Answer: Long-term assets are assets with a duration of more than one year. From the list the parties classified as long-term assets are three:
- Land
- Buildings
-Equipment
The rest of the games are classified as:
Accounts receivable (short-term assets)
Notes payable (due in three years) (Long-term liabilities)
Accounts payable (Short-term liabilities)
Retained Revenue (Equity)
Prepaid rental (Short-term assets)
Unearned Renvenue (Short-term liabilities)
Notes payable (due in six months) (Short Term Liabilities)
Answer:
8.95%
Explanation:
Data provided in the question:
Time, n = 29 years
Principle amount = $200,000
Future value = $2,400,000
Now,
Using the compounding formula
Future value = Principle × [ 1 + r ]ⁿ
here,
r is the interest rate
Thus,
$2,400,000 = $200,000 × [ 1 + r ]²⁹
or
[ 1 + r ]²⁹ = 12
taking the natural log both the sides, we have
29 × ln(1 + r) = ln(12)
or
ln(1 + r) = 0.08569
or
1 + r = 
or
1 + r = 1.0895
or
r = 0.0895
or
r = 0.0895 × 100% = 8.95%
Answer:
9.7%
Explanation:
The rate of return can be determined using a financial calculator
Cash flow in year 0 = -65
Cash flow in year 1 = $0.50
Cash flow in year 2 = $0.52
Cash flow in year 3 = $0.54
Cash flow in year 4 = $0.56
Cash flow in year 5 = $0.58 + $100
Rate of return = 9.7%
To find the rate of return using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
Answer:
(a)
TC(q) [before expansion] = Fixed Cost + Variable Cost
= 750,000 + 1.25q
TC(q) [after expansion] = (750,000 + 350,000) + 0.75q
= 1,100,000 + 0.75q
(b) (i) q = 600,000
TC(q) [before expansion] = 750,000 + (1.25 × 600,000)
= 750,000 + 750,000
= 1,500,000
TC(q) [after expansion] = 1,100,000 + (0.75 × 600,000)
= 1,100,000 + 450,000
= 1,550,000
Since expansion will increase total cost, profit will fall ceteris paribus. So firm should not expand.
(ii) q = 800,000
TC(q) [before expansion] = 750,000 + 1.25 × 800,000
= 750,000 + 1,000,000
= 1,750,000
TC(q) [after expansion] = 1,100,000 + (0.75 × 800,000)
= 1,100,000 + 600,000
= 1,700,000
Since expansion will decrease total cost, profit will rise ceteris paribus. So firm should expand.
