Answer:
Paul is NOT maximizing his utility.
Explanation:
Given:
MU
= Marginal utility from DVDs = 21
MU
= Marginal utility from books = 4
P = Price of DVDS = $11
P = Price of books = $1
Under the utility maximization theory for two or more goods, utility is said to be maximized by a consumer when the ratios of the marginal utility to price per unit of each good are equal to each other. For this question, this implies that when we have:
MU / P = MU / P ………………………….. (1)
Therefore, we have:
MU / P = 21 / 11 = 1.91
MU / P = 4 / 1 = 4
Since 1.91 = MU / P < MU / P = 4, this implies that these conditions are NOT consistent with equation (1). Therefore, Paul is NOT maximizing his utility.
In order to maximize his utility, Paul should consume more DVDs and consume less books until these conditions are consistent with equation (1).
Answer:
The company must borrow $144000
Explanation:
The required ending cash balance is the balance that the company should have at the end of the period. The decision to borrow will be taken by comparing the actual ending balance with the required ending balance. If the actual ending balance is less than the required ending balance, only then the company needs to borrow to reach the desired level of ending balance.
The actual ending balance can be calculated as,
Actual Ending balance = Opening Balance + Cash receipts - Cash disbursements
Actual Ending balance = 126000 + 870000 - 1020000
Actual Ending balance = - $24000
Difference = -24000 - 120000 = - $144000
As the ending cash balance is negative ( - $24000) which means that there is a shortage of cash and the company does not have enough cash to meet the disbursements for the period and maintain the required ending cash balance. The negative sign in difference indicates shortage and the need for borrowing. The company should borrow for the amount of difference. Thus, the company should borrow $144000
Answer:
B) Favourable Variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
Explanation:
Variances refer to the difference between actual and standard or budgeted costs. Standard cost is also referred to as budgeted cost. Budgeted costinh can be used by a food nutritionist to determine the food quantity he can cook as well as the ingredient amount which consists of the budgeted costs and the actual cost of preparing the food. Budgeted costchas a major advantage which is its ability to determine the pricing policy even before the product or service is delivered. When favourable or unfavourable variances are mentioned, it refers to the greater of budgeted or actual price or quantity. Favourable goes with a greater actual price or quantity while unfavorable or adverse goes with a greater standard price or quantity.
Bond could increase in the future
Answer:
c. 10%
Explanation:
The Yield to Maturity(YTM) of the Bond is the cost of the debt. So, we need to find the YTM first.
Here i will use a Financial Calculator to enter and compute the YTM as follows :
N = 20× 2 = 40
PMT = ($1,000 × 8%) ÷ 2 = $40
PV = $828
P/YR = 2
FV = 1,000
I or YTM = ?
Thus the cost of the Bond is 10%
