The forward contract's initial value is 50.01 and its forward price is 1.9540.
Forward Contract: What is it?A forward contract is a sort of derivative in which the underlying asset is sold at a defined price and at a later time. The contract includes the writer and the buyer as the two parties. Interest, currency exchange rates, metal, stocks, etc. are examples of the underlying asset in a derivative contract.
Given:
Dividend = $1 per share
Stock price = $50
Risk-free rate = 8% per annum
Present value of income from security= ( dividend X [tex]e^{-risk- free interest rate X \frac{2}{12} }[/tex]) + (dividend X [tex]e^{-risk- free rate X \frac{5}{12} }[/tex] )
= ( 1 X [tex]e^{-0.08 X \frac{2}{12} }[/tex] ) + (1 X [tex]e^{- 0.08 X \frac{5}{12} }[/tex] )
= (1 X 0.98676) + (1 x 0.96722)
= 0.98676 + 0.96722
= 1.9540
Forward Price = (stock price - present value of income from security) X [tex]e^{- risk - free rate X \frac{6}{12} }[/tex]
= ( 50- 1.9540) X [tex]e^{-0.08 X \frac{6}{12} }[/tex]
= 48.046 X 1.041
= 50.01
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when interest is compounded continuously: a) the cash flow must also occur continuously. b) the cash flow must be converted into continuous cash flow. c) the interest rate must be converted into an annual rate. d) none of the abov
The correct answer is d. When interest is compounded continuously the cash flow may not occur continuously.
Compound interest, often known as interest on principal and interest, is the adding of interest to the loan or deposit principal. Reinvesting interest, or restoring it to the lent capital instead of paying it out or requiring payment from the borrower, results in interest being earned on the principal amount plus already accumulated interest in the next period. In finance and economics, compound interest is common. In contrast to simple interest, which does not compound since past interest is not applied to the principal for the current period, compound interest allows interest to build over time.
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a company had net sales of $29,800 and accounts receivable of $4,400 for the current period. its days' sales uncollected equals: (use 365 days a year.)
Days' sales uncollected means the average collection period. It means how many days are required to collect the cash for its sales.
This can be calculated using two items which are account receivables and net sales. Account receivables are the proceeds of payment to be received from customers who have been sold goods on credit. Net sales are the gross sales minus returns, discounts and interests.
In this ques, days' sales uncollected equals 53.874 days which is approximately 54 days.
It is given that the net sales of the company are $29800 and account receivables are $4400.
Days' sales uncollected can be calculated as:
= (AR÷NS)×365
where, AR= Account receivables
NS = Net Sales
In this ques,
AR = $4400
NS = $29800
Thus,
Days' sales uncollected = (AR÷NS)×365
= (4400÷29800)×365
= 0.1476 ×365
= 53.874
Thus, days' sales uncollected equals 53.874 days which is approximately 54 days.
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modcloth inc. offers an unconditional return policy. it normally expects 2% of sales at retail selling prices to be returned before the return period expires. assuming modcloth records total sales of $10 million for the current period, what amount of net sales should it record for this period?
The amount of net sales it should record is $9,800,000 if the total sales are $10 million.
The net sales can be described as the total sales minus returns and discounts. In this case, the formula for net sales can be given as;
Net sales = Total sales - return
As the expected return of this company is 2%, we first calculate the expected amount of returns from the total sales of $10 million.
Return = 2% of $10,000,000
Return = (2/100) × 10,000,000
Return = 0.02 × 10,000,000
Return = $200,000
Now by using subtraction, we calculate the net sales as follows;
Net sales = $10,000,000 - $200,000
Net sales = $9,800,000
Therefore, the amount of net sales it should record for this period is calculated to be $9,800,000
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The health benefits tom receives from his employer cover 43% of the total monthly premium of $345.00. how much does tom have to pay each month? a. $148.35 b. $196.65 c. $302.00 d. $288.00 please select the best answer from the choices provided a b c d
The health benefits Tom receives from his employer cover 43% of the total monthly premium of $345.00 is $196.65 . option B is correct.
The medical supplies or services that a health insurance plan covers. The health insurance plan's coverage documents outline covered benefits and disallowed services. Inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and other things are among them. Certain programs offer more services. Plans must cover children's dental expenses. Adult dental insurance is an optional benefit .the monthly premium you pay for health insurance. In addition to your monthly premium, you often have to pay a deductible, copayment, and coinsurance for your medical care. A premium tax credit may be able to help you save money if you have a Marketplace health plan.
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According to the digital disconnect and the lecture, the global digital divide is the result of _____.
According to Digital Disconnect, the global digital divide is the result of the hyper-commercialization of Internet development that only serves affluent populations/groups.
The Digital Disconnect refers to experts' examination of current theory, research, and practice in socio-digital inequality. The Digital Disconnect provides a thorough analysis of capitalism's exploitation of the Internet. As per the Digital Disconnect, it is the hypercommercialism of mainstream computing technologies that causes the global digital divide. The global digital divide refers to global discrepancies, particularly between developing countries, and developed in access to computing and information resources such as the Internet, as well as the opportunities that such access provides.
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yoko bought a desktop computer and a laptop computer. before finance charges, the laptop cost more than the desktop. she paid for the computers using two different financing plans. for the desktop the interest rate was per year, and for the laptop it was per year. the total finance charges for one year were . how much did each computer cost before finance charges?
Each computer cost before finance charges could be simply calculated by simple interest rate. If we are not very sure how they want you to calculate the finance charges, but if it's just simple interest then the answer could be find out by:
Suppose, Let D = cost of desktop
Then L = cost of laptop = D + (whatever the cost of the laptop is)
Putting the values for the cost of desktop and laptop , the cost before finance charges is easy to obtain with the specific amount of interest rate(that should be given). If the cost of the laptop is low as compared to computer desktop, we would prefer laptop.
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north company budgets overhead costs for the next year of $5,240,000 for indirect labor and $550,000 for factory utilities. the company uses machine hours as its overhead allocation base. if 150,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?
The company's plantwide overhead rate is calculated to be $38.60 per machine hour.
The company's plantwide overhead rate can be calculated by dividing the sum of overhead costs of indirect labor and factory utilities by the total machine hours planned for the next year. As the overhead cost of indirect labor is $5,240,000 and the overhead cost of factory utilities is $550,000; the plantwide overhead rate can be calculated as follows;
plantwide overhead rate = (overhead cost of indirect labor + overhead cost of factory utilities) ÷ machine hours
plantwide overhead rate = $5,240,000 + $550,000 ÷ 150,000
plantwide overhead rate = 5,790,000 ÷ 150,000
plantwide overhead rate = 38.60
Therefore, the plantwide overhead rate is calculated to be $38.60 per machine hour.
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a company purchased a computer system at a cost of $30,000. the estimated useful life is 6 years, and the estimated residual value is $9,000. assuming the company uses the double-declining-balance method, what is the depreciation expense for the second year?
The depreciation expense using double -declining method of computer who have life of 6 years is $9,702.
Given information,
Cost of asset = $30,000
Time period = 6 years
Residual value = $9,000
Rate of depreciation = 1/ useful life*100
= 1/6*100
= 16.67%
Depreciation using double -declining method = 2* cost of asset*
*Depreciation rate
Depreciation value = 2*$30,000* 16.17% = 9,702
Depreciation is an accounting technique for spreading out the expense of a tangible item over the course of its useful life. How much of an asset's value has been used is shown through depreciation. It enables businesses to purchase assets over a predetermined length of time and generate income from those assets.
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in a complicated negotiated, minmetals in china agreed to purchase at least 24,000 tons of copper cathode for $35 million from pasar in the philippines. according to the terms of the sale, pasar will provide at least $12 million worth of coal to a chinese power company that will provide the electricity needed to operate minmetals. this is an example of a(n):
Passer will provide at least $12 million in coal to a Chinese power company that will provide the electricity required to operate the minmetals, according to the terms of the sale. This is an illustration of a(n): countertrade
What is countertrade?Countertrade refers to the exchange of goods or services for which payment is made in whole or in part with other goods or services rather than with money. A monetary valuation, on the other hand, can be used in countertrade for accounting purposes. The term bilateral trade refers to transactions between sovereign states. Countertrade is a type of reciprocal international trade in which goods or services are exchanged for other goods or services rather than hard currency. This type of international trade is more common in developing countries that have limited access to foreign exchange or credit.
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Do not recall password and i am not receiving password reset email. i wish to cancel my subscription and not be charged now that i am done with school.
In case you did no longer request to acquire those password reset emails, the high-quality route of action is to disregard them.
With software being utilized in so many regions of lifestyles, it is not unusual now to acquire a password reset notification without inquiring for it.
That may be due to a simple typo or someone genuinely trying to advantage get the right of entry to a person else's account. it is able to be puzzling—even alarming—to acquire these emails.
If a person maintains trying to request a password reset, your e-mail address can be fetched through malware, phishing emails, or attacking internet sites.
Run anti-virus/anti-malware scans in your laptop. make certain not to submit your electronic mail cope with publicly or subscribe to suspicious internet pages.
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one of the advantages of the matrix structure is: group of answer choices the ability to balance conflicting objectives higher performance flexibility teamwork all of these
A matrix structure has the advantage of "providing flexibility, enhanced cooperation, and creativity," according to technical and organizational theory.
What exactly is matrix structure?Matrix Structure is a term used to describe the organizational method of establishing a firm's business in which reporting relationships are established in a grid or matrix style rather than the usual conventional hierarchy.The matrix structure is known to have many advantages because it allows the company to make the best use of the resources it has rather than looking outside the company for more expertise and recruiting employees from outside the organization.Matrix Structures of Various Types
Matrix Structure Flaw .Matrix Structure that is Balanced .Matrix Structure that is Strong .To learn more about matrix structure refer to :
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enter's insurance would include coverage for: group of answer choices flood damage. personal property. house and other structures. umbrella liability. earthquake damage.
Personal property.
Three fundamental categories of protection are covered by renters insurance, often known as tenants insurance: Personal possessions. Liability. Additional costs of living.
Of the following, which one is not protected by renter's insurance?Major weather catastrophes like earthquakes, landslides, sinkholes, and floods are not covered by renters insurance. In addition, if your roommate is not a named insured on the policy, the policy will not provide coverage for pest infestations (including bed bugs) or for your roommate's belongings.Renters' contents insurance covers the costs of replacing any stolen or damaged objects covered by the policy, protecting your things against theft and damage from fire, flood, storms, subsidence, burst pipes, and water leaks.Three fundamental categories of protection are covered by renters insurance, often known as tenants insurance: Personal possessions. Liability. Additional costs of living.To learn more about Renters insurance refer to:
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what amount would a person with actual cash value coverage receive for two-year-old furniture destroyed by a fire? the furniture would cost $11,000 to replace today and had an estimated life of five years.
A individual with actual cash value coverage would get $6,600 for two-year-old furniture that was destroyed in a fire.
How would you define insurance?Risk management uses insurance as a tool. By purchasing insurance, you protect yourself from unanticipated financial losses. The insurance provider pays you or a person of your choosing if something unfavorable happens to you.
What are insurance premium payments?The money that a person or company spends on an insurance policy is known as the insurance premium. Payment of premiums is required for health, life, vehicle, and home insurance. Once the premium has been collected, it is given to the insurance provider.
In the given query,
Insurance payment = Replacement cost - Depreciation
= $11,000 - [($11,000 / 5) × 2]
= $11,000- $4,400
= $6,600
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the owner of the company in which you work is dominant, self-confident, convinced of the moral righteousness of her beliefs, and able to inspire a sense of excitement and adventure in employee followers. she is known as a(n) leader.
The owner of the company in which your work who is dominant, self-confident, convinced of the moral righteousness of her beliefs, and able to inspire a sense of excitement and adventure in employee followers will be known as a charismatic leader.
A charismatic personality can be described as a personality that is highly willpower, magnetic, self-empowered depicting high levels of confidence.
In the scenario above, the characteristics mentioned for the owner of a company are all charismatic as they make the owner more likable and produce a sense of respect for her within you.
We will say that the owner of the company will have a charismatic personality as she is confident and believes in moral rights and also inspires others.
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under which conditions will an investor demand a larger return (yield) on a bond? multiple choice the bond issue is upgraded from a to aa. the bond issue is downgraded from a to bbb. interest rates decrease due to decline in inflation. none of the conditions will cause an increase in the bond's yield.
When a bond issue is downgraded from A to BBB, an investor will demand a higher return (yield).
What is demand?The quantity of a good that consumers are willing and able to purchase at various prices at any given time is referred to as demand. The demand curve is the relationship between price and quantity demand. Demand is simply a consumer's desire to purchase goods and services without hesitation and pay the price for them. Simply put, demand is the number of goods that customers are ready and willing to purchase at various prices during a given time period. For example, if a hungry consumer purchases a slice of pizza, the first slice will provide the most benefit or utility. Each additional slice increases consumer satisfaction while decreasing utility.To learn more about demand, refer to:
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cary allows kail to access his land locked property by using a road that cuts across cary's land. kail paid cary $1000 for the use of the road and can use it whenever he wants. this arrangement is generally known as:
This arrangement is generally known as an easement.
What is an easement?
An easement is a non-possessive right to access and/or utilize another person's real property without actually owning it. The most typical easements are affirmative ones. They permit exclusive usage of privately owned property. Positive easements are less lenient. They restrict the usage of land.
All easements, limitations, and covenants, both positive and negative can run with the land and bind all future owners of the subject real estate. An easement by deed, if granted from a freehold or leasehold estate, will function as a legal interest in land, but only once it has been recorded on the title at the Land Registry. The easement will be effective as an equitable right up until the registration is finished.
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three years ago, suzanne bought a new personal automobile for $26,900. this year, she sold it for $19,000. what is the amount and character of suzanne's recognized loss?
No loss was recorded when a personal asset was sold.
According to the exclusion rule, money that cannot be utilized to buy food or shelter is not taxable.
Of the following, which is not considered gross income?Income from municipal bond income, child support, life insurance death benefit money, and welfare are all excluded from the IRS's determination of your income tax. According to the exclusion rule, money that cannot be utilized to buy food or shelter is not taxable.Itemized deductions are particular costs borne by the taxpayer that may lower taxable income. Mortgage interest, state or local income taxes, property taxes, medical or dental expenses in excess of AGI restrictions, and charitable contributions are examples of itemized deductions.The costs you incurred for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, and disaster losses are all included in itemized deductions.To learn more about Gross income refer to:
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How often do loans involve risk
A: Never
B: Always
C: Sometimes
D: Frequently
Loans are known to involve risk all of the time that money is to be lend out. Option B
What is a loan?This is the term that is used to refer to the amount of money that is given to a person that is to act as a lender with the hope that the money is to be returned in a later date which is agreed by the parties that are involved and that the person may have to pay an interest rate on the amount that hey have been lent.
The loans that a person receives is one that is knwon to come with a risk. This is the reason why the loans are sometimes given after the borrower has agreed to a collateral that would suit the person that is lending.
The goal is that the person would receive the collateral that they have used to obtain the loan after they have paid off the loan back to the person that they borrowed it from.
Hence from the explanation that we have here, we can agree that the loan is known to always come with its risks.
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in the first half of the nineteenth century, when prospective entrepreneurs obtained bank loans to finance their new ventures, the loans were issued in the form of
In the first half of the nineteenth century, when the prospective entrepreneurs obtained bank loans to the finance their new ventures, loans were issued in the form of Bank Notes
What is a Bank Note?Bank note refers to a negotiable note in which one party can pay a specific amount of money to another party. It is payable on the bearer's demand.
Before the emergence of modern societies people used to used valuable objects such as gold and silver to pay for goods and services through the system of barter. Later paper money and coins replaced these physical asserts as the medium of currency. At present only the government issues banknotes. Although earlier the commercial banks also issued bank notes, Presently the Reserve bank issues the bank notes and mint money . Bank notes have natural advantage than coins as they are lighter and easy to carry but they are less durable than coins. Bank notes are created with high security features like security thread and optically variable ink. The creator of paper currency is China, as the first paper money was issued in the form of receipts during the dynasty of Tang in the 7th Century. Presently the US Bureau of Engraving and Printing prints the Federal Reserve Notes.To know more about Bank Notes, visit:
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Apex fitness club uses straight-line depreciation for a machine costing $28,800, with an estimated four-year life and a $2,300 salvage value. at the beginning of the third year, apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $1,850 salvage value.
The book value of the asset at the end of the second year is $15,550.
The depreciation for each of the final three years is $4,566.67.
What is the book value and the depreciation?Straight line depreciation method is a method that is used to depreciate the value of an asset. The value of the asset is depreciated linearly over the useful life of the asset.
Depreciation expense = (cost of the asset - salvage value) / useful life
(28,800 - $2,300) / 4 = $6,625
Book value is the cost of the asset less its accumulated depreciation
Book value = cost of the asset - accumulated depreciation
Accumulated depreciation = yearly depreciation expense x number of years
$6,625 x 2 = $13,250
Book value = $28,800- $13,250 = $15,550
Depreciation expense using the revised estimate = ($15,550 - $1,850) / 3 = $4,566.67
Here is the complete question:
Compute (1) the machine’s book value at the end of its second year and (2) the amount of depreciation for each of the final three years given the revised estimates.
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suppose that a market basket used to construct a university student price index (uspi) consists of 4 textbooks and 100 gallons of gasoline. in 2018, the base year, textbooks cost $100 each, and gasoline costs $2 per gallon. in 2019, textbooks still cost $100 each, and gasoline costs $4 per gallon. the uspi for 2019 is:
In 2019, textbooks still cost $100 each, and gasoline costs $4 per gallon. the USPI for 2019 is 133.33
Calculation:
Cost of basket in 2018 = 4 × 100 + 100 × 2 = 600
Cost of basket in 2019 = 4 × 100 + 100 × 4= 800
CPI in 2019 = 800/600 ×100 = 133.33
The Consumer Price Index (CPI) tracks changes in consumer prices on a monthly basis in the United States. The cost-of-living index (CPI) is determined by the Bureau of Labor Statistics (BLS) as a weighted average of prices for a sample of products and services that is indicative of total consumer expenditure in the United States.The CPI is among the most widely used indicators of inflation and deflation. The producer price index (PPI), which tracks changes in the prices paid to US producers of goods and services, has a different survey methodology, pricing samples, and index weights than the CPI report.The CPI is based on around 94,000 price quotations that are gathered each month from 23,000 retail and service businesses and 43,000 rental housing units.Learn more about Consumer Price Index (CPI), here
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Invented by the well-known quality control statistician dr. Kaoru ishikawa, what is the name of the analysis tool that provides a systematic way of looking at effects and the causes that create or contribute to those effects?.
A visual aid for classifying a problem's possible origins is a fishbone diagram. This technique is used to determine the underlying causes of issues.
What is Fishbone structure?An effective visual representation of cause and consequence is a fishbone diagram. It is a more organized method than some other problem-solving programs on the market (e.g., the Five Whys tool). The issue or result is seen at the fish's mouth or head.The cause-and-effect analysis tool most frequently used in Six Sigma is the fishbone diagram. One of the most important responsibilities in any Six Sigma DMAIC project is cause-and-effect analysis because when the right root causes of the issue (the Y) are identified, half the battle is won.One of the seven quality circles (QC) tools is a fish-bone diagram. Visualizing potential causes makes it easier to identify the underlying cause of a specific issue.To learn more about Fishbone structure refer to:
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List and explain four costs and risks of holding little inventory
Answer: death and starvation
Explanation:
if you are on little supply that’s not good for the human body. However you will be able to survive about 4 months.
trulife health systems has opted for a top-down approach to changing how the company functions so that efficiency is increased. what is the change likely to entail?
The change likely to entail expanding adoption of healthcare innovations and other medication price drop steps .
What is truelife health systems and what is opted by the company for a better change?Truelife health is a service agency grew and growing for constantly providing help in terms of health to those in need.The company has opted for multiple steps to enhance the output and to provide better service for public welfare.Here is asked the change likely be entailed by company to increase the effiiciency.Hence the change is to expand the adoption of healthcare innovations and drop the prices of medicines.Other steps also have taken along to quicken the process of enhancement and increase the efficiency.To know more about health visit:
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payton corporation has sales of $200,000, a contribution margin ratio of 35%, and a profit of $40,000. if 10,000 units were sold, what are total variable costs?
The total variable costs are $130,000 if 10,000 units were sold.
The contribution margin describes the portion of the sales revenue that is not used up by variable cost; therefore in this case we can find the total variable costs by subtracting the contribution margin from the sales.
First, we determine the amount of contribution margin as follows;
contribution margin = 35% of $200,000
contribution margin = (35/100) × 200,000
contribution margin = $70,000
Now we determine the total variable costs as follows;
total variable costs = sales revenue - contribution margin
Substituting the values in this equation to find the total variable costs;
total variable costs = $200,000 - $70,000
total variable costs = $130,000
Therefore, the total variable costs are calculated to be $130,000.
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the ownership of land include: (select all that apply) the ownership of land include: (select all that apply) mineral rights none of the options surface rights air rights
Once you close on the property, you become the owner and have the rights of possession, control, exclusion, enjoyment, and disposition.
Use rights and quiet pleasure Right to exclude others and to grant others a right to use (via licenses and leases). Right to dispose of or transfer ownership of the property to another party through gifting, inheritance, or sale.
How do we define ownership of land?Unless the lot or parcel has been sold under a real estate contract, the vendee or grantee shall be deemed to be the owner, the term "owner of land" means the record owner of at least a majority ownership interest in a separate and legally created lot or parcel of land, as determined by the records of the county auditor.Specifications of Ownership
Right to possess means the ability to keep what he possesses in his possession:use and enjoyment of:Right to consume, abridge, or abridge (liberties):Right to be perpetual and of indefinite duration:True right:Ownership is residual in nature:To learn more about ownership of land refer to:
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ashburn corporation issued 10-year bonds two years ago at a coupon rate of 8.4 percent. the bonds make semiannual payments. if these bonds currently sell for 105 percent of par value, what is the ytm? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Intermediate calculation - The YTM is 7.85%.
What is intermediate calculations?
The process of rounding involves bringing a value to its closest meaningful number. The final results are rounded, and intermediate calculations are truncated. Any math operation contained in a formula is an intermediate calculation. The value that is carried over into another calculation is referred to as an intermediate step. On a worksheet, a step in between is noted and may or may not be reported. The result that is reported is the conclusive response.
Given that,
Coupon rate = 8.4%
Years = 20 years - 2 years = 18 years × 2 = 36 years
Par value or future value= $1,000
Present value = $1,000 × 110% = $1,100
Monthly payment or PMT = (8.4% × $1,000) ÷ 2 = 42
In semi annual payments, we multiply by 2 in years and divide by 2 in PMT as in case of YMT
So, YMT = Rate × 2 = 3.93% × 2 = 7.85%
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question content area during periods of decreasing costs, the use of the lifo method of costing inventory will result in a lower amount of net income than would result from the use of the fifo method. true false
The fifo approach would produce more net income at times of declining expenses, while the lifo method would produce less net income during the same times. So the correct response is true.
Write an account on lifo method of costing inventory.Utilizing the lifo method of costing inventories will produce less net income than doing so using the fifo approach during periods of declining costs.
When the expenses of making a product or acquiring inventory have been rising, the COGS (Cost of Goods Sold) computation uses the LIFO approach. Inflation may be to blame.
Although a company's profits may decline as a result of using the LIFO accounting system, it may also result in a reduction in the amount of corporate tax due. These savings could be substantial for a corporation if the cost rises persist for a while.
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if a lump-sum income tax of $30 billion is levied and the mps is 0.40, the consumption schedule will shift multiple choice downward by $30 billion. downward by $18 billion. downward by $12 billion. upward by $18 billion.
If a lump-sum income tax of $30 billion is levied and the MPs is 0.40, the consumption schedule will shift downward by 18 billion.
The term "income" generally refers to the transfer of money, property, and other value received over a period of time in exchange for services or products. There is no single standard definition. Income is defined according to the context in which the concept is used. The three most important types of income are earned income, passive income, and portfolio income.
Earned income includes wages, salaries, tips, and commissions. Passive or unearned income is derived from rental properties, royalties, and limited partnerships. Portfolio or investment income includes interest, dividends, and investment income. Source of Income means an employer or subsequent employer or other person or entity owing or expected to pay income to a payer.
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hansen construction, inc., has consistently used the input method based on costs incurred to recognize revenue over time. during year 1, hansen started work on a $3 million fixed-price construction contract. the accounting records disclosed the following data for the year ended december 31, year 1: costs incurred $ 930,000 estimated costs to complete 2,170,000 amounts billed 1,100,000 collections 700,000 how much loss should hansen have recognized in year 1? $230,000 $0 $100,000 $30,000
The loss recognized by Hansen will be equal to $100000.
Revenue may be defined as the benefits and profits that are earned by any company from the selling of its manufactured products. There are many expenses incurred during manufacture of the products by any company. If the cost of manufacturing is less than the revenue, then the company is in profit and if the cost of manufacturing is more than the revenue, then the company is in loss. According to the question If the amount spent by Hansen Construction in 1 year is $930,000 and the amount estimated that it still needs is $2,170,000 to complete the contract, their total cost for the contract is $3,100,000. Since the contract is fixed price at $3,000,000, then Hansen is going at a loss of $100,000. So, Hansen should recognize the whole $100,000 loss in year 1 as soon as it is able to estimate it.
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