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3 years ago

The following information pertains to the three divisions of Marlow Company:

Business

1 answer:

lubasha [3.4K]3 years ago

5 0

Answer:

The correct option is B

Residual income = ($9000)

Explanation:

<em>Residual Income is measure of how much a division or a part of a business is able to generate over and above the company-wide opportunity cost of capital.</em>

A division with a controllable over and margin over and above the cost of fund is evaluated to be profitable .

Residual income = Controllable margin - (cost of capital(%)× operating assets)

Cost of capital = Target ROI

Residual income for Division X

= 36,000 - (15%× 300,000 )

= ($9000)

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2 years ago

An investment offers a total return of 11 percent over the coming year. Alex Hamilton thinks the total real return on this inves

Ahat [919]

Answer:

2.87%.

Explanation:

The total return, also refer to as Nominal return or Money return, is based on the nominal interest rate. For example, let's say that you deposited $100 into a bank account and the bank offers you an annual return of 11%. This 11% is the stated interest rate, it is known as nominal interest rate, and it is rate before taking into account the effect of inflation. When we deduct the effect of inflation from nominal rate, it gives us the real rate. Real rate reflects the Purchasing Power. The Fisher equation will be used to determine the expected inflation rate. The Fisher equation is as follows:

(1 + i ) = (1 + r) * (1 + h)

where

i = Nominal (Money) rate

r = Real rate

h = Inflation rate

Simply adjust the equation to calculate the inflation rate;

⇒ h = [(1 + i) / (1 + r)] - 1

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2 years ago

f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, S

Margarita [4]

Answer:

Journal 1

Debit : Other Income $34,000

Credit : Equipment $34,000

Journal 2

Debit : Accumulated depreciation $6,800

Credit : depreciation $6,800

Explanation:

Step 1 : Eliminate the Income resulting from sale and the additional value of equipment sitting in the buyer books

Income = Selling Price - Carrying Amount

where,

Carrying Amount = Cost - Accumulated depreciation

= $84,000

therefore,

Income = $118,000 - $84,000 = $34,000

Journal;

Debit : Other Income $34,000

Credit : Equipment $34,000

Step 2 : Eliminate the unrealized profit as a result of additional asset value

unrealized profit = income ÷ remaining useful life

= $34,000 ÷ 5

= $6,800

Journal;

Debit : Accumulated depreciation $6,800

Credit : depreciation $6,800

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2 years ago

From a firm's point of view, when the demand for a good has a price elasticity of 0.5, then, all things remaining the same, a(n)

jeyben [28]

Answer:

The correct answer is: increase in the price of the good will increase the firm's revenue.

Explanation:

When the demand for goods has a price elasticity of 0.5, it implies that the demand is relatively inelastic. This implies that a proportionate change in price will cause less than proportionate change in price.

So when the firm increases the price of a good, this will lead to a smaller decline in the quantity demanded of the commodity. As a result, the total revenue will increase.

6 0

2 years ago