Answer:
A. $19,034
Explanation:
The computation of the present value for 20 years cash flow is shown below:
For the First 10 years
Given that
Payment for first 10 years = $2,000
Discount rate = 11%
Now the present value is
= $2000 ÷ 1.11 + $2,000 ÷ 1.11^2 +...........+ $2,000 ÷1.11^10
= 11,778.46402 ..............(1)
For the Next 10 years
Given that
Payment for next 10 years = 3,500
Discount rate = 11%
Now the present value is
= $3,500 ÷ 1.11 + $3,500 ÷ 1.11^2 +...........+ $3,500 ÷ 1.11^10
= 20,612.312
So, today present value is
= $20,612.312 ÷ 1.1110
= 7,259.339 ...........................(2)
Now
Total present value is
= $7,259.339 + $11,778.46402
= $19,034
Answer:
1. The increase in savings resulting directly from this change in income is $500
That is
Increase in savings = Increase in income minus increase in consumption
= 2000 - 1500
= $ 500
2.The marginal propensity to save (MPS) is calculated by dividing the change in savings by the change in income.
That is
ΔS/ ΔY,
Therefore given
Change in savings =ΔS =$500
Change in income =ΔY = $2000
MPS = 500/2000
MPS = 0.25
3.The marginal propensity to consume (MPC) is calculated by dividing change in consumption by changes in come.
That is ΔC / ΔY
Where ΔC = 1500
ΔY = 2000
Therefore MPC = 1500/2000
= 0.75
1. The increase in savings resulting directly from this change in income is $
Answer:
The answer is: C) Human capital is more important than financial capital.
Explanation:
Steve emphasizes the value of human resources or human capital. He is convinced that the prime factor in the success of a company is its human capital. The actions he takes empowers his staff by giving them a say in the decision making processes.
Answer:
1- A) Cash (Dr.) $1,000
Accounts Receivable (Cr.) $1,000
2- b. Unearned Revenue
3- c. determining when to record revenue.
Explanation:
1- When a company sales its products to its customers on credit basis under accrual accounting system it records Accounts receivable as debit and sales as credit. At a later date when the customer pays the cash, the company makes adjusting entry; cash as debit and Account receivable as credit.
2- Cash basis accounting system is one in which revenues and expenses are only record when there is actual cash exchange which means revenue will be recorded only when cash is received from customers and expenses will be recorded when they are actually paid.
Accrual basis allows to record revenue when it is earned and expenses when they are billed. Unearned revenue account will only be used if the company is using accrual basis accounting.
3- Revenue recognition principle guides the account when to record revenue under cash basis and accrual basis accounting systems.
