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qwelly [4]
3 years ago
9

1. Suppose banks keep no excess reserves and no individuals or firms decide to hold more cash during the deposit expansion proce

ss. If someone suddenly discovers $50 million in buried treasure, explain what would happen to the money supply if the required reserve ratio is 10 percent. How would your answer change in the required reserve ratio was 20 percent?
Business
1 answer:
anygoal [31]3 years ago
6 0

Answer:

Increase by $500 m

Increase by $250 m  instead of $500 m

Explanation:

Since all the deposits over and above the reserve requirements are loaned out by the banks,

We can calculate the Credit multiplier and see how a new 50 m deposit will affect the money supply.

Credit multiplier @ 10% reserve = 1 / 0.10 = 10 times

So a new deposit of 50 m will create new money of 10 * 50 = 500 m thus increasing the money supply by this amount.

For a 20% reserve ratio, Credit multiplier changes a,

Credit Multiplier = 1 / 0.2 = 5 times

This will change the money supply by = 5 * 50 = 250 m. This is the amount of new money that will be created with reserve ratio of 20%.

Hope that helps.

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The​ after-tax cost of debt is higher than the​ before-tax cost of debt. True or False
olasank [31]

Answer:

False

Explanation:

The after cost of debt is always lower than the before tax cost of debt. For example, a company borrows $1,000,000 and pays 7% interest per year. This results in $70,000 in interest expense before taxes = $1,000,000 x 7% = $70,000.

The after tax cost of the debt = $1,000,000 x 7% x (1 - tax rate) = $1,000,000 x 7% x (1 - 21%) = $1,000,000 x 7% x 0.79 = $55,300

5 0
3 years ago
Please answer that question
SOVA2 [1]
1) agree 2)agree 3)disagree 4) disagree 5) agree 6) agree 7) agree 8) agree
7 0
3 years ago
Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2013. (Round your answers to 2 decimal plac
maxonik [38]

Answer:

NELSON COMPANY

A. Current Ratio = Current Assets/Current Liabilities

= $38,500/$13,000

= 2.96 : 1

B. Acid-test Ratio = Current Assets - Inventory/Current Liabilities

= $24,600/$13,000

= 1.89 : 1

C. Gross margin ratio = Gross margin/Net Sales x 100

= $70,750/$110,950 x 100

= 63.77%

Explanation:

a) Data and Calculations:

NELSON COMPANY

1. Unadjusted Trial Balance  as of January 31, 2013

                                                       Debit     Credit

Cash                                          $ 24,600

Merchandise inventory                12,500

Store supplies                               5,900

Prepaid insurance                         2,300

Store equipment                        42,900

Accumulated depreciation—

    Store equipment                                  $ 19,950

Accounts payable                                         13,000

J. Nelson, Capital                                        39,000

J. Nelson, Withdrawals                2,100

Sales                                                            115,200

Sales discounts                          2,000

Sales returns and allowances   2,250

Cost of goods sold                  38,000

Depreciation expense—

      Store equipment              0

Salaries expense                     31,300

Insurance expense                 0

Rent expense                         14,000

Store supplies expense         0

Advertising expense              9,300

Totals                                $ 187,150       $ 187,150

2. Adjusted Trial Balance as of January 31, 2013

                                                       Debit     Credit

Cash                                          $ 24,600

Merchandise inventory                10,300

Store supplies                                2,800

Prepaid insurance                             800

Store equipment                         42,900

Accumulated depreciation—

    Store equipment                                  $ 21,625

Accounts payable                                         13,000

J. Nelson, Capital                                        39,000

J. Nelson, Withdrawals                2,100

Sales                                                            115,200

Sales discounts                          2,000

Sales returns and allowances   2,250

Cost of goods sold                  40,200

Depreciation expense—

      Store equipment                 1,675

Salaries expense                     31,300

Insurance expense                   1,500

Rent expense                         14,000

Store supplies expense           3,100

Advertising expense               9,300

Totals                               $ 188,825      $ 188,825

3. NELSON COMPANY

Income Statement for the year ended January 31, 2013:

Sales Revenue                                     $110,950

Cost of goods sold                                40,200

Gross profit                                          $70,750

Depreciation expense—

      Store equipment                 1,675

Salaries expense                     31,300

Insurance expense                   1,500

Rent expense                         14,000

Store supplies expense           3,100

Advertising expense               9,300    60,875  

Net Income                                         $ 9,875

4. Sales Revenue                    $115,200

   Sales discount & allowances (4,250)

  Net Sales Revenue             $110,950

5. NELSON COMPANY

Balance Sheet as of January 31, 2013:

Assets:

Cash                                                         $ 24,600

Merchandise inventory                               10,300

Store supplies                                               2,800

Prepaid insurance                                            800

Current Assets:                                           38,500

Store equipment                         42,900

Accumulated depreciation—

    Store equipment                   (21,625)     21,275

Total Assets                                             $ 59,775

Liabilities + Equity:

Accounts payable                                       $13,000

J. Nelson, Capital                                         39,000

J. Nelson, Withdrawals                                 (2,100 )

Net Income                                                 $ 9,875

Total Liabilities + Equity                         $ 59,775

a) Nelson Company's current ratio is the measure of the company's ability to settle maturing short-term liabilities with short-term financial resources.  It is is measured as the relationship between current assets and current liabilities.

b) Nelson's acid-test ratio takes away the encumbrances that can slow the conversion of current assets into cash for the settlement of current liabilities.  In this case, the inventory, stores supplies, and prepaid insurance are excluded.

c) Nelson has a robust gross margin ratio of more than 60%.  This means that it is able to limit the cost of goods sold to below 40%.  However, management of Nelson Company is unable to control its periodic costs in order to generate reasonable net income, as it can only turn less than 9% of the sales into returns for J. Nelson.

7 0
2 years ago
An animal shelter spends $2.00 per day to care for each cat and $6.50 per day to care for each dog. Isaiah noticed that the shel
kari74 [83]

Answer:

There were 9 cats at the shelter on Wednesday.

Explanation:

Per day cost to care for each cat = $2.00

Per day cost to care for each dog = $6.50

Total Cost on Wednesday = $44.00

Suppose

Number of cats = C

Number of dogs = D

According to given condition

C + D = 13 (Equation 1)

( each cat's per day cost x Number of cats ) + ( each dog's per day cost x Number of dogs ) = Total coat

2C + 6.5D = 44 (Equation 2)

Multiply (Equation 1) by 2 and we get

2C + 2D = 26 (Equation 3)

Subtract (Equation 3) from (Equation 2)

2C + 6.5D - 2C - 2D  = 44 -26

4.5D = 18

D = 18/4.5

D = 4

by placing value of D in (Equation 1)

C + 4 = 13

C = 13-4

C = 9

4 0
3 years ago
Entrepreneurs who have the ability to effectively confront demands or stressors, and thus improve entrepreneurial performance, t
Aleksandr [31]

Any entrepreneurs that have the ability to effectively confront demands or stressors, and thus improve entrepreneurial performance, tend to have an <u>entrepreneurial self-efficacy</u>.

<h3>Who is an entrepreneurs?</h3>

This refers to the individual that starts and runs a business with limited resources, planning and responsible for all the risks and rewards of their business venture. Their business idea usually entails  a new product or service rather than an existing business model.

When an entrepreneur have a self-efficacy, it means he/she belief in his or her capacity to execute behaviors necessary to produce specific performance attainments.

Read more about entrepreneurs

brainly.com/question/13628349

#SPJ1

8 0
1 year ago
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