Answer:
d
Explanation:
Nominal interest rate = real interest rate + inflation rate
6 - 2 = 4%
Inflation is a persistent rise in the general price levels
Types of inflation
1. demand pull inflation – this occurs when demand exceeds supply. When demand exceeds supply, prices rise
2. cost push inflation – this occurs when the cost of production increases. This leads to a reduction in supply. Higher prices are the resultant effect
if inflation declined by 2 percent, it means purchasing power increased by 2%.
Total increase in purchasing power = 6 + 2 = 8
Automatic stabilizers have a similar impact as discretionary fiscal policy but occur automatically, without action by the government. Automatic stabilizers increase aggregate demand during recessions and reduce aggregate demand during expansions.
Answer:
B. $2,000
Explanation:
The principal amount is $100,000
Interest rate is 8% usually per year ( 12 months)
Loan duration, three months:
Annual interest = $100,000.00 x 8%
=$100,000.00x 0.08
=$ 8000.00
Interest for 3 months
=3/12x$8000.00
=0.25x$8000.00
=$2000
Answer:
1. Yes. Cash flows are able to illustrate liquidity.
2. Recommendations
a. Reducing levels of Inventory.
b. Negotiating Longer credit settlement period with suppliers.
Explanation:
One of the uses of a Cash flow Statement is its use in negotiating loans with bank and other lenders. Of interest to these parties is the liquidity of the entity.
Liquidity is the ability of an entity to honor its short-term obligations using its current assets. Liquidity is reflected in the Cash flow from Operating Activities of the Cash flow Statement.
<u>Recommendation</u>
Companies can maintain liquidity through reducing levels of inventory. Inventory ties up cash. Negotiating longer credit settlement period with suppliers can also increase liquidity.
Answer:
Depreciation expense $12,910
Book value $46,680
Explanation:
Kansas Enterprises
Formula for Depreciation expenses
Annual depreciation expense=(Cost-Residual value)/Useful Life
Where,
Cost = 72,500
Residual value =7,950
Useful life = 5 years
Let plug in the formula
=(72,500-7950)/5
=64,550/5
=$12,910/year
Therefore depreciation expense for 2021
=$12,910
Calulation for Book value
Book value = $72,500 – ($12,910× 2)
$72,500 -$25,820
=$46,680
Therefore the book value would be $46,680
