Answer: There would be an increase on return on investment (ROI) if current assets decrease while everything else remains the same
Explanation: This is because when the profit(returns) is constant, but the assets drops in value, the new ROI will be relative drop in value of asset.
Explanation:
Decline by $0.5 billion and the money supply will decline by $2.5 billion.
We need to compare the present values (PV) of all the expenses of all the investments to make an investment decision. The formula of PV = ((C1/(1+r)1) + ((C2/(1+r)2) + ((C3/(1+r)3) +…….+ ((Cn/(1+r)n) + present value of investment – present value of the salvage value
Where, Cn refers to the expense incurred in the nth period and r is the rate of interest per period.
For Machine A, present value of the expenses is
= ((1600/(1+0.20)1) + ((1600/(1+0.20)2) + 15,000 – ((3000/(1+0.20)2)
= 1333.33 + 1111.11 + 15000 – 2083.33
= 15361.11
For Machine B, present value of the expenses is
= ((400/(1+0.20)1) + ((400/(1+0.20)2) + ((400/(1+0.20)3) + ((400/(1+0.20)4) + 25,000 - ((4000/(1+0.20)2)
= 333.33 + 277.77 + 25,000 – 2777.77
= 22833.33
We can see that Machine A is the least cost alternative; therefore, Machine A should be selected.
Answer:
Unit of account
Explanation:
Money serves three functions :
1. Unit of account : money serves the function of determining the value of a good or service. It is usually assumed that goods that are more highly priced are more valuable that goods that have lower prices
2. Medium of exchange : goods and services can be exchanged for money. For example, if I want to buy a gallon of gasoline and pay 4 seashells, money has served as a medium of exchange.
3. store of value: money can be saved, retrieved and exchanged sometimes in the future
Answer: 45%
Explanation:
First calculate the sales:
= Cash sales + credit sale
= 275,000 + 20,000
= $295,000
Terms on credit sale was 2/10 n/30 and they paid half in time($10,000) but a partial allowance of $1,800 was granted:
Net sales would be:
= Sales - sales returns - sales discount
= 295,000 - 1,600 - (10,000 * 2%) - 1,800
= $291,400
COGS = 152,070 + 9,000 - 800
= $160,270
Gross profit percentage = (Sales - Cost of goods sold) / Sales
= (291,400 - 160,270) / 291,400 * 100%
= 45%
