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4 years ago

15

Simon bought a computer and made monthly payments. By the end of the month, Simon had no money left for groceries. Which step in

the decision-making process would most benefit Simon?

2 answers:

wlad13 [49]4 years ago

4 0

<span>Evaluating results (C)</span>

alexandr402 [8]4 years ago

3 0

The answer is C) Evaluating results

I just took the test

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A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows:Year C

Degger [83]

Answer:

IRR= 14,96%

The firm should not accept the project, due o the fact that the internal rate of return is lower than the required return. (14,96%<16%)

Explanation:

The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. The internal rate of return (IRR) rule is a guideline for evaluating whether to proceed with a project or investment. The IRR rule states that if the internal rate of return on a project or investment is greater than the minimum required rate of return, then the project or investment should be pursued. If it is lower than the cost of capital or required rate o return, the best course of action is to reject the project.

$0 = (initial investment x -1) + CF1 / (1 + IRR) ^ 1 + CF2 / (1 + IRR) ^ 2 + ... + CFX / (1 + IRR) ^ X

Initial Invesment= Total initial investment costs year x-1

CFx= Cash Flow during period X

IRR= Internal rate of return

Because of the nature of the formula, however, IRR cannot be calculated analytically and must instead be calculated either through trial-and-error or using software programmed to calculate IRR.

<u>In this case:</u>

IRR= -27200+ 11200/(1+IRR)^1 + 14200/(1+IRR)^2 + 10200/(1+IRR)^3

IRR= 14,96%

The firm should not accept the project, due o the fact that the internal rate of return is lower than the required return. (14,96%<16%)

5 0

3 years ago

In 2017, Wagner Industries purchased a piece of equipment with an estimated useful life of 10 years. Each year, Wagner expenses

mixer [17]

Answer:

This is an example of A : depreciation

Explanation:

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value.

3 0

3 years ago

Suppose that the demand for loanable funds for car loans in the Milwaukee area is $12 million per month at an interest rate of 1

Anton [14]

Answer:

<u>a) 4% per year.</u>

<u>b) a shortage (or excess demand) of $1 million worth of car loans per month.</u>

<u>c) the surplus of supply will be $3 million worth of car loans per month.</u>

Explanation:

The question is incomplete. The complete question is:

<em>Suppose that the demand for loanable funds for car loans in the Milwaukee area is $12 million per month at an interest rate of 10 percent per year, $13 million at an interest rate of 9 percent per year, $14 million at an interest rate of 8 percent per year, and so on. </em>

<em>Instructions: Enter your answers as whole numbers. </em>

<em>a. If the supply of loanable funds is fixed at $18 million, what will be the equilibrium interest rate? </em><em><u> </u></em><em>percent per year. </em>

<em>b. If the government imposes a usury law and says that car loans cannot exceed 3 percent per year, how big will the monthly shortage (or excess demand) for car loans be?</em><em><u> </u></em><em> $ million worth of car loans per month. </em>

<em>c. How big will the monthly shortage for car loans be if the usury limit is raised to 7 percent per year:</em><em><u> </u></em><em> $ million worth of car loans per month.</em>

<h2>Solution</h2>

<em>a. If the supply of loanable funds is fixed at $18 million, what will be the equilibrium interest rate? </em><em><u> </u></em><em>percent per year. </em>

The equilibrium interest rate is the rate at which the demand and the supply for loans are equal.

Thus, if the supply is fixed ad $18 million, you must find the interest rate at which the demand for loans is also $18 millions.

The sequence of the data are:

Demand for loanable funds per month Interest rate

$12 million 10% per year

$13 million 9% per year

$14 million 8% peryear

If you continue:

$15 million 7% per year

$16 million 6% per year

$ 17 million 5% per year

$ 18 million 4% per year

Hence, the equilibrium interest rate will be, when both demand and supply for loanable funds for cars in the Milwaukee are are equal to $18 millions, is 4% per year.

<em>b. If the government imposes a usury law and says that car loans cannot exceed 3 percent per year, how big will the monthly shortage (or excess demand) for car loans be?</em><em><u> </u></em><em> $ million worth of car loans per month. </em>

Shortage, also called excess demand, occurs when demad is higher than supply.

When the interest rate is fixed at a different value than the equilibrium rate, then the demand will be different than the equilibrium demand.

If the price (the rate of toans) is lower than the equilibrium price, the demand will be higher than the equilibrium demand, which is the supply; thus, there will be a shortage.

In this case, the "artificial" interest reate is fixed at 3%. If you continue the table, at that rate the amount of loans demanded will be $19 millions.

Thus, the amount of loans demanded, $19 millions, is higher than $18 millions, meaning that the demand is higher than the supply, and, in consequence, there will be a shortage of $19 millions - $18 millions = $1 million.

In conclusion, there will be a shortage (or excess demand) of $1 million worth of car loans per month.

<em>c. How big will the monthly shortage for car loans be if the usury limit is raised to 7 percent per year:</em><em><u> </u></em><em> $ million worth of car loans per month.</em>

Surplus occurs when the prices are above the equilibrium price (the rate of the loans).

Find the amount of car loans demanded when the interest rate is 7%. From the table it is $15 million.

So, you see that the interest rate is higher than the equilibrium supply and the demand is lower than the supply of $18million.

Then, as demand is lower than supply, there there will be a surplus, there will be a surplus of supply for car loans. It will be equal to $18 million - $15 million = $3million.

6 0

4 years ago

If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning

Allisa [31]

This problem can be solved by remembering the BASE acronym. Beginning Add Subtract End is what it stands for. The logic is that you have the goods around at the start of the period (as leftovers). Then you subtract those at the end of the month to avoid double counting.

You also need to add in your anticipated production as well. So we add the beginning 300 (from BASE), add the production of 9000 (what we make) and subtract the ending 200 (from BASE) Our production budget has 300 + 9000 - 200 = 9100.

Thus there are 9100 units in the production budget.

3 0

4 years ago

ABC has the following: cash, $102 million; receivables, $94 million; inventory, $182 million; other current assets, $18 million,

Leno4ka [110]

Answer:

Current ratio = 4.04

Explanation:

Current ratio measures the ability of a business to settle its short term obligations using its liquid financial resources (current assets)

<em>A current ratio in excess of 2 is considered as adequate (except for some special occasions) and vice versa</em>.

Current ratio is computed as follows:

Current ratio = current assets/current liabilities

Applying this we have

$

Cash 102

Receivable 94

Inventory 182

Other current assets <u> 18</u>

<em>Total current assets 396 </em>

<em><u>To</u></em><em>tal current liability 98</em>

Current ratio= Total current assets / T<u>o</u>tal current liability

Current ratio = 396/98= 4.04:1

Current ratio = 4.04

3 0

4 years ago