What does an increase in the consumer price index indicate?

The price of a new computer game has demand of 3,000 units at $50 and 2,500 units at $60. Calculate the Price Elasticity of Dema

kondaur [170]

Answer:

option D "The demand is unitary elastic."

Explanation:

Data provided:

At price, P1 = 3,000 units

Demand, D1 = $ 50

also,

at price P2 = $ 60

Demand, D2 = 2,500 units

Now,

the percentage change in price = $\frac{60-50}{50}\times100$

or

the percentage change in price = 20%

and,

The percentage change in the quantity = $\frac{2500-3000}{2500}\times100$

or

The percentage change in the quantity = -20%

The elasticity in demand (Ed) is given as:

Ed = (Percentage change in quantity) / (Percentage change in price)

on substituting the values, we get

Ed = (-20%) / 20%

or

Ed = - 1

Here the negative sign depicts the inverse relation between the price and the demand.

hence, the correct answer is option D "The demand is unitary elastic."

8 0

4 years ago

Project Q has an initial cost of $211,415 and projected cash flows of $121,300 in Year 1 and $176,300 in Year 2. Project R has a

vlada-n [284]

Answer:

Project Q should be accepted.

Explanation:

In this question, we have to use the profitability index formula which is shown below:

Profitability index = Present value of all years cash flows ÷ Initial investment

where,

Present value of cash inflows is calculated by applying the discount rate which is presented below:

For this, we have to first compute the present value factor which is computed by a formula

= 1 ÷ (1 +rate) ∧ number of year

number of year = 0

number of year = 1

Number of year = 2

So,

For year 1 = 0.9216 (1 ÷ 1.085) ∧ 1

For year 2 = 0.8495 (1 ÷ 1.085) ∧ 2

Now, multiply this present value factor with yearly cash inflows

So

For Project Q,

The present value of year 1 = $121,300 × 0.9216 = $111,797.235

The present value of year 2 = $176,300 × 0.8495 = $149,758.967

and the sum of all year cash inflow is 261,556.202

So, the Profitability index would be equal to

= $261,556.202 ÷ $211,415

= 1.23

For Project R,

The present value of year 1 = $187,500 × 0.9216 = $172,811.059

The present value of year 2 = $236,600 × 0.8495 = $200,981.121

and the sum of all year cash inflow is $373,792.180

So, the Profitability index would be equal to

= $373,792.180 ÷ $415,000

= 0.90

Since, the Project Q has high profitability index than Project R, so Project Q should be accepted.

4 0

3 years ago

Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special ro

valentina_108 [34]

Answer:

1a. 3,000 units

1b. $1,050,000

2. See attachment.

3. contribution margin income statement

Sales ($350 × 7,000 units) $2,450,000

Less Variable Cost ($245 × 7,000 units)) ($1,715,000)

Contribution $735,000

Less Fixed Costs ( $315,000)

Operating Profit $420,000

Explanation:

Break-even point (sales units ) = Fixed Cost ÷ Contribution per unit

= $315,000 ÷ ($350 - $245)

= 3,000

Break-even point (sales dollars) = Fixed Cost ÷ Contribution Margin Ratio

= $315,000 ÷ ($105/$350)

= $1,050,000

4 0

4 years ago

When auditing, the IRS typically selects which type of return?

madreJ [45]

Those who have the most deductions

6 0

3 years ago

Cotton Hotel Corporation recently purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emp

ExtremeBDS [4]

Answer:

c. capitalized as part of the cost of the land.

Explanation:

These are the options for the question

a. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down.

b. written off as an extraordinary loss in the year the hotel is torn down.

c. capitalized as part of the cost of the land.

d. capitalized as part of the cost of the new hotel.

From the question, we are informed about Cotton Hotel Corporation

which recentlyy purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emporia Hotel and build a new luxury hotel on the site. The cost of the Emporia Hotel should be capitalized as part of the cost of the land. In financial accounting, cost of land can be regarded as asset valuation method which can be used to land that shows on the balance sheet of a company. This cost would encompass all amount spent when acquiring the property and other expenses.

,

6 0

3 years ago