Answer:
The market price is below what some consumers are willing to pay for the product.
Explanation:
Consumer surplus refers to the benefit that a consumer can get by purchasing the product. It is the difference between the consumer's willingness to pay for the product and the price actually paid by the consumer for the product.
Consumer surplus = Consumer's willingness to pay - Market price
Whenever consumer's willingness to pay is higher than the market price, then consumer surplus is out to be positive.
Answer:
Decrease of net cash flow
Explanation:
Underthe indirect method, we calculate the cash flow based on the change in working capital:
The inventory, which is an asset will be purchased with cash or cash equivalent. Therefore, an increase on inventory produce a decrease of net cash flow.
If the inventory is purchased on account then, It will increase account payable, which represent an increase on the net cash flow. This generates a net effect of zero, 100,000 for account payable - 100,000 for inventory.
Which is what happens when purchase on account are made.
However, here we are asked for an increase on inventory only. We should simply state that this will represent a decrease in the cash flow for 100,000.
Answer:
1.22%
Explanation:
The modified duration of the bond gives an indication of change in price due to a 1% change in the yield to maturity,hence, the bond modified duration is computed using the formula below:
modified duration=Macaulay Duration/(1+YTM)
Macaulay Duration=4.2
YTM(initial)=3%
modified duration=4.2/(1+3%)= 4.08
That for 1% change in yield to maturity price would change 4.08%
0.3% change in yield(3.3%-3%)= 4.08%*0.3%=1.22%
Answer:
The answer can include both C and D. Description below.
Explanation:
We make the following records.
The treasury stock was reissued at a premium of 5184 - 4556 = $628
Since treasury stock is credit account by nature we debit to reduce it by the Amount of $4,566
$628 is to be credited to the paid in capital as this is premium received in excess of par value of the stock. Since there is no mention of premium or paid in capital account we may credit the Excess of Par/Common.
Hope that helps.
