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3 years ago

In an economy with population growth at rate n, the change in capital stock per worker is given by the equation:_______.

Business

1 answer:

Natalija [7]3 years ago

6 0

Answer:

B. Δk = sf(k) – (δ + n)k.

Explanation:

The Solow Growth Model, developed by Robert Solow, a Nobel Prize winning economist. It was the first neoclassical growth model which was was built upon the Keynesian Harrod-Domar model. The modern theory of economic growth is given by the Solow Model.

The equation below gives us the change in capital stock per worker with population growth at rate n;

Δk = sf(k) – (δ + n)k.

Where k: capital stock per worker in period t

s: savings rate

δ: rate of depreciation of capital

n: labor or number of workers

sf(k): savings per capita multiplied by a fraction of income saved.

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On January 1, 2016 Dinwiddie Company purchased a car that cost $45,000. The car had an expected useful life of 6 years and a $10

disa [49]

Answer:

.B. The amount of depreciation expense recognized in 2019 would be greater if Dinwiddie depreciates the car under the straight-line method than if the double declining balance method is used

Explanation:

The double-declining method recognizes higher depreciation amounts in the first years of an asset 's life. The method applies twice the rate of the straight-line method on a declining book value balances. In the latter years, the depreciation amount will be less because the book value will have declined considerably.

In this case, a useful life of six years attracts a straight-line depreciation rate of 16.6 % (1/6 x 100). the double-declining method will apply a rate of 33.2 %.

The straight-line method applies a constant rate throughout the use-life of an asset. The book value decreases at a constant rate, unlike in double -declining, where the book value decreases rapidly in the early years of the asset. 2019 will be the fourth year in this case. The fourth-year is in the latter stages of a six-year useful life.

3 0

3 years ago

A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2021. Accounting records on that date indicated the following:

andrew-mc [135]

Cost of inventory destroyed in fire is $1,140,000

Explanation:

The loss from fire to inventory can be calculated by finding the cost of the inventory on the may 4 , 2021.

Cost of sales = Sales – profit on sales

= 9000000-1800000

=$7200000

The value of inventory on the may 4 = opening inventory on January 1 + purchases + freight in – cost of sales

=1980000+5880000+480000-7200000

=$1,140,000

Cost of sales is referred to the amount that is incurred in producing the goods. Cost of sales is included in the sale price of the product to earn a profit beyond the cost. So sales includes cost and profit which can be used to find the cost of sales.

4 0

3 years ago

Taylor's Hardware is acquiring The Corner Store for $50,000 in cash. Taylor's has 2,200 shares of stock outstanding at a market

Katena32 [7]

Answer:

$27,000

Explanation:

Taylor share $39,600

(2,200 * 18)

Add: Corner share Acquired $35,100

(1,300 * 27)

Add: incremental value $2,300

Less: Cash paid $50,000

Value of Taylor's Hardware $27,000

after the acquisition

7 0

2 years ago

Suppose a U.S. Treasury bond will pay $2,500 five years from now. If the prevailing interest rate on 5-year Treasury bonds is 4.

Morgarella [4.7K]

Answer:

The value of the bond today is closest to $1648.85

Explanation:

The value of the bond today is closest to:

Present Value = FV / (1+i)^n *m

FV= 2500

I = 4.25 = 0.0425

N= 5

M= 2

The value of the bond today = 2500 / (1+0.0425) ^5*2

The value of the bond today = 2500 / 1.516214468

The value of the bond today = 1648.853256

The value of the bond today = $1648.85

5 0

3 years ago

On January 1, 2021, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bonds were priced to yield

aev [14]

Answer:

before decrease in rates: 706,483

after rate decrease: 751,360

interest expense 35,015.12

discount on BP 3,015.12

cash 32,000

--bonds first interest payment--

interest expense 35,165.87

discount on BP 3,165.87

cash 32,000

--second interest payment--

unrealized loss 44,877

discount on bonds payable 44,877

--to adjust bonds valuation--

Explanation:

First, we solve for the present value of the bond to get the proceeds from the issuance.

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

C 32,000

time 20

rate 0.05

$32000 \times \frac{1-(1+0.05)^{-20} }{0.05} = PV\\$

PV $398,790.7310

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 800,000.00

time 20.00

rate 0.05

$\frac{800000}{(1 + 0.05)^{20} } = PV$

PV 301,511.59

PV c $398,790.7310

PV m $301,511.5863

Total $700,302.3173

Now, we do the table for the first year:

# / Principal/ paid / interest / Amort/End. P

1 700,302 32000 35015.12 3015.12 703,317

2 703,317 32000 35165.87 3165.87 706,483

Now, we have to redo the calculations for the bonds market value considering a decrease in the market rate to 9%

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

C 32,000

time 18

rate 0.045

$32000 \times \frac{1-(1+0.045)^{-18} }{0.045} = PV\\$

PV $389,119.7377

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 800,000.00

time 18.00

rate 0.045

$\frac{800000}{(1 + 0.045)^{18} } = PV$

PV 362,240.30

PV c $389,119.7377

PV m $362,240.2951

Total $751,360.0328

We adjust for: 751,360 - 706,483 = 44,877

This will be an unrealized loss as the liability increases but, will be realized on the redemption of the bonds or at the end of the bonds' life.

3 0

3 years ago