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2 years ago

How differently would you allocate assets between an elderly couple and a young entrepreneur?

1 answer:

8 0

According to conventional wisdom regarding asset allocation by age, you should hold a proportion of stocks equal to 100 minus your age. Therefore, if you are 40 years old, 60% of your portfolio should consist of equity. Criteria might be better changed to 110 minus your age or 120 minus your age because life expectancy increasing.

By deducting your present age from 100, you can utilize rule of thumb to determine your asset allocation. It implies that as you get older, you should shift away from equity funds and toward debt funds and fixed income assets in your asset allocation.

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Answer and Step by Step Explanation:

A.Price at Issuance (Proceeds) = PV of bond’s cash flows = PV of coupon annuity + PV of payment at maturity (face value)

Coupon Payment = 600,000 x 7.5% / 2 = 22,500

Number of coupon payments = 8 (2 x 4 years)

Market rate of 8.5% => use 4.25% discount rate for semiannual payments

Price at Issuance = 6.6638 x 22,500 + 0.7168 x 600,000 = $580,016 (discount)

B.Journal Entry at Issuance:

DrCash (A) 580,016

Cr Bond Payable (L) 580,016

C.Journal Entry on June 30, :

Dr Interest Expense 24,650 (580,016 x 4.25%)

Cr Bond Payable 2,150 Cash 22,500

D.As of June 30, :

Bond Payable (L) $582,166

PV of $1 annuity for 8 periods at 4.25% is 6.6638.

PV of a single $1 payment in 8 periods at 4.25% is 0.7168

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3 years ago

What factors under the control of owners and managers make a firm successful and allow it to earn economic profits?

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Answer: E. The firm's ability to differentiate its product

Explanation:

The factor under the control of owners and managers that make a firm successful and allow it to earn economic profits is the firm's ability to differentiate its product.

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Answer:

The answer is given below

Explanation:

From the question given, we resolve the issue as follows:

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We prepare a journal entries to record its purchase of raw materials and requisition of direct materials.

Raw materials Inventory = $62,000

Cash = $62,000

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Raw materials Inventory = $50,000

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