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2 years ago

If the fed buys $25 billion of u.s. bonds in the open market and the reserve requirement is 20 percent, m1 will eventually:___.

1 answer:

8 0

M1 will eventually Increase by $125 billion. If the fed buys $25 billion of u.s. bonds in the open market and the reserve requirement is 20 percent.

U.S. savings bonds are a form of government debt issued to American citizens to help fund federal expenditures.

Savings bonds are sold at a discount and mature to their full face value, and do not pay regular coupon interest.

Series EE bonds are sold at half of face value and mature in 20 years. Series I bonds are adjusted for inflation.

Initial Increase in Money Supply = $25 billion

Reserve Requirement = 20%

Money Multiplier = 1 / Reserve Requirement

Money Multiplier = 1 / ( 20 / 100 )

Money Multiplier = 100 / 20

Money Multiplier = 5

Total Increase in M1 = Money Multiplier X Initial Increases in Money Supply

Total Increase in M1 = 5 X 25

Total Increase in M1 = 125

Therefore, Total Increase in M1 is $125 billion.

Learn more about U.S. savings bonds here

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Van Frank Telecommunications has a patent on a cellular transmission process.

Sonbull [250]

Answer:

Van Frank Telecommunications

December 31, 2016:

Debit Amortization Expense - Patent $4,400,000

Credit Accumulated Amortization-Patent $4,400,000

To record the revised amortization expense for the year.

Explanation:

Data and Calculations:

Patent's value on January 1, 2012 = $19,800,000

Patent's assessed lifespan = 9 years

Amortization expense for each year on straight-line = $2,200,000 ($19,800,000/9)

Accumulated Amortization for Patent = $6,600,000 (for 3 years)

Net book value of patent = $13,200,000 ($19,800,000 - $6,600,000)

Revised lifespan = 6 years

Revised amortization expense per year = $4,400,000 ($13,200,000/3)

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4 years ago

The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $24,000,

dexar [7]

Answer:

The simple rate of return on the investment is closest to 19.16%

Explanation:

In order to calculate the the simple rate of return on the investment we would have to use the following formula:

simple rate of return = <u>Annual incremental net operating income</u>

Initial investment

<u />

Initial investment = Cost of the new machine - salvage value of old machine

Initial investment = $384,000 - $24,000 = $360,000

Annual cost savings = $133,000

Annual depreciation = $384,000/6 = $64,000

Therefore, Annual incremental net operating income = $133,000 - $64,000 = $69,000

Therefore, simple rate of return = $69,000 / $360,000 = 19.16%

The simple rate of return on the investment is closest to 19.16%

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3 years ago

The required return on the stock of Moe's Pizza is 10.4 percent and aftertax required return on the company's debt is 3.28 perce

Katarina [22]

Answer:

WACC - new project = 6.408% rounded off to 6.41%

Explanation:

The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure can consist of one or more of the following components namely debt, preferred stock and common equity. The WACC is calculated as follows,

WACC = wD * rD * (1 - tax rate) + wP * rP + wE * rE

Where,

w represents the weight of each component
r represents the cost of each component
D, P and E represents debt, preferred stock and common equity
rD * (1 - tax rate) is the after tax cost of debt

We first need to calculate the WACC of the company and then adjust it for the new project.

WACC = 35% * 3.28% + 65% * 10.4%

WACC = 7.908%

As the new project is less risky and has an adjustment factor of -1.5%, the required rate of return for the new project will be,

WACC - new project = 7.908% - 1.5%

WACC - new project = 6.408% rounded off to 6.41%

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3 years ago

A company has net income of $187,000, a profit margin of 8.6 percent, and an accounts receivable balance of $126,370. Assuming 6

NARA [144]

Answer:

35.35 days

Explanation:

For the computation of company’s days’ sales in receivable first we do the following calculations

As we know that

Profit margin = Net income ÷ Sales

0.086 = 187,000 ÷ Sales

Sales = 2,174,418.605

So,

Credit sales = Sales × Sales percentage

= 2,174,418.605 × 0.6

= 1,304,651.163

Receivables turnover ratio = Credit sales ÷ Receivables

= 1,304,651.163 ÷ 126,370

= 10.3241

Now

Days sales in receivables = 365 ÷ Receivables turnover

= 365 ÷ 10.3241

= 35.35 days

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3 years ago

Vertical analysis is a tool to evaluate individual financial statement items or a group of items in terms of a specific base amo

mylen [45]

Answer:

The correct answers are revenue; assets.

Explanation:

Just as you can use the vertical analysis applied to the Balance Sheet, you can also analyze the Income Statement, for which exactly the same procedure as for the balance sheet is followed, and the reference value will be sales, since it is due Determine how much a certain concept represents (Sales Cost, Operating Expenses, Non-Operating Expenses, Taxes, Net Profit, etc.) with respect to the total sales.

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3 years ago