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damaskus [11]
3 years ago
14

Lara Technologies is considering a total cash outlay of $250,000 for the purchase of land, which it could lease out for $35,000

per year. If alternative investments are available that yield a 12% return, the opportunity cost of the purchase of the land is a. $30,000 b. $4,200 c. $250,000 d. $35,000
Business
1 answer:
o-na [289]3 years ago
3 0

Answer:

opportunity cost = 30,000

Explanation:

The opportunity cost is the return in the alternative investment:

250,000 x 12% = 30,000 opportunity cost

The economic profit would be the  lease less the opportunity cost

35,000 - 30,000 = 5,000 economic profit

<u>Note: If there was two or more alternatives, </u>we should pick the investment with the highest yield.

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A situation in which a buyer has limited supplierâ options, is procuring a criticalâ item, needs technologyâ innovation, or is c
Dmitry_Shevchenko [17]

Answer:

Collaborative relationship

Explanation:

Here, it requires at least 2 parties to consent to this and the aim is to allow mutual benefits between both parties where they both benefit from each other. Thus, with this, more resources can be pumped to get the appropriate supply that is technologically advanced and equipped to to be used to foster the business

7 0
3 years ago
Calculate the following: The future value of lump-sum investment of $3,200 in four years that earns 6 percent. Round your answer
tresset_1 [31]

Answer:

(a) $4,040

(b) $3,434

(c) $348

(d) $3,265

Explanation:

(a) Calculate the following: The future value of lump-sum investment of $3,200 in four years that earns 6 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.1 or the Garman/Forgue companion website.) Round Future value of a Single Amount in intermediate calculations to four decimal places. $

To estimate this, the formula for calculating future value is used as follows:

FV = PV * (1 + r)^n ………………………….. (1)

Where,

FV = future value = ?

PV = lump-sum investment = $3,200

r = interest rate = 6%, or 0.06

n = number of years = 4

Substitute the values into equation (1) to have:

FV = $3,200 * (1 + 0.06)^4

FV = $3,200 * (1.06)^4

FV = $3,200 * 1.2625

FV = $4,040

(b) The future value of $1,100 saved each year for three years that earns 4 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $

To calculate this, the formula for calculating the Future Value (FV) of an Ordinary Annuity is used as follows:

FV = M * (((1 + r)^n - 1) / r) ................................. (2)

Where,

FV = Future value of the amount after 3 years =?

M = Annual savings = $1,100

r = interest rate = 4%, or 0.04

n = number of years = 3

Substituting the values into equation (2), we have:

FV = $1,100 * (((1 + 0.04)^3 - 1) / 0.04)

FV = $1,100 * 3.1216

FV = $3,434

(c) A person who invests $1,800 each year finds one choice that is expected to pay 4 percent per year and another choice that may pay 7 percent. What is the difference in return if the investment is made for four years? Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $

To do this, we first calculate the return of each of the 2  investments by using the the formula for calculating the Future Value (FV) of an Ordinary Annuity in part b above is used as follows:

<u>Calculation of return at 4 percent</u>

Where;

FV at 4% = Future value of the return after 4 years =?

M = Annual savings = $1,800

r = interest rate = 4%, or 0.04

n = number of years = 4

Substituting the values into equation (2), we have:

FV at 4% = $1,800 * (((1 + 0.04)^4 - 1) / 0.04)

FV  at 4% = $1,800 * 4.2465

FV  at 4% = $7,644

<u>Calculation of return at 7 percent</u>

Where;

FV at 7% = Future value of the return after 4 years =?

M = Annual savings = $1,800

r = interest rate = 7%, or 0.07

n = number of years = 4

Substituting the values into equation (2), we have:

FV at 7%= $1,800 * (((1 + 0.07)^4 - 1) / 0.07)

FV at 7% = $1,800 * 4.4399

FV at 7% = $7,992

<u>Calculation of the difference in return</u>

This is calculated as follows:

Difference = FV at 7% - FV at 4% = $7,992 - $7,644 = $348

(d) The amount a person would need to deposit today with a 7 percent interest rate to have $4,000 in three years. Round your answer to the nearest dollar. (Hint: Use Appendix A.2 or the Garman/Forgue companion website.) Round Present value of a Single Amount in intermediate calculations to four decimal places. $

To estimate this, the formula for calculating present value is used as follows:

PV = FV / (1 + r)^n ………………………….. (1)

Where;

PV = Present value or amount to deposit today = ?

FV = future value in three years = $4,000

r = interest rate = 7%, or 0.07

n = number of years = 3

Substitute the values into equation (1) to have:

PV = $4,000 / (1 + 0.07)^3

PV = $4,000 / 1.2250

PV = $3,265

4 0
3 years ago
Cassandra is a 21-year-old who is still in college. She wants a credit card so she can order items online.
ycow [4]
The most logical answer to me would be A, however I recommend you don’t go with my answer JUST YET because this is an educational guess. Take time to think about my answer. Sorry if it’s wrong
4 0
3 years ago
1The main reason that U.S. currency cannot be turned in to the government in exchange for a tangible asset such as gold is that:
White raven [17]
The correct answer for the question that is being presented above is this one: 
(1) <span>B)People prefer tangible items, so the government would not be able to satisfy demand for the tangible item at any fixed rate of exchange
</span>(2) <span>B)Potential buyers of the assets of a bank, incorrectly rumored to be distressed, may suspect the assets to be of poor quality.
</span>(3) <span>C) The Federal Reserve ("the Fed") stands ready to inject reserves into the system more quickly in a crisis.
</span>(4) <span>A)Checkable Deposits / Required Reserves</span>
7 0
3 years ago
A market is described by the following supply-and-demand curves:QS = 2PQD = 300−PSuppose the government imposes a price ceiling
Zarrin [17]

Answer:

Binding

$100

200

200

Shortage

Explanation:

A price ceiling is when the government or an agency of the government sets the maximum price for a good.

A price ceiling is binding when the price ceiling is below the equilibrium price.

To find the equilibrium price, equate qs to qd because at equilibrium, quantity supplied is equal to quantity demanded.

2P = 300 - P

3P = 300

P = 100

Equilibrium price is $100.

$100 > $90. Therefore, price ceiling is binding.

To find quantity supplied, plug in the value of P into the equation for quantity supplied

QS = 2(100) = 200

To find quantity demanded, plug in the value of P into the equation for quantity demanded

QD = 300 - 100 = 200

when price is below equilibrium price, quantity demanded increases while the quantity supplied decreases. This leads to a shortage.

I hope my answer helps you

3 0
3 years ago
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