Answer:
A) Price elasticity of demand = 8
B) PED is elastic
C) increase Danny's total revenue
Explanation:
we can calculate the price elasticity of demand using the formula:
PED = % change in quantity demanded / % change in price = [(300 - 100) / 100] / [(1.5 - 2) / 2] = (200 / 100) / (-0.5 / 2) = 2 / 0.25 = 8
if the PED is the same when the price decreases from $1 to $0.50, total revenue will :
- when price = $1.50, total revenue = $1.50 x 300 = $450
- when price = $1, total revenue = $1 x 1,100 = $1,100
*a 33.33% decrease in the price will cause a 266.6% increase (= 33.33% x 8) increase in the quantity demanded = 300 units + (300 x 266.6%) = 300 + 800 = 1,100 units
Cash transactions are more likely to be recorded incorrectly than other types of transactions since they happen more frequently.
<h3>What do you name a transaction?</h3>
A transaction is what? An executed contract between such a seller and a buyer to trade goods, services, or capital instruments in exchange for money is known as a transaction. The phrase is also frequently used in business accounting. In corporate bookkeeping, this easy notion could be difficult to apply.
<h3>Do you mean by transaction "payment"?</h3>
A transaction is the outcome of a contract between such a seller and a buyer. In a trade, the seller exchanges cash for the provision of goods, services, or other financial assets. A company's lifeblood is its financial activities, which enable them to produce a consistent revenue stream and manage cash flow.
To know more about transactions visit:
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Amount to be credited = $2,020
Outstanding balance = $480
Explanation:
The payment terms state that
- 3% discount may be taken within 10 days of the invoice date (up to May 20); or
- 1% discount may be taken within 15 days of the invoice date (after May 20 but not later than May 25); or
- The net amount is due within 60 days of the invoice date if advantage is not taken of the cash discounts offered.
- The 3% cash discount is not applicable as the payment was made on May 22 which is after the end of the discount period. However, the 1% discount is allowed, since payment on May 22 is within the 15-day period for the 1% discount.
Amount to be credited
= 2000 / (1−0.01)
= 2000 / (0.99)
= $2,020
Outstanding balance
= 2500 - 2020
= $480
Answer:
Testerman Construction Co.
Internal rate of return method in analyzing capital expenditure:
Present value of expenditure = $149,630
Present of cash inflows annuity = $149,630 (using 20% discount rate and present value annuity factor of 3.3251 x $45,000)
NPV = $0 (PV of cash outflow - PV of cash inflow)
Therefore, the IRR = 20%
Explanation:
a) Data and Calculations:
Investment cost = $149,630
Annual net cash flows = $45,000
Investment period = 6 years
Annuity of future cash flows = 3.3251
b) Testerman’s IRR (Internal Rate of Return) is a capital budgeting and analysis tool which determines the discount rate that makes the present value of future inflows equal to the present value of outflows from a project. This IRR helps the managers to determine the projects that add value and are worth undertaking. IRR is based on assumptions. Similar projects with the same IRR will differ in returns due to the differences in timing and the size of the cash, the amount of debts and equity used to generate the returns, and the assumption of a constant reinvestment may which IRR makes.
