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3 years ago

What factors affect the time value of money and the cost of borrowing money?

1 answer:

5 0

1.Interest rates
The interest rate level is moved higher or lower by a country's central bank to either stimulate or slow down an economy. Higher interest rates impose a more costly fee to borrow money while lower interest rates lessen the fee and usually spur more borrowing

2.Economic growth
The strength of an economy can go a long way to boosting the strength of the nation's currency. A strong growth rate in a country will see a growing demand for products and services with better job prospects for workers as well as being an attractive destination for capital and investments.

3.Inflation
When a product rises in price, it signals that there is an underlying demand for that product. Higher prices may not seem good to a consumer, but it is generally considered healthy for a country to have a moderate increase in inflation in a growing economy.

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Enith Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts P

Firlakuza [10]

Answer:

March 1

Dr Rent Expense$4,000

Cr Cash $4,000

Dr Advertising Expense $1,350

Cr Cash $1,350

Dr Supplies $1,800

Cr Cash$1,800

Dr Office Equipment $11,500

Cr Account Receivable$11,500

10 Dr Cash $8,600

Cr Account Payable$8,600

Dr Account Payable$3,180

Cr Cash$3,180

Dr Miscellaneous Expense$700

Cr Cash$700

Dr Miscellaneous Expense$550

Cr Cash$550

Dr Account receivable$37,200

Cr Fees Earned$37,200

Dr Utilities Expense$830

Cr Cash$830

Dr Dividend$2,000

Cr Cash$2,000

Explanation:

March 1

Dr Rent Expense$4,000

Cr Cash $4,000

Dr Advertising Expense $1,350

Cr Cash $1,350

Dr Supplies $1,800

Cr Cash$1,800

Dr Office Equipment $11,500

Cr Account Receivable$11,500

10 Dr Cash $8,600

Cr Account Payable$8,600

Dr Account Payable$3,180

Cr Cash$3,180

Dr Miscellaneous Expense$700

Cr Cash$700

Dr Miscellaneous Expense$550

Cr Cash$550

Dr Account receivable$37,200

Cr Fees Earned$37,200

Dr Utilities Expense$830

Cr Cash$830

Dr Dividend$2,000

Cr Cash$2,000

5 0

3 years ago

DelRay Foods must purchase a new gumdrop machine. Two machines are available. Machine 7745 has a first cost of $10,000, an estim

Dafna11 [192]

Answer:

MACHINE 7745: -20,862.72

MACHINE A37Y: -18,281.02

Explanation:

production: 30,000,000

Machine 1

cost 10,000

life 10 years

salvage value 1,000

operating cost 0.01 per 1000 units. 0.01 x 30,000,000/1,000 = 300

Minimun accepted rate of retrun 6%

Future value of the Operating cost

$C \time \frac{(1+r)^{time} -1}{rate} = FV\\$

C = 300

r = 0.06

time = 10

$300 \time \frac{(1+0.06)^{10} -1}{0.06} = FV\\$

FV -$3,954.24

Future Value of the Investment

$Principal \time (1+ r)^{time} = Amount$

$10,000\time (1+ 0.06)^{10} = -17,908.48$

Total -17,908.48 - 3,954.24 + 1,000 = -20,862.72

Machine 2

8,000

life 10 years

no salvage value

operating cost 300

FV of the operating cost: - 3,954.24

FV of the Investment: -14,326.78

$8,000\time (1+ 0.06)^{10} = -14,326.78$

Total: -3,954.24 - 14,326.78 = -18,281.02

Edit: sorry but the math toll is not working as it should be =(

5 0

3 years ago

gary, bill and carmella invested in a corporation in the ratio of 2:3:5, respectively. if they divide the profit of $82,000 prop

Hitman42 [59]

Answer:

Each will receive:

Gary: $ 16,400

Bill: $24,600

Carmella: $ 41,000

Explanation:

The profit is shared according to the ratios of their investment as per below calculations:

Gary: $82,000×2/10 = 16,400

Bill: $82,000*3/10 = 24,600

Carmella $82,000 *5/10 = 41,000

8 0

3 years ago

on January 31,2009,Village Bank had 500000 shares of $2 par value common stock outstanding. On that date the company declared a

slavikrds [6]

A reduction in retained earnings of $2,950,000.

$37(500,000 x .14) = &2,590,000

3 0

3 years ago

Stock prices tend to ignore unexpected changes in dividend payments. Companies prefer to cut dividend payments rather than borro

Shkiper50 [21]

Answer: B. Maintaining a steady dividend is a key goal of most dividend-paying companies.

Explanation:

Companies that pay dividends prefer in general, to maintain a steady dividend overtime. This does not necessarily mean that they will pay the same amount of dividend but rather that they will pay out dividends as within a certain percentage range of the net income.

Companies do not prefer to cut dividends so as not to send the wrong message so A is wrong. Share repurchases reduces agency costs so C is wrong. Short term fluctuations in cash flow are not the key favor in determining dividend policy as the company might still pay out the same regardless so this is wrong as well. Option B is the best answer.

7 0

3 years ago