Answer:
In an open economy, the supply curve for dollars in the foreing-currency exhange market is vertical, because the supply does not depend on the exchange currency rate.
The supply of dollars in an open economy depends on the interest rate, which is determined by the difference between imports and exports (which is the same as the difference between purchases and sales of foreign capital).
Answer:
inflation <u>SHOULD BE</u> included explicitly in the cash flow analysis, and debt payments by the subsidiary <u>SHOULD BE</u> included explicitly in the cash flow analysis.
Explanation:
A capital budgeting analysis is carried out in order to determine how a company should invest their capital assets.
The discounted cash flow method is the primary tools used in this type of analysis. Cash flows from foreign countries that have high inflation rates will be negatively affected since high inflation tends to currency depreciation which in turn leads to lower cash flows in US dollars. The same applies to debt payments made by the subsidiaries since they also reduce net cash flows. Lower net cash flows result in lower NPV and IRR.
Answer:
Consumer surplus increases by $2
Explanation:
The consumer surplus can be defined as the benefit that consumers gain when they pay less for a good that they are willing to pay more for.
a). Determine the final demand as follows;
Price elasticity of demand=% change in price/% change in demand
where;
price elasticity of demand=-1
% change in price={(Final price-initial price)/initial price}×100
Final price=$24
initial price=$25
% change in price=(24-25)/25=(1/25)×100=-4%
% change in demand=x
replacing in the original expression;
-1=-4/x
x=4%
% change in quantity={final quantity-initial quantity/initial quantity}×100
let final quantity=y
4%={(y-100)/100}×100
0.04=(y-100)/100
4=y-100
y=4+100=104
final quantity=104 units
Consumer surplus=(1/2)×change in price×change in quantity
where;
change in price=25-24=1
change in quantity=104-100=4
Consumer surplus=(1/2)×1×4=2
Consumer surplus increases by $2
Answer:
a. Secured bonds - A secured bond is a bond that is issued with a collateral backing the loan.
b. Callable bonds - A bond that the issuer can call off, or pay off, at any time, not necessarily at maturity.
c. Convertible bonds - A bond that can be converted into equity (stocks). If the bondholder wishes, he can exchange his bond for ownership of stocks in the bond issuer firm.
d. Term bonds - A bond that has one single, specific maturity date.
e. Serial bonds - A bond that has several maturity dates.
Answer:
The amount of allocated manufacturing overhead costs for August is $47,150
Explanation:
For computing the allocated manufacturing overhead costs, first we have to compute the direct labor hours which is shown below:
= Direct labor cost ÷ per hour rate
= $73,800 ÷ $36
= 2,050 hours
Now the allocated manufacturing overhead costs equals to
= Direct labor hours × Manufacturing overhead rate
= 2,050 hours × $23
= $47,150
