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Vikki [24]
4 years ago
6

Antonio would like to replace his golf clubs with a​ custom-measured set. A local sporting goods megastore is advertising custom

clubs for ​$710​, including a new bag.​ In-store financing is available at 5.22 ​percent, or he can choose not to renew his ​$600 certificate of deposit​ (CD), which just matured. The advertised CD renewal rate is 5.58 percent. Antonio knows the​ in-store financing costs would not affect his​ taxes, but he knows​ he'll pay taxes​ (25 percent federal and 5.75 percent​ state) on the CD interest earnings. Should he cash the CD or use the​ in-store financing?​ Why?
Business
1 answer:
AlexFokin [52]4 years ago
6 0

Answer:

Antonio and Replacement of Golf Clubs

a. He should cash the CD and use the proceeds to finance part of the golf clubs.

b. The reason is that he would pay more in in-store financing totaling $37.06 per annum than the net interest he would generate from the CD totaling $23.18 per annum.  And Antonio would incur a net loss of $13.88 if the CD was renewed unlike the $5.74 if the CD were not renewed.

Explanation:

Option 1: Renew Certificate of Deposit (CD):

Interest earned  = $33.48 ($600 * 5.58%)

Taxes                  =   10.30 ($33.48 * 30.75%)

Net Income         = $23.18

Cost of in-store financing = $37.06 ($710 * 5.22%)

Net Loss(overall) = $13.88 ($37.06 - $23.18)

Option 2:

Sale-off of CD = $600

Net financing required = $110 ($710 - $600)

Cost of financing = $5.74 ($110 * 5.22%)

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You purchased 100 shares of IBM common stock on margin at $70 per share. Assume the initial margin is 50%, and the maintenance m
SIZIF [17.4K]

Answer:

$50

Explanation:

The computation of the stock price level is shown below:

Maintenance margin = Number of shares purchased × price - loan amount ÷  Number of shares purchased × price

30% = 100 shares × price - $3,500 ÷ 100 shares × price

30% × 100 shares × price = 100 shares × price - $3,500

30 × price = 100 shares × price - $3,500

After solving this, the price would be $50

And, the loan amount equal to

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= 100 shares × $70 × 50%

= $3,500

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3 years ago
Listening is often as important as speaking in a business conversation
natka813 [3]
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3 years ago
Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50
Gala2k [10]

Answer:

A. $60

Explanation:

Recall that, consumer's surplus refers to the price that a consumer is willing to pay less the amount he or she actually pays.

Thus

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Given that

Market price = $40

Vonda is willing to pay = $90

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Hence.

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Total consumer surplus = 50 + 10

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8 0
3 years ago
Farmers Pantry Products Inc. and Market Grocers LLC dispute a term in their contract. If Farmers Pantry and Market Grocers have
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Answer:

<u>Relationship selling</u>

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