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Arada [10]
2 years ago
10

If you earned $10-an-hour in 2005 when the cpi was 100, and you earn $11-an-hour today when the cpi is 120, then your real wage

rate has _____ since 2005.
Business
1 answer:
Eva8 [605]2 years ago
4 0
The consumer price index, or cpi, has the following formula:

CPI =  \frac{Current \ Period \ Price}{Base \ Period \ Price} \ x \ 100

Let's compute the real base period price for the cpi today.

120 = \frac{11}{Base \ Period \ Price} \ x \ 100

Base Period Price = $9.2

Then, we compare the apparent with the real:

Real Base Period:  $11 - $9.2 = $1.8
Apparent Base Period: $11 - $10 = $1

Real > Apparent, thus your real wage rate has increased since 2005.
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What is the major difference between the unadjusted trial balance and the adjusted trial balance?
11Alexandr11 [23.1K]

Answer:

The correct answer is Option a. The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts.

Explanation:

The trial balance is a summary of all the account balances for an organization, usually spooled at the end of the year. The possibility exist that transaction that occurred during the year are not captured, accurately or properly recorded in the books. When the company's financial statements are reviewed at the end of the year, adjustments may be made to the unadjusted trial balance to include transactions previously not recorded, accurately or properly captured in the books of accounts.

The inclusion of these adjustments results in the adjusted trial balance.

Hence Option a which states that the adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts is the right option.

5 0
3 years ago
Read 2 more answers
Bert's Car Sales is a new firm that is still in a period of rapid growth. The company plans on retaining all of its earnings for
DaniilM [7]

Answer:

The correct choice is C)

The most logical thing to do would be to calculate the value of the stock in 5 years time.

Explanation:

This speaks to ones understanding of dividend growth stock valuation models. These tools are used to establish a fair value for a stock by discounting the present value of its future dividends. A commonly used model is the constant growth dividend discount model.

The formula for the DDM, which assumes constant growth in dividends, is provided below.

P0 = D1/(r-g)

Where,

P0 = intrinsic value of stock

D1 = dividend payment one year from today

r = discount rate

g = growth rate

Identifying the correct answer entails establishing a timeline of the expected cash flows. We are given the following information:

t0 = $0

t1 = $0

t2 = $0

t3 = $0

t4 = $0

t5 = $0.20

t6 = $0.20 * 1.035

Given a rate of return, we could use the constant growth dividend discount model to establish the fair value of the firm at t5 (five years from today). Incidentally, to determine today's value, we'd discount it back another five years.

Based on the information above,  we are able to prove that the answer is '5'.

Cheers!

3 0
3 years ago
When we express the value of a cash flow or series of cash flows in terms of dollars today, we call it the ________ of the inves
vekshin1

Answer:

Present value

Future value

Explanation:

Present value is the value of cashflows discounted at interest rate at arrive at its value today.

Future value is the value of cashflows discounted at interest rate at arrive at its value at some given time in the future.

I hope my answer helps you

8 0
3 years ago
Read 2 more answers
A share of stock is now selling for $115. It will pay a dividend of $9 per share at the end of the year. Its beta is 1. What do
natali 33 [55]

Answer:

The expected price of the stock is $122.03

Explanation:

To calculate the expected price of the stock at the end of the year or at Year 1, we first need to determine the required rate of return on the stock. We will use the CAPM equation to calculate the required rate of return.

The required rate of return is calculated as,

r = rRF + Beta * (rM - rRF)

Where,

  • rRF is the risk free rate
  • rM is the return on market

r = 0.05 + 1 * (0.14 - 0.05)

r = 0.14

We already have the price of the stock today, the D1 and the required rate of return. Using the constant dividend growth model of DDM, we calculate the growth rate in dividends to be,

P0 = D1 / (r - g)

115 = 9 / (0.14 - g)

115 * (0.14 - g)  =  9

16.1 - 115g  =  9

16.1 - 9 = 115g

7.1 / 115 = g

g = 0.0617 or 6.17%

Using the same formula and replacing D1 with D2, we can calculate the price of the stock at the end of the year or at start of Year 1.

P1 = 9 * (1+0.0617)  /  (0.14 - 0.0617)

P1 = $122.03

4 0
3 years ago
QS 3-7 Adjusting prepaid (deferred) expenses LO P1 For each separate case, record the necessary adjusting entry. On July 1, Lope
kicyunya [14]

Answer:

S/n   General Journal              Debit      Credit

a       Insurance expense        $1,200

               Prepaid Insurance                   $1,200  

        (To record insurance expired)

b       Supplies expense          $6,200

                Supplies                                  $6,200

                ($5,000 + $2,000 - $800)

         (To record supplies used)

5 0
3 years ago
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