Answer:
The answer is a. The project will utilize some equipment the company currently owns but is not now using.
Explanation:
If you look at all the other options that are listed here, they either are a significant sum to the company or has a significant the opportunity cost. In this one, company uses idle assets and therefore bears no opportunity cost.
Answer:
With a 10% required reserve ratio, the money supply could increase by $500,000/r when the loan is made.
This equals $5,000,000 ($500,000/0.1) where r = 10%
Explanation:
a) The money multiplier is the amount of money that banks generate with each dollar of reserves. Reserves is the amount of deposits that the Federal Reserve requires banks to hold and not lend.
b) The formula for the money multiplier is simply 1/r, where r = the reserve ratio.
c) The reserve ratio, also known as Cash Reserve Ratio, is the percentage of deposits which commercial banks are required to keep as cash according to the directions of the central bank. It is used by the central bank to control the supply of money in the economy. When the central bank wants to increase the money supply, it lowers the reserve ratio and vice versa.
d) According to wikipedia.com, "the money supply is the total value of money available in an economy at a point of time." It is usually defined as currency in circulation plus demand deposits. It is the demand deposits that give commercial banks the ability to create money using the reserve ratio.
Answer:
The correct answer is letter "C": Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include immediate increases in accounts payable, accrued wages, and accrued taxes.
Explanation:
Spontaneous funds are all those incomes that a company receives without expecting them. The money can be received from different internal and external sources but they imply obligations. It means taxes are likely to be deducted after reporting the income in the firm's accounting books.
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