Total revenue minus the total explicit and total implicit costs of production is economic profit.
Economic profit is accounting profit less implicit or opportunity costs. It is also total revenue less explicit and implicit cost.
Explicit cost is the amount used in running a business. Examples are rent and wages.
Implicit cost is the cost of the next best option that is let gone off when one option is chosen over other options. For example, a baker leaves his job to start his own business. His implicit cost is the wages he earned as a baker.
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Answer:
Dividend $82,500 (debit)
Cash $82,500 (credit)
Explanation:
Dividends are distributed to the shares outstanding at declaration date instead of authorized shares.
Dividend = 110,000 shares outstanding × $1× 0.75
= $82,500
Note : Value used is based on the par value of shares
Dividend $82,500 (debit)
Cash $82,500 (credit)
Answer: B
Explanation:
I THINK DONT BE MAD IF ITS NOT
Answer:
a. 96.87%
b. 0.08%
c. 1.79%
d. Please read the explanation below.
Explanation:
a. Number of compounding period (t) = 1
Yield to maturity = 3.23%
Assume the face value of Zero compund bond is 1.000.
Calculate the price
Price = Face Value / (1+YTM)^t
= 1.000/(1+0.323)^1
=968.71
Price expressed as a % to face value = Price / Face Value * 100 = 96.87%
b. Credit spread = Yield of AAA - Yield of treasury bond = 4.94% - 3.15%= 0.08%
c. Credit spread = Yield of B - Yield of treasury bond
= 4-94% - 3.15%
=1.79%
D. The credit rating a bond changes with its corresponding change in the credit risk. That means higher the risk, lower will be the rating of the bond and vice versa.
The investors demand for higher return on risky bonds for undertaking additional risk. Therefore, the credit spread widens as the bonds rating falls with an increase in the risk.