Answer:
Profitability index for Project 1 is 3.17
Profitability index for Project 2 is 1.75
The company should prefer project 1 based on the profitability index.
Explanation:
We calculate the profitability index by dividing the present value of future cash flows by the initial investment. So the profitability index for project 1 will be its future cash flows divided by the initial investment.
1,300,000/410,000=3
Profitability index for Project 1 is 3.17
We will do the same to calculate the profitability index for Project 2
7,000,000/4,000,000=1.75
Profitability index for Project 2 is 1.75
Answer: Option (A) is correct.
Explanation:
When there is an increase in both the components of aggregate demand i.e. government spending and taxes then this will most likely to offset the fiscal policy actions.
If there is an increase in the taxes, as a result aggregate demand decreases because of lower disposable income. This policy action is known as Contractionary fiscal policy.
Whereas, if there is an increase in the Government spending, as a result aggregate demand increases. This policy action is known as Expansionary fiscal policy.
But this will also largely depend upon the tax multiplier and government spending multiplier.
Answer:
Net Income 5,100
Explanation:
Sales Revenue 150x800 = 120,000
Cost of goods sold 150x600=90,000
Gross Profit 30,000
Rent expense 1900
selling expense 23,000 (120,000 x 15% + 5000)
Tota expenses 24,900
Operation Income 5,100
Under a traditional income statment, the selling expense will be period cost, They will be subtracted form the gross profit entirely.
Answer:
Ava, Miranda and Anna are using marginal analysis, while D.A and Andrea are not.
Explanation:
Let's look at the situation of each character:
- Ava decides whether or not she should spend an additional hour per day welding burn barrels by looking at how much she can produce in that hour.
Marginal analysis focuses on the costs and benefits of producing an additional unit of output or using an additional unit of input. In this case, Ava wants to determine how her productivity would be modified if an additional unit of input (time) is added.
- Miranda is pondering whether adding one more painting to her art installation will make the audience's experience better or worse.
She is using marginal analysis to determine whether the costs of producing an additional unit of output (one more painting on display) would be offset by the benefits, which are represented by the audience's satisfaction.
- D.A. calculates how many pounds of brisket he needs to eat on a daily basis to survive by looking at the total number of calories he needs.
- Andrea decides how much fabric she needs for her new costume-making business this month by using the total she used last month.
Neither D.A nor Andrea are using marginal analysis. If so, they would be interested to know what the effect of using an additional unit of input (brisket or fabric) would be to achieve their purposes. Instead, they are simply asking about the total amount of input needed to generate a certain output.
- Anna decides whether she should devote another day to studying for her music theory exam or if she can instead spend it practicing the viola.
Anna uses marginal analysis because she wants to determine how her test performance would change, whether or not she invests an additional unit of time in studying.
