Answer:
The most I could pay for the investment is $12,960.09
Explanation:
The maximum a rational investor could pay acquire an investment is the present value of all future cash flows receivable from the investment.
In the case, the present of all cash flows is calculated thus:
Years Cashflows [email protected] 12% PV
1 5000 0.892857143 4,464.29
2 5300 0.797193878 4,225.13
3 6000 0.711780248 4,270.68
Total of present values 12,960.09
The discounting factor is calculated using the formula :
1/(1+r)^n where r and n are rate and number of years respectively.
Answer: A - nominal wages are slow to adjust to changing economic conditions
Explanation:
In the short run, the costs of many of the factors used in the production process are fixed. For example labours wage is fixed for a number of years because of labour contracts. Also the raw materials used in the production process have long term agreements that fix their prices.
As a result of factors of production been fixed in the short run, when general price level rises and the cost of production remains constant, profit also rises.
Firms take advantage of this rise in price and increase production and the quantity of aggregate supply increases. This is why the short run aggregate supply curve is upward sloping.
Answer:
B
Explanation:
Systemic risk occurs when there is a possibility that a company or a sector of the economy may go into crisis and negatively influence the entire economy of a country. They can happen in companies that are extremely relevant to the economy and would influence in many other sectors causing economic crisis
Answer: The matching principle
Explanation: Matching principle is a combination of accrual accounting and revenue recognition. It states that the expenses of a company must be recorded at the same accounting period in which they were incurred to earn such revenues.
In the given case, Apple is reporting the warranty expenses at the same time period in which the revenue from such expenses is recognized.
Hence we can conclude that the given case illustrates the matching principle.
