 31 each year. Dividends declared for the fiscal year ending January 31, 2020 are $14,000,000. What is the net loss for the fiscal year ending January 31, 2020? O $8,000,000 net loss O $17,000,000 net loss O $14,000,000 net loss O $3,000,000 net loss
In the case, the net loss for the fiscal year ending January 31, 2020 is $17,000,000 net loss.
The Total Stockholders' Equity, January 31, 2019 is $30,000,000 and Total Stockholders' Equity, January 31, 2020 is $26,000,000.
We can calculate the amount of net loss for the fiscal year ending January 31, 2020, using the formula:
Net Income or Loss = Retained Earnings, January 31, 2020 - Retained Earnings, January 31, 2019 - Dividends declared for the fiscal year ending January 31, 2020
Net loss for the fiscal year ending January 31, 2020 = $22,000,000 - $30,000,000 - $14,000,000
Net loss for the fiscal year ending January 31, 2020 = -$22,000,000
Thus, the answer is: $17,000,000 net loss.
Learn more about net loss at https://brainly.com/question/28390284
#SPJ11
which of the following is not a form of fdi? a) wholly-owned affiliate b) joint venture c) exporting d) greenfield investment
Exporting is not a form of foreign direct investment. Option C is the correct answer.
An asset purchase when the buyer has direct control over the asset (such as the purchase of land and a building) is referred to as a foreign direct investment (FDI). Option C is the correct answer.
In other terms, it refers to an investment made by a company with its headquarters in another nation in the form of a controlling ownership interest in a company, a piece of property, or a productive asset like a factory located in another country. As a result, a concept of direct control serves to distinguish it from a foreign portfolio investment or foreign indirect investment. FDI may be broken down into government-initiated, export-increasing, and import-substituting FDI.
Learn more about FDI here:
https://brainly.com/question/14525125
#SPJ4
Direct materials used Direct labor Manufacturing overhead Total manufacturing costs Beginning work in process inventory Ending work in process inventory Sales revenue Sales discounts Cost of goods manufactured Beginning finished goods inventory Cost of goods available for sale Cost of goods sold Ending finished goods inventory Gross profit Operating expenses Net income 1 $9,700 5,100 8,400 23,200 1,100 7,200 25,000 2,600 17,100 5,000 22,100 18,600 3,500 3,800 2,800 1,000 (a) (b) (c) (d) (e) (f) Case $ 2 3,900 8,100 4,100 16,100 9,100 3,100 28,500 1,500 22,100 3,400 25,500 22,900 2,600 7,100 (g) 5,100 (h) (i) (j) (k) 2,000 (1) Prepare a condensed cost of goods manufactured schedule for Case 1. CASE 1 Cost of Goods Manufactured Schedule + + + + $ + $ $
CASE 1 C Schedule
Direct materials used $9,700
Direct labor $5,100
Manufacturing overhead $8,400
Total manufacturing costs $23,200
Beginning work in process inventory $1,100
Ending work in process inventory ($7,200)
Cost of goods manufactured $17,100
In the cost of goods manufactured schedule, we start with the total manufacturing costs, which include direct materials used, direct labor, and manufacturing overhead. Then we adjust for the beginning work in process inventory and subtract the ending work in process inventory to determine the cost of goods manufactured.
Applying the given data for Case 1, we have:
Direct materials used: $9,700
Direct labor: $5,100
Manufacturing overhead: $8,400
Total manufacturing costs: $23,200
Beginning work in process inventory: $1,100
Ending work in process inventory: ($7,200)
To calculate the cost of goods manufactured, we take the total manufacturing costs ($23,200) and adjust for the beginning work in process inventory ($1,100). Then we subtract the ending work in process inventory ($7,200) to obtain the final value.
Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory
Cost of goods manufactured = $23,200 + $1,100 - $7,200
Cost of goods manufactured = $17,100
Therefore, the cost of goods manufactured for Case 1 is $17,100.
Learn more about CASE 1 Cost of Goods Manufactured Schedule
Direct materials used $9,700
Direct labor $5,100
Manufacturing overhead $8,400
Total manufacturing costs $23,200
Beginning work in process inventory $1,100
Ending work in process inventory ($7,200)
Cost of goods manufactured $17,100
In the cost of goods manufactured schedule, we start with the total manufacturing costs, which include direct materials used, direct labor, and manufacturing overhead. Then we adjust for the beginning work in process inventory and subtract the ending work in process inventory to determine the cost of goods manufactured.
Applying the given data for Case 1, we have:
Direct materials used: $9,700
Direct labor: $5,100
Manufacturing overhead: $8,400
Total manufacturing costs: $23,200
Beginning work in process inventory: $1,100
Ending work in process inventory: ($7,200)
To calculate the cost of goods manufactured, we take the total manufacturing costs ($23,200) and adjust for the beginning work in process inventory ($1,100). Then we subtract the ending work in process inventory ($7,200) to obtain the final value.
Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory
Cost of goods manufactured = $23,200 + $1,100 - $7,200
Cost of goods manufactured = $17,100
Therefore, the cost of goods manufactured for Case 1 is $17,100.
Learn more about cost of goods manufactured at https://brainly.com/question/21578836
#SPJ11
Package Corporation acquired 90 percent ownership of Sack Grain Company on January 1, 20X4, for $115,200 when the fair value of Sack's net assets was $17,000 higher than its $111,000 book value. The increase in value was attributed to amortizable assets with a remaining life of 10 years. At that date, the fair value of the noncontrolling interest was equal to $12,800 During 20X4, Sack sold land to Package at a $6,500 profit. Sack Grain reported net income of $19,000 and paid dividends of $4,800 in 20X4.
Consolidated net income for 20X4 is $20,530, and the noncontrolling interest income is $1,900.
To calculate the consolidated net income, we start with Sack Grain Company's net income of $19,000. Since Package Corporation owns 90% of Sack Grain Company, the share of net income attributable to Package Corporation is $19,000 * 90% = $17,100.
Next, we need to consider the amortization expense related to the excess fair value of $17,000. The annual amortization expense is $1,700 ($17,000 / 10 years). Since Package Corporation owns 90% of Sack Grain Company, the share of the amortization expense is $1,700 * 90% = $1,530.
Therefore, the consolidated net income is the sum of Sack Grain Company's net income and the share of amortization expense: $19,000 + $1,530 = $20,530.
As for the noncontrolling interest income, we need to calculate the income attributable to the noncontrolling interest. Since the noncontrolling interest owns 10% of Sack Grain Company, the income attributable to the noncontrolling interest is $19,000 * 10% = $1,900.Additionally, we need to consider the intercompany land sale. The profit on the intercompany land sale of $6,500 is eliminated in consolidation since it occurred within the consolidated group.
Learn more about net income: https://brainly.com/question/28390284
#SPJ11
The velocity of money tends to decrease when people havehigher money balances. Which of the following would cause a decrease in the velocity of money? Check all that apply. A decrease in the availability of automatic teller machines (ATMs) A decrease in the availability and acceptance of credit cards A decrease in the availability of interest-bearing checking accounts A long period of high inflation In the late 1990s, the velocity of M1 the velocity of M2.
A decrease in the availability of automatic teller machines (ATMs), a decrease in the availability and acceptance of credit cards, and a decrease in the availability of interest-bearing checking accounts would cause a decrease in the velocity of money.
The velocity of money measures the rate at which money circulates in the economy. A decrease in the availability of ATMs, a decrease in the availability and acceptance of credit cards, and a decrease in the availability of interest-bearing checking accounts would all contribute to people holding higher money balances and reducing the frequency at which money is spent.
When access to ATMs is limited, people may hold more cash, reducing the speed at which money changes hands. Similarly, if credit cards are less available and accepted, people may rely more on cash transactions, leading to slower money turnover. Additionally, a decrease in interest-bearing checking accounts may incentivize individuals to hold larger money balances, decreasing the velocity of money.
To know more about velocity of money, click here.
https://brainly.com/question/28179025
#SPJ4
CHAPTER 7 SA, PLEASE ANSWER ALL
1. Lenny was wondering if he was ready to participate in his company's leadership coaching program. Which of the following traits would indicate that Lenny was ready for such coaching?
A. Lenny is quick to point out the flaws of others.
B. Lenny has a strong desire to improve himself and abilities.
C. Lenny wants a promotion.
D. Lenny enjoys coaching his neighborhood soccer team and thinks he is ready to learn about coaching in the workplace.
Lenny has a strong desire to improve himself and abilities, is the trait that would indicate Lenny was ready for such coaching. Option B is the correct answer.
A tried-and-true systematic process called leadership coaching can be used to evaluate and improve an executive's capacity for leadership within an organization. Option B is the correct answer.
Initiatives for smart leadership coaching provide quantifiable outcomes aimed at bringing revolutionary change across all levels of leadership in your business. There are several methods that senior leaders, executives, and high-potential employees may improve personal and corporate performance.
To execute successfully, successful leaders must possess a variety of diverse abilities and traits. They should be capable to aim clearly, stay arranged, encourage their teammates and quickly adjust to new situations. For contemporary businesses wanting to prosper in today's fast-paced, fiercely competitive business world, leadership coaching is a crucial tool.
Learn more about Leadership here:
https://brainly.com/question/1232764
#SPJ4
Eva invested in two stocks. She put 28% into stock A, which has an expected return of 9.9%, and the rest into stock B, with an expected return of 18.7%. What is the expected return of her portfolio? (Note: Round your answer to 3 decimal places. For example, if your answer is 8.7%, you should write 0.087 in the answer box. DO NOT write 8.7 in the box as you will be marked wrong).
Eva invested in two stocks. She put 28% of her investment in stock A, which has an expected return of 9.9%, and the remaining 72% of her investment in stock B, which has an expected return of 18.7%. Eva wants to calculate the expected return of her investment portfolio.
To solve this problem, we use the weighted average return of the stocks in which the investment is made. We can calculate the expected return of her portfolio using the following formula:Expected return of portfolio = (Weight of stock A * Expected return of stock A) + (Weight of stock B * Expected return of stock B)We know that the expected return of stock A is 9.9% and that stock A has a weight of 28%.
Therefore, the weight of stock B can be calculated as follows:Weight of stock B = 100% - Weight of st11ck AWeight of stock B = 100% - 28%Weight of stock B = 72%The expected return of stock B is 18.7%, which is the expected return of the remaining 72% of her investment.
Now, let's substitute all the values in the formula and solve for the expected return of her portfolio:Expected return of portfolio = (0.28 * 0.099) + (0.72 * 0.187)Expected return of portfolio = 0.02772 + 0.13464Expected return of portfolio = 0.16236
The expected return of her investment portfolio is 16.236% (rounded to 3 decimal places). Therefore, Eva can expect a return of 16.236% on her investment portfolio.
For more such questions on investment portfolio
https://brainly.com/question/29518759
#SPJ11
TRUE / FALSE. Question 1 Is the following statement true or false? Aggregate demand reduces when export falls. True False 3 pts
The statement "Aggregate demand reduces when export falls" is true,
Aggregate demand (AD) is a macroeconomic concept that refers to the total amount of goods and services that consumers, businesses, the government, and foreign buyers are willing to buy at a particular price level in a given period of time. AD is influenced by many factors, one of which is net exports (exports minus imports).
When exports fall, net exports decrease, and this reduces AD. This is because there is a reduction in the amount of goods and services that are being demanded, and this can lead to a reduction in economic output, which is the measure of the value of all goods and services produced within a country in a given period of time.
Learn more about aggregate demand https://brainly.com/question/15157098
#SPJ11
All the following statements are incorrect, except .
Select one: a. Financial ratios should be used in isolation b. Financial ratios aim to meet the needs of external users only c. Financial ratios are easy to interpret but difficult to calculate d. Financial ratios allow comparison and pinpoint some problem areas
Financial ratios provide a snapshot of the organization's performance. In most cases, financial ratios allow comparison, which can help to pinpoint areas of concern.
Financial ratios should be used together to create a more accurate picture of the organization's performance rather than in isolation. Financial ratios are essential for both internal and external stakeholders to evaluate an organization's financial status. Financial ratios are not easy to calculate, but they are simple to understand. Financial ratios aim to meet the needs of both internal and external stakeholders, not external users only.
The correct option is A, i.e., Financial ratios should be used in isolation. Financial ratios should not be used in isolation, but they should be used together to create a more accurate picture of the organization's performance. Financial ratios are critical financial analysis tools that assess an organization's financial position. These ratios assess a firm's liquidity, profitability, and solvency. Financial ratios provide insights into how a company manages its financial resources and generates profit.
To know more about ratios visit:
https://brainly.com/question/13419413
#SPJ11
Financial statement data for years ending December 31 for Newton Company follow: 20Y9 20Y8 Cash (end of year) $25,500 $24,250 Short-term investments (end of year) $8,270 $9,460 Operating expenses $60,135 $63,780 Depreciation expense $13,225 $11,400 Determine the days' cash on hand for 20Y8 and 20Y9. Round all calculations to one decimal place.
The days' cash on hand for 20Y8 is approximately 0.0014 days, and for 20Y9, it is approximately 0.0015 days.
To decide the days' money available for 20Y8 and 20Y9, we really want to work out the normal day to day cash in light of the money and momentary ventures toward the year's end and the working costs.
Days' Money Close by (DCH) recipe: Normal Everyday Money = (Money + Transient Speculations)/365
For 20Y8:
Normal Everyday Money = ($24,250 + $9,460)/365
Normal Everyday Money = $33,710/365
Normal Everyday Money ≈ $92.38
DCH 20Y8 = Normal Everyday Money/Working Costs
DCH 20Y8 = $92.38/$63,780
DCH 20Y8 ≈ 0.0014
For 20Y9:
Normal Everyday Money = ($25,500 + $8,270)/365
Normal Everyday Money = $33,770/365
Normal Everyday Money ≈ $92.49
DCH 20Y9 = Normal Everyday Money/Working Costs
DCH 20Y9 = $92.49/$60,135
DCH 20Y9 ≈ 0.0015
In this manner, the days' money available for 20Y8 is roughly 0.0014 days, and for 20Y9, it is around 0.0015 days. This shows the quantity of long periods of money accessible to cover the organization's working costs.
To learn more about days' cash on hand, refer:
https://brainly.com/question/15582149
#SPJ4
Sen Click Submit to complete this insessment Question 16 4 points On Dec 31, 2020, ABC Corp issued 4-year, 7% bonds with $3,000,000 as par value ABC Corp. received $3,360,000 in cash. The bond interes
ABC Corp issued [tex]3,360[/tex] bonds, the annual interest payment is [tex]\$140[/tex] per bond, and the journal entry recorded the bond issuance.
On December [tex]31, 2020[/tex], ABC Corp issued [tex]\$3,000,000[/tex] par value 4-year, [tex]7\%[/tex] bonds and received [tex]\$3,360,000[/tex] in cash. The bond interest payable is semi-annually with a face value of [tex]\$1,000[/tex]. To determine the number of bonds issued, divide the total cash received by the par value per bond, resulting in [tex]3,360[/tex] bonds. The annual interest payment to bondholders can be calculated by multiplying the semi-annual interest payment by [tex]2[/tex], as the interest is paid twice a year. Thus, ABC Corp must pay [tex]\$140[/tex] annually to each bondholder. The journal entry to record the bond issuance on December [tex]31, 2020[/tex], includes debiting Cash for [tex]\$3,360,000[/tex], crediting Bonds Payable for [tex]\$3,000,000[/tex], and crediting Premium on Bonds Payable for the remaining [tex]\$360,000[/tex].In conclusion, ABC Corp issued [tex]3,360[/tex] bonds with a par value of [tex]\$3,000,000[/tex] and received [tex]\$3,360,000[/tex] in cash. The annual interest payment to bondholders is [tex]\$140[/tex] per bond. The journal entry on December [tex]31, 2020[/tex], recorded the issuance of bonds by debiting Cash for [tex]\$3,360,000[/tex], crediting Bonds Payable for [tex]\$3,000,000[/tex], and crediting Premium on Bonds Payable for [tex]\$360,000[/tex].
For more such questions on annual interest :
https://brainly.com/question/31261623
#SPJ11
All of the following are essential components of a formal anti-money laundering program EXCEPT A) an independent audit function B) an accreditation program C) an employee training program D) policies, procedures, and internal controls for detecting and preventing money laundering
All of the following are essential components of a formal anti-money laundering program EXCEPT an accreditation program. The anti-money laundering program has become mandatory for various financial institutions, including banks, credit unions, investment firms, money service businesses, and others. The correct answer is option- A,C and D.
An effective AML program is comprised of various components, including customer identification and due diligence, employee training, policies, procedures, and internal controls, and an independent audit function to ensure the adequacy of the program. An anti-money laundering program should contain the following:Customer Identification and Due Diligence:
A risk-based program must be implemented to identify and verify customer identities. Companies must keep records of customer identification and the methods used to verify their identities.Employee Training: The employees must receive ongoing training to identify and report suspicious activity as well as to comply with the law's requirements.Policies, Procedures, and Internal Controls:
Companies must develop, implement, and enforce internal policies, procedures, and controls to detect and prevent money laundering.Independent Audit Function:
The effectiveness of an AML program must be independently audited periodically by qualified auditors or the company's internal audit function to ensure the program is adequate and effective.
An accreditation program is not an essential component of a formal anti-money laundering program. Instead, financial institutions can join a regulatory agency's voluntary compliance program to obtain regulatory assistance and reduced penalties in the event of non-compliance.
Therefore, the correct answer is option- A,C and D.
For more question on policies
https://brainly.com/question/11669632
#SPJ8
What is the present value of the following set of cash flows, discounted at 14.8% per year? 2 Year CF 1 $110 -$110 The present value of the cash flow stream is $ (Round to the nearest cent.) CIT 3 $209 -$209
The present value of the cash flow stream is $12.57 (rounded to the nearest cent).
How to determine the present valueWe can use the formula to calculate the present value of the cash flows.:
Present Value = [tex]CF1 / (1 + r)^1 + CF2 / (1 + r)^2[/tex]
where CF1 and CF2 are the cash flows, and r is the discount rate.
In this case, the cash flows are as follows:
CF1 = $110
CF2 = -$110
The discount rate is 14.8% per year, which can be expressed as a decimal as 0.148.
We can now enter the following values into the formula:
Present Value =[tex]\\$110 / (1 + 0.148)^1 + (-$110) / (1 + 0.148)^2[/tex]
Calculating this expression, we find:
Present Value = $110 / 1.148 + (-$110) / 1.321504
Simplifying further:
Present Value = $95.87 - $83.30
Present Value = $12.57
Therefore, the present value of the cash flow stream is $12.57 (rounded to the nearest cent).
Learn more about present value at https://brainly.com/question/20813161
#SPJ4
Last month when Holiday Creations, Incorporated, sold 41,000 units, total sales were $164,000, total variable expenses were $124,640, and fixed expenses were $39,200. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase sales volume by 375 units and total sales by $1,500? (Do not round intermediate calculations.) 1. Contribution margin ratio % 2. Estimated change in net operating income
1) The company's contribution margin (CM) ratio is 24.08%
2) The estimated change in the company's net operating income is $364.125.
1. The company's contribution margin (CM) ratio is:
CM ratio = (Total Sales - Total Variable Expenses) / Total Sales
CM ratio = ($164,000 - $124,640) / $164,000
CM ratio = 0.2408 = 24.08%
2. The estimated change in the company's net operating income can be calculated by using the following formula:
Estimated change in net operating income = (Contribution Margin x Additional units sold) + Original Net Operating Income
Where:
Contribution Margin = Total Sales - Total Variable Expenses
Contribution Margin per unit = Contribution Margin / Number of units sold
Original Net Operating Income = Total Sales - Total Variable Expenses - Fixed Expenses
Contribution Margin per unit = Contribution Margin / Number of units sold
Contribution Margin per unit = ($164,000 - $124,640) / 41,000 units = $0.97 per unit
Original Net Operating Income = $164,000 - $124,640 - $39,200 = $0.00
Estimated change in net operating income = ($0.97 x 375) + $0.00 + $1,500
Estimated change in net operating income = $364.125
Learn more about contribution margin at:
https://brainly.com/question/16928763
#SPJ11
Sky Tracker Corporation manufactures a telecommunications device. During its first year of operations, the company started and completed 50 devices at a cost of $60,000 per unit. Of these, 48 were sold for $100,000 each and two remain in finished goods Inventory. In addition, the company had six partially completed units in its factory at year-end. Total costs for the year (summarized alphabetically) were as follows Direct materials used Direct labor Income tax expense General and administrative expenses Manufacturing overhead Selling expenses $ 771,000 826,000 100,000 500,000 1,630,000 500,000 es Required: a. Compute the total manufacturing costs charged to work in process for the current year. b. Compute the cost of finished goods manufactured for the current year. c. Compute the cost of goods sold for the current year. d. Compute the gross profit on sales and net income for the current year. e. Compute the dollar value of ending inventories of (1) work in process and (2) finished goods for the current year. Total manufacturing costs charged to work in process for the current year. b. Cost of finished goods manufactured Cost of goods sold Gross profit on sales Net Income $ 3.227.000 $ 3.000.000 $ 2.880,000 $ 1,920.000 d
The total manufacturing costs charged to work in process for the current year amount to $3,227,000. This includes the direct materials used ($771,000), direct labor ($826,000), and manufacturing overhead ($1,630,000) expenses.
The cost of finished goods manufactured for the current year is $3,000,000. This cost is derived from the 50 completed devices manufactured at a cost of $60,000 per unit. The cost of goods sold for the current year is $2,880,000. This includes the cost of the 48 devices sold at $100,000 each.
The gross profit on sales for the current year is $1,920,000, which is calculated by subtracting the cost of goods sold ($2,880,000) from the sales revenue of the 48 devices ($100,000 per device). The net income for the current year is also $1,920,000, as there is no mention of other expenses or income apart from the costs provided.
The dollar value of ending inventories is as follows: (1) The work in process inventory has a value of $500,000, which includes the six partially completed units in the factory. (2) The finished goods inventory has a value of $200,000, representing the cost of the two unsold devices remaining.
Learn more about manufacturing costs here:
https://brainly.com/question/21306513
#SPJ11
To gain a distinction grade you must choose a organisation with which you are famili ar. Using your chosen organisation, you are required to produce a further section to th e guide that: • Reviews t
To achieve a distinction grade, one must select an organization with which they are familiar and generate an additional segment to the guide that examines the organisation's ability to interact with its internal and external stakeholders.
In this context, the company's ability to collaborate with internal and external stakeholders is critical to its success. The internal stakeholders include personnel, management, and board members, while the external stakeholders include clients, partners, suppliers, regulators, and other entities that the company interacts with.
In addition, effective collaboration with internal and external stakeholders is essential for ensuring that the company's decision-making processes are inclusive, resulting in high-quality decisions that account for diverse perspectives. As a result, it is critical to examine the firm's internal and external collaboration initiatives in order to better understand the company's ability to operate efficiently and sustainably.
An organization that is effective in collaborating with both its internal and external stakeholders is more likely to be successful, efficient, and able to take advantage of market opportunities. Furthermore, successful internal and external collaboration will aid in the development of a positive reputation for the organisation.
To know more about distinction grade visit:
https://brainly.com/question/32051028
#SPJ11
Jim is considering buying one of the following tractors for use in his farm: Tractor Estimated lifespan (years) Purchase price Annual maintenance cost A B 12 6 $50,000 $31,000 $4,400 $5,500 Maintenance costs are assumed to be paid at the end of each year within the tractor's estimated lifespan. The cost of capital is 8% per annum. (a) Calculate the equivalent annual costs (EACs) of the two tractors, and show that Jim should purchase tractor A based on this criterion.
(b) It is known that buyers of tractor B can optionally purchase one of the following protection plans (at the time of tractor purchase): • Gold Warranty Plan: Provides protection of the tractor for at most 8 years from the date of purchase. • Platinum Warranty Plan: Provides protection of the tractor for at most 10 years from the date of purchase. Should a Warranty Plan be purchased, it is assumed that the estimated lifespan of tractor B will lengthen to the respective protection period, and maintenance costs will be payable until the end of the protection period. Based on the EAC criterion, calculate the price for each of the two Warranty Plans, below which it will be better for Jim to purchase tractor B instead.
Jim should purchase tractor A as its EAC is lower than that of tractor B. However, if the price of the Gold Warranty Plan is lower than $11,686 or the price of the Platinum Warranty Plan is lower than $9,928, it would be more advantageous for Jim to purchase Tractor B instead.
(a) To calculate the equivalent annual costs (EACs) of the tractors, we need to consider the purchase price, annual maintenance costs, estimated lifespan, and the cost of capital. The EAC formula is given by:
EAC = (Purchase Price - Salvage Value) / Annuity Factor + Annual Maintenance Cost
Where:
Annuity Factor = (1 - (1 + r)^(-n)) / r
r is the cost of capital (8% per annum) and n is the estimated lifespan of the tractor.
For tractor A:
Purchase Price = $50,000
Annual Maintenance Cost = $4,400
Estimated Lifespan = 12 years
Using the formula, the Annuity Factor for tractor A is calculated as follows:
Annuity Factor = (1 - (1 + 0.08)^(-12)) / 0.08 ≈ 7.536
EAC for tractor A:
EAC = ($50,000 - 0) / 7.536 + $4,400 ≈ $11,219
For tractor B:
Purchase Price = $31,000
Annual Maintenance Cost = $5,500
Estimated Lifespan = 6 years
Using the formula, the Annuity Factor for tractor B is calculated as follows:
Annuity Factor = (1 - (1 + 0.08)^(-6)) / 0.08 ≈ 4.623
EAC for tractor B:
EAC = ($31,000 - 0) / 4.623 + $5,500 ≈ $12,375
Comparing the EACs, we can see that the EAC for tractor A is lower than the EAC for tractor B. Therefore, based on the EAC criterion, Jim should purchase tractor A.
(b) To determine the price for each Warranty Plan below which it is better for Jim to purchase tractor B, we need to calculate the EACs with extended lifespans for tractor B.
For the Gold Warranty Plan with a protection period of 8 years:
Annuity Factor = (1 - (1 + 0.08)^(-8)) / 0.08 ≈ 5.747
EAC for tractor B with Gold Warranty:
EAC = ($31,000 - 0) / 5.747 + $5,500 ≈ $11,686
For the Platinum Warranty Plan with a protection period of 10 years:
Annuity Factor = (1 - (1 + 0.08)^(-10)) / 0.08 ≈ 7.536
EAC for tractor B with Platinum Warranty:
EAC = ($31,000 - 0) / 7.536 + $5,500 ≈ $9,928
Now we compare the EACs of the Warranty Plans with the EAC of tractor A ($11,219). If the price of the Gold Warranty Plan is lower than $11,686 or the price of the Platinum Warranty Plan is lower than $9,928, it will be better for Jim to purchase Tractor B instead.
To learn more about Warranty
https://brainly.com/question/31473485
#SPJ11
What two factors are best considered when establishing the Sprint length? (Choose two.)
A. The organization has mandated similar length sprints.
B. The level of uncertainty over the technology to be used.
C. The frequency at which team formation can be changed.
D. The risk of being disconnected from the stakeholders.
The two factors that are best considered when establishing the Sprint length are:
B. The level of uncertainty over the technology to be used: The complexity and uncertainty surrounding the technology or product being developed can impact the Sprint length. If the technology is new or there are significant unknowns, shorter Sprints may be preferred to allow for more frequent feedback and adaptation.
D. The risk of being disconnected from the stakeholders: The Sprint length should also take into account the need to engage and receive feedback from stakeholders. If there is a high risk of becoming disconnected from stakeholders over a longer period, shorter Sprints may be more suitable to ensure regular collaboration and alignment.
Factors A and C mentioned in the options are not directly related to determining the Sprint length. The organization's mandate for similar length sprints (Option A) may be a consideration but is not one of the best factors. The frequency at which team formation can be changed (Option C) is more relevant to the team dynamics and composition rather than determining the Sprint length.
Learn more about sprint length here:
https://brainly.com/question/30458057
#SPJ11
The following statement of financial position information is available for Oz bank. The amounts are measured in thousands of dollars and the duration is measured in years.
Item
Present Value
($ thousands)
Duration
(years)
90-day bank bill
100
0.2
Treasury notes
50
0.45
Commonwealth Government bonds
50
4.0
Variable rate mortgage loans
10000
0.07
Fixed rate loans
3000
3.5
Deposits
9000
0.7
CDs
3000
1.0
Equity
1200
What is the average duration of assets?
Select one:
a.
0.86686 years
b.
1.55 years
c.
0.01837 years
d.
1.64 years
The average duration of assets is 0.86686 years which is option A for statement of financial position information.
The average duration of assets is 0.86686 years. Duration is used in finance to refer to the period of time it takes to recover the initial cost of an investment. If the investment does not generate revenue, the duration is the same as the investment's payback period. Given the following financial position information for Oz bank, the average duration of assets can be calculated.
The duration-weighted average of each item is as follows:
Duration-Weighted Average = [(Present Value of Each Asset x Duration of Each Asset) / Total Assets]
Total Assets = 100 + 50 + 50 + 10000 + 3000 + 9000 + 3000 + 1200 = 23100
Duration-Weighted Average = [(100 x 0.2) + (50 x 0.45) + (50 x 4.0) + (10000 x 0.07) + (3000 x 3.5) + (9000 x 0.7) + (3000 x 1.0) + (1200 x 0)] / 23100Duration-Weighted Average = 16.57 / 23100
Duration-Weighted Average = 0.0007161 years.
The average duration of assets is 0.86686 years. Therefore, the answer is a. 0.86686 years.
Learn more about assets:
https://brainly.com/question/30077916
#SPJ11
Auerbach Inc. issued 8% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $475 million The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 10% Assuming that Auerbach issued the bonds for $415,804,740, what interest expense would it recognize in its 2021 income statement?
To calculate the interest expense that Auerbach Inc. would recognize in its 2021 income statement, we need to determine the interest expense for the period from October 1, 2021, to December 31, 2021.
The effective interest rate established by the market is 10%, which means Auerbach Inc. will be paying interest at this rate on the bond's face value of $475 million.
The interest expense can be calculated using the following formula:
Interest Expense = Face Value of the Bonds * Effective Interest Rate * Time
Since the time period is from October 1, 2021, to December 31, 2021, which is a span of 3 months (1/4 of a year), we can calculate the interest expense as follows:
Interest Expense = $475,000,000 * 10% * (3/12)
= $475,000,000 * 0.10 * 0.25
= $11,875,000
Therefore, Auerbach Inc. would recognize an interest expense of $11,875,000 in its 2021 income statement.
To know more about expense visit-
brainly.com/question/20816124
#SPJ11
Assume market demand function is: P = 100 - 2Q
1) Find the price when Q = 20
2) Find the quantity sold in the market when P = $40
3) Calculate the consumer surplus at P = $40
4) Calculate the endpoint price elasticity of demand when price increases from $36 to $40
we can use these two values to calculate the endpoint price elasticity of demand:Endpoint price elasticity of demand = (% change in quantity demanded) / (% change in price)Endpoint price elasticity of demand = (-6.25) / 11.11Endpoint price elasticity of demand = -0.562
1. When Q = 20, the market price is:
Market demand function is: P = 100 - 2QSo, putting Q = 20 i
P = 100 - 2(20)P = 100 - 40P = $60
Therefore, the price when Q = 20 is $60.2.
When P = $40, the quantity sold in the market is:Market demand function is: P = 100 - 2Q So, putting P = $40 in above equation we get, $40 = 100 - 2Q2Q = 100 - 40Q = 60/2Q = 30Therefore, the quantity sold in the market when P = $40 is 30.
3. Consumer surplus at P = $40:To calculate the consumer surplus at P = $40, we need to find the area below the demand curve and above $40. The shaded area in the figure below represents consumer surplus:Therefore, consumer surplus at P = $40 is 1/2 * (70 - 40) * 30 = $450.
4. Endpoint price elasticity of demand when price increases from $36 to $40 Endpoint price elasticity of demand = (% change in quantity demanded) / (% change in price)(New price - Old price) / Old price * 100% change in price = (40 - 36) / 36 * 100% change in price = 11.11%
Next, let's calculate the percentage change in quantity demanded:Initial quantity demanded (Q1) can be calculated by putting P = $36 in the demand function:P = 100 - 2QP = 100 - 2(Q1)36 = 100 - 2(Q1)Q1 = 32So, the initial quantity demanded (Q1) is 32.
Using the same process, we can calculate the new quantity demanded (Q2) when P = $40:40 = 100 - 2(Q2)Q2 = 30Therefore, the percentage change in quantity demanded is:% change in quantity demanded = (Q2 - Q1) / Q1 * 100% change in quantity demanded = (30 - 32) / 32 * 100% change in quantity demanded = -6.25%
Finally, we can use these two values to calculate the endpoint price elasticity of demand:Endpoint price elasticity of demand = (% change in quantity demanded) / (% change in price)Endpoint price elasticity of demand = (-6.25) / 11.11Endpoint price elasticity of demand = -0.562
For more question on demand
https://brainly.com/question/18550230
#SPJ8
Hind has extensive experience and knowledge in ergonomic product design. Though she is not a manager, she is often called on by product managers to offer advice on ergonomic features for new products. It can be said that Hind has _____________ power in ergonomic product design. Referent Transformational Behavioral Expert
Hind has expert power in ergonomic product design. Expert power is the influence one has on others by virtue of one’s perceived expertise on the subject matter at hand. It can be said that Hind has expert power in ergonomic product design because she possesses extensive experience and knowledge in this field.
As per the given information, Hind is not a manager, but she is often called on by product managers to offer advice on ergonomic features for new products. It indicates that Hind has significant knowledge and experience in ergonomic product design, and her opinions are valued by other managers. As such, she can influence their decision-making process when it comes to ergonomic product design, using her expert power. She is an expert in her field, and her input is valued.
Hind has expert power in ergonomic product design . She has extensive knowledge and experience in this area, and her opinions are sought after by product managers, who hold her in high esteem. Expert power is a critical aspect of leadership, and it can have a significant impact on an individual’s ability to influence others.
to know more about Ergonomic visit:
brainly.com/question/32735674
#SPJ11
Factors why people non-compliance tax for paying? (5 factors with examples)
The Five factors that contribute to non-compliance with tax laws are Rising or High Tax Burden, Lack of Knowledge of Tax Laws, Complexity of Tax Laws, Tax Evasion, and a Weak Tax System.
A Rising or High Tax Burden: Individuals and organizations will tend to be non-compliant with tax laws when the taxes are deemed to be high as compared with the cost of living.
Lack of Knowledge of Tax Laws: it focuses on the unintentional failure of a taxpayer to comply with tax laws. For example when a small or medium enterprise does not know that it is required to be registered and as such pay taxes for running the business.
The complexity of Tax Laws: low-income taxpayers who cannot afford to employ tax agents who could help to understand basic laws and even routine mathematical operations, and interpreting the tax tables may present problems.
Tax Evasion: The failure to declare taxable activity or income is known as Tax evasion.
Weak Tax System: This can also lead to intentional non-compliance with tax laws as taxpayers can utilize loopholes in the tax system.
To learn more about Tax:
https://brainly.com/question/30707595
#SPJ4
BC Corporation is considering replacing an existing machine with a new machine. The new machine can be purchased for $15 million and shipping and installation costs are another $500,000. The new machine will also require an initial $2 million investment in net operating working capital. The current after tax selling price of the existing machine is $3 million. What is the initial investment outlay (year zero cash flow) if the new equipment is purchased? O a. $15.5 million b. $14.5 million c. $17.5 million d. Cannot be determined from the information e. $17 million
The initial investment outlay (year zero cash flow) if the new equipment is purchased is $17.5 million. Option C is the correct answer.
To calculate the initial investment outlay, we need to consider the cost of the new machine, shipping and installation costs, and the initial investment in net operating working capital. The cost of the new machine is $15 million, and the shipping and installation costs are an additional $500,000. Therefore, the total cost of the new machine and associated expenses is $15.5 million.
In addition, the new machine requires an initial investment in net operating working capital of $2 million. Therefore, the initial investment outlay is $15.5 million + $2 million = $17.5 million.
Hence, the correct answer is option C, $17.5 million.
You can learn more about investment at
https://brainly.com/question/29547577
#SPJ11
explain the balance score card of loblow.
The balanced scorecard is a performance measurement tool that focuses on various business perspectives like financial, customer, internal processes, and learning and growth perspectives. This tool gives an integrated view of the entire organization, and it helps in linking the long-term strategy with the day-to-day activities of the business.
The scorecard is customized to suit the unique requirements of the organization.The Loblaw Companies Limited is a Canadian supermarket chain, and they use the balanced scorecard to measure their performance and growth. Loblaw's balanced scorecard focuses on four perspectives, which are financial, customer, internal business, and learning & growth perspectives.The financial perspective of the balanced scorecard measures the financial performance of the company. It measures the profitability and financial stability of the company.
Loblaw's financial perspective focuses on sales growth, operating margins, and return on capital employed.The customer perspective of the balanced scorecard measures the level of satisfaction of the customers. It measures the loyalty of the customers and the level of customer retention. customer perspective focuses on customer satisfaction and loyalty.Internal business perspective of the balanced scorecard measures the operational performance of the company. It measures the efficiency of the processes and the level of innovation.
Loblaw's internal business perspective focuses on supply chain management and innovation.The learning and growth perspective of the balanced scorecard measures the ability of the organization to innovate and learn. It measures the level of employee satisfaction and retention. Loblaw's learning and growth perspective focuses on employee satisfaction and retention.The balanced scorecard is a comprehensive tool that Loblaw uses to measure their performance. This tool helps in integrating the short-term and long-term objectives of the company.
TO know more about measurement visit :
https://brainly.com/question/2107310
#SPJ11
explain what influences the effectiveness of monetary and fiscal
policy using appropriate diagrams.
The effectiveness of both monetary and fiscal policies can be influenced by the economic conditions, expectations, and other complex factors.
Monetary and fiscal policies are two key tools used by governments and central banks to influence the overall state of the economy. The effectiveness of these policies can be influenced by various factors. Let's explore these factors and their impact using appropriate diagrams.
1. Monetary Policy:Monetary policy refers to the actions taken by a central bank to regulate the money supply, interest rates, and credit availability. The effectiveness of monetary policy can be influenced by the following factors:
a) Interest Rate Elasticity of Investment and Consumption:
Monetary policy works through changes in interest rates to influence investment and consumption decisions. The effectiveness of monetary policy depends on the responsiveness of investment and consumption to changes in interest rates. If investment and consumption are highly sensitive to interest rate changes (elastic), monetary policy can be effective in stimulating or slowing down economic activity. The diagram below illustrates this relationship:
Investment and Consumption
|
↑ |
↓ Monetary Policy ↑
↓ |
|
Interest Rate
If the investment and consumption curves are steep (high elasticity), a change in interest rates will have a significant impact on these components, making monetary policy more effective. However, if the curves are flatter (low elasticity), monetary policy may have limited effectiveness in influencing investment and consumption.
b) Liquidity Trap:
In a liquidity trap, interest rates are already very low, and conventional monetary policy measures, such as reducing interest rates, become less effective. This situation occurs when individuals and businesses are reluctant to invest or spend even with low interest rates due to pessimistic economic expectations or uncertainty. The diagram below illustrates the liquidity trap:
Investment and Consumption
|
↓ |
↓ Monetary Policy ↓
↓ |
|
Interest Rate
In the liquidity trap, monetary policy may have limited effectiveness, as reducing interest rates further may have little impact on investment and consumption.
2. Fiscal Policy:Fiscal policy refers to government decisions regarding taxation and government spending to influence economic activity. The effectiveness of fiscal policy can be influenced by the following factors:
a) Multiplier Effect:
Fiscal policy has a multiplier effect, meaning that changes in government spending or taxation can lead to larger changes in aggregate demand. The effectiveness of fiscal policy depends on the size of the fiscal multiplier. A higher fiscal multiplier implies that a given change in government spending or taxation will have a larger impact on overall economic activity. The diagram below illustrates the multiplier effect:
Real GDP
|
↑ |
↑ Fiscal Policy ↑
↑ |
|
Government Spending or Taxation
If the fiscal multiplier is high, fiscal policy measures can have a significant impact on increasing or decreasing real GDP. Conversely, if the fiscal multiplier is low, the effectiveness of fiscal policy may be limited.
b) Crowding-Out Effect:
Fiscal policy can also be influenced by the crowding-out effect. When the government increases spending, it may borrow money, leading to increased demand for loans. This increased demand for loans can push up interest rates and crowd out private investment. The diagram below illustrates the crowding-out effect:
Investment
|
↓ |
↑ Fiscal Policy ↑
↑ |
|
Interest Rate
If the crowding-out effect is strong, increased government spending may lead to higher interest rates and reduce private investment, limiting the effectiveness of fiscal policy.
It's important to note that the effectiveness of both monetary and fiscal policies can be influenced by the economic conditions, expectations, and other complex factors. The diagrams provided here offer simplified illustrations of the key factors at play, but real-world scenarios can involve more intricacies and interdependencies.
To know more about monetary and fiscal policies, refer to the link below:
https://brainly.com/question/32465678#
#SPJ11
Each question is worth 10 marks. 1. Comment on the following statement: "Well-functioning money markets are very important in any market economy because they provide an efficient means for economic units to adjust their liquidity positions, and enable central banks to conduct monetary policy." 2. In what ways stock indices are useful to investors? What are the reasons for the rise of index funds and exchange traded funds (ETFs)? 3. Coles, one of the two giant supermarkets in Australia, sells in-house baked bread, cakes and pastry. Thus, it has to purchase a reasonable amount of wheat every month. Amid recent rising wheat prices, it is looking for a way to protect itself. Suggest TWO possible derivatives contracts for Coles to hedge against price risk. Which one would be the best for Coles? 4. Comment on the following statement: "For any country, especially a newly established country, or a country which just went through a war or a revolution, bonds and the bond market play a critical role in its nation building." 5. When facing complex and volatile market conditions, which heuristics financial market participants often apply to assist them with decision making? 6. Explain why Bitcoin and stablecoins could bring about financial instability.
Well-functioning money markets are essential in a market economy as they provide a mechanism for economic units to adjust their liquidity positions efficiently. They enable central banks to conduct monetary policy by influencing interest rates and managing liquidity.
Money markets facilitate borrowing and lending of short-term funds, allowing economic units to meet their financing needs. Overall, money markets play a crucial role in maintaining liquidity, stability, and effective monetary policy implementation in the economy.
1. The statement accurately highlights the importance of well-functioning money markets in a market economy. Money markets provide a platform for economic units to manage their liquidity needs efficiently. By facilitating the borrowing and lending of short-term funds, money markets enable economic units to adjust their liquidity positions and meet their financing requirements.
2. Stock indices serve as benchmarks that track the performance of a specific group of stocks or the overall stock market. They are useful to investors in several ways:
a) Performance measurement: Stock indices provide a reference point to evaluate the performance of individual stocks, mutual funds, or portfolios. Investors can compare their investment returns against the performance of relevant indices to assess the success of their investment strategies.
b) Market trends and sentiment: Stock indices reflect the overall market trends and investor sentiment. Changes in indices can provide insights into the broader market conditions and help investors make informed decisions about their investment allocations.
c) Diversification: Indices represent a basket of stocks from different sectors or regions, allowing investors to achieve diversification by investing in index funds or ETFs. This diversification helps reduce specific stock risks and potentially enhances overall portfolio stability.
The rise of index funds and ETFs can be attributed to their advantages such as low costs, ease of diversification, and ability to passively track specific indices.
3. Two possible derivatives contracts for Coles to hedge against price risk in wheat are:
a) Futures contracts: Coles can enter into futures contracts to lock in the price of wheat for future delivery. By buying futures contracts, Coles can hedge against potential price increases in wheat, ensuring a fixed purchase price for the agreed-upon quantity.
b) Options contracts: Coles can purchase put options on wheat as a form of price protection. Put options provide Coles with the right, but not the obligation, to sell wheat at a predetermined price (strike price) within a specified time period. If wheat prices rise, Coles can exercise the put options and sell at the higher strike price, offsetting the increased cost.
4. The statement is accurate in highlighting the critical role of bonds and the bond market in nation-building, especially for newly established countries or those recovering from wars or revolutions. Bonds and the bond market serve several crucial functions:
a) Financing infrastructure and development: Bonds allow governments to raise capital for investment in infrastructure projects, public services, and other development initiatives. By issuing bonds, countries can attract domestic and international investors to fund their nation-building efforts.
b) Attracting foreign investment: A well-developed bond market can attract foreign investors seeking fixed-income investments. This foreign investment can contribute to economic growth, currency stability, and increased liquidity in the financial markets.
c) Establishing creditworthiness: A vibrant bond market enables governments to establish a track record of responsible debt management and repayment.
d) Supporting monetary policy: Government
To learn more about interest rates refer here:
https://brainly.com/question/28236069#
#SPJ11
Utility = x1x2. P1 = 10 and P2 =5. Income (m) = $200. The original utility maximizing quantities are: x₁ = = 10 and x2 =20. If the price of x₁ increases to 15, the substitution effect will result
Utility = x₁x₂. P₁ = 10 and P₂ = 5. Income (m) = $200. The original utility-maximizing quantities are x₁ = 10 and x₂ = 20. If the price of x₁ increases to 15, the substitution effect will result in a new utility maximizing quantity of x₁ = 6.67, option a.
To determine the new utility maximizing quantity of x₁ after the price of x₁ increases to 15, we need to compare the changes in the marginal utilities and prices.
The marginal utility of x₁ is given by the partial derivative of the utility function with respect to x₁:
MU₁ = ∂U/∂x₁ = x₂
The marginal utility of x₂ is given by the partial derivative of the utility function with respect to x₂:
MU₂ = ∂U/∂x₂ = x₁
To maximize utility, the consumer will equate the ratio of marginal utilities to the price ratio:
MU₁ / P₁ = MU₂ / P₂
Substituting the given values:
x₂ / 10 = x₁ / 5
Cross-multiplying:
5x₂ = 10x₁
Simplifying:
x₂ = 2x₁
Given that the original utility maximizing quantities are x₁ = 10 and x₂ = 20, we can substitute x₁ = 10 into the equation to find the corresponding value of x₂:
x₂ = 2x₁ = 2(10) = 20
Now, we need to determine the new utility maximizing quantity of x₁ when its price increases to 15. We can use the same equation and substitute the new price and the value of x₂ we just found:
x₂ / 15 = x₁ / 5
Cross-multiplying:
5x₂ = 15x₁
Simplifying:
x₂ = 3x₁
Substituting x₂ = 20:
20 = 3x₁
Solving for x₁:
x₁ = 20 / 3 ≈ 6.67
Therefore, the new utility maximizing quantity of x₁ is approximately 6.67.
The correct answer is option (a) 6.67.
To learn more about utility: https://brainly.com/question/14729557
#SPJ11
Douglas pays Selena $43,900 for her 28% interest in a partnership with net assets of $125,600. Following this transaction, Douglas's capital account should have a credit balance of a. $43,900 Ob. $35,168 Oc. $125,600 Od. $12,292
To determine the credit balance of Douglas's capital account after paying Selena for her interest in the partnership, we need to calculate Douglas's capital account balance before the transaction and then adjust it accordingly.
The net assets of the partnership are given as $125,600, and Selena owns a 28% interest in the partnership. Therefore, Selena's share of the net assets can be calculated as:
Selena's share = 28% of net assets = 0.28 * $125,600 = $35,168
This means that Selena's interest is valued at $35,168.
Now, let's calculate the balance of Douglas's capital account before the transaction. Since Selena is selling her interest to Douglas, the total value of the partnership's net assets remains the same.
Douglas's capital account before the transaction = Net assets - Selena's interest
Douglas's capital account before the transaction = $125,600 - $35,168 = $90,432
Finally, we can determine the credit balance of Douglas's capital account after the transaction by subtracting the amount paid to Selena ($43,900) from the balance before the transaction:
Douglas's capital account after the transaction = Douglas's capital account before the transaction - Amount paid to Selena
Douglas's capital account after the transaction = $90,432 - $43,900 = $46,532
Therefore, the correct answer is:
c. $125,600
To know more about capital account balance here
https://brainly.com/question/29437564
#SPJ11
Consider the problem of a consumer who must choose between two types of goods, good 1 (x1) and good 2 (x2) costing respectively pı and p2 per unit. He is endowed with an income m and has a quasi-concave utility function u defined by u(x1, x2) = 5 1n X1 + 3 1n x2. 1. Write down the problem of the consumer. 2. Determine the optimal choice of good 1 and good 2, x1 = x1(P1, P2, m) and x2 = x2(P1, P2, m). 3. Find the optimal amounts of good 1 and good 2 the consumer will choose if p1 = 1, p2 = 3 and m = 10.
1. The consumer's problem is to maximize their utility subject to their budget constraint. The problem can be formulated as follows: Maximize: u(x1, x2) = 5ln(x1) + 3ln(x2)
Subject to: p1x1 + p2x2 ≤ m
2. To determine the optimal choice of goods 1 and 2, we need to solve the consumer's optimization problem. We can use the Lagrange multiplier method to solve this constrained optimization problem. The Lagrangian function is:
L(x1, x2, λ) = 5ln(x1) + 3ln(x2) + λ(m - p1x1 - p2x2)
Taking the first-order conditions:
∂L/∂x1 = 5/x1 - λp1 = 0
∂L/∂x2 = 3/x2 - λp2 = 0
∂L/∂λ = m - p1x1 - p2x2 = 0
Solving these equations simultaneously, we can find the optimal values of x1 and x2.
3. Given p1 = 1, p2 = 3, and m = 10, we can substitute these values into the equations obtained from the Lagrangian method to find the optimal amounts of goods 1 and 2.
From ∂L/∂x1 = 5/x1 - λp1 = 0:
5/x1 = λ
From ∂L/∂x2 = 3/x2 - λp2 = 0:
3/x2 = 3λ
From ∂L/∂λ = m - p1x1 - p2x2 = 0:
10 - x1 - 3x2 = 0
Substituting the value of λ from the first equation into the second equation:
3/x2 = 5/x1
Rearranging the above equation:
x2 = (3/5)x1
Substituting the above equation into the third equation:
10 - x1 - 3[(3/5)x1] = 0
10 - x1 - (9/5)x1 = 0
10 - (14/5)x1 = 0
x1 = (5/14) * 10
x1 = 25/7
Substituting the value of x1 into x2 equation:
x2 = (3/5)(25/7)
x2 = 75/35
Therefore, the optimal amounts of goods 1 and 2 that the consumer will choose when p1 = 1, p2 = 3, and m = 10 are x1 = 25/7 and x2 = 75/35, respectively.
To know more about Lagrange multiplier visit-
brainly.com/question/30776684
#SPJ11