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Dahasolnce [82]
4 years ago
5

Assume that the following data characterize a hypothetical economy: money supply $200 billion; quantity of money demanded for tr

ansactions $150 billion; quantity of money demanded as an asset $10 billion at 12 percent interest, increasing by $10 billion for each 2-percentage-point fall in the interest rate. a. What is the equilibrium interest rate? Explain. b. At the equilibrium interest rate, what are the quantity of money supplied, the total quantity of money
Business
1 answer:
Whitepunk [10]4 years ago
7 0

Answer:

A. The interest rate is 4 percent.

B. The amount of money supplied is 200 bilion dollars and the equilibrium quantity demanded is 200 bilion dollars.

Explanation:

A. To answer this questions you use the table below. The first column is the interest rate. The second column is the quantity of money demanded as an asset at each rate. The third column is the quantity of money demanded for transactions, which is independent of the interested rate. The fourth column is the actual (total) quantity of money demanded at each interest rate, which is the sum of columms 1 and 2. The fifth column is the quantity of money supplied at each interest rate. You wil find the equilibrium interest rate by equating the quantity supplied with the quantity demanded, which occurs at the interest rate of 4 percent.

B. It also follows from the answer above that the equilibrium quantity of money supplied is 200 bilion dollars and the equilibrium quantity demanded is 200 bilion dollars. You can decompose the quantity demanded into its separate components, where the amount of money demanded for transactions is 150 billion dollars and the amount of money demanded as an asset is 50 billion dollars.

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True if you pay only the minimum amount each month towards your credit card bill?
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Zuo Software categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible
yaroslaw [1]

Answer:

(1) $66,500

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Explanation:

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Allowance for uncollectible account total:

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Balance of allowance for uncollectible accounts on 12/31/2021 is $66,500.

(2) Journal entry for adjusting the allowance for uncollectible account is :

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Workings:

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= $66,500 - $22,000

= $44,500

(3) Net account receivable balance on 12/31/2021:

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7 0
3 years ago
7. Kraft Company expects to give a dividend of $2 next year. Dvidend increases by 4 per cent require a 12% return. What will be
Nat2105 [25]

Answer:

$28.125

Explanation:

Dividend D1= $2

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Required Return r = 12% or 0.12

Step1- Share price of company A today

As per Dividend Growth Model

Share price =Expected dividend/(required return - growth rate)

S0 = Do(1+g) / (r-g)

S0 = D1/(r-g)

S0 = 2/(0.12-0.04)

S0 = $25

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Step2 - Expected dividend at the end of 3 years

D4=D0(1+g)^4

( as we already have D1 which is one time growth multiplied, therefore to find dividend at the end of 3rd year we will multiply 1 Less growth multiplier to D1)

D4= D1(1+g)^3

D4 = 2(1+0.04)^3

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Step3 - Share price of company A in 3 year

Share price =Expected dividend/(required return - growth rate)

S3 = D4/(r-g)

S3 = 2.25/(0.12-0.04)

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