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lisov135 [29]
3 years ago
9

A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Any surrender fee imposed:__

____.
a. increases cost basis.
b. reduces cost basis.
c. is deductible.
d. is not deductible.
Business
1 answer:
DanielleElmas [232]3 years ago
7 0

Answer: d. is not deductible.

Explanation: Annuity cancellation is possible before the specified term of the contract which may occur due to poor performance or other needs best known to the holder of the contract. However, when cancellation clause of an annuity is triggered, the holder may have to bear with losses arising from the cancellation in the form of Fall in the net asset value at the time, that is if the net asset value is lower than the cost basis, this is classed as ordinary and is deductible. However, the insurer also charges a non-deductible surrender charge upon cancellation.

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Eastern Electric currently pays a dividend of about $1.64 per share and sells for $27 a share.
Gre4nikov [31]

Answer:

a. 9.07%

b. 5.93%

c. 12.07%

Explanation:

Dividend valuation method is used to calculate the the value of stock based on the dividend paid, its growth rate and rate of return.

Stock Price = Dividend / ( Rate of return - Growth rate )

a.

$27 = $1.64 / ( Rate of return - 3% )

Rate of return - 0.03 = $1.64 / $27

Rate of return - 0.03 = 0.0607

Rate of return = 0.0607 + 0.03

Rate of return = 0.0907 = 9.07%

b.

$27 = $1.64 / ( 12% - Growth rate )

0.12 - Growth rate = $1.64 / $27

0.12 - Growth rate = 0.0607

Growth rate = 0.12 - 0.0607

Growth rate = 0.0593 = 5.93%

c.

$27 = $1.64 / ( Rate of return - 6% )

Rate of return - 0.06 = $1.64 / $27

Rate of return - 0.06 = 0.0607

Rate of return = 0.0607 + 0.06

Rate of return = 0.1207 = 12.07%

4 0
3 years ago
Chris and Jordan are a two-person household. Chris's market hourly wage is $40, but Chris can also produce $20 of household prod
andrezito [222]

Answer:

A. Jordan specializes in household production, while Chris specializes in marketplace work.

Explanation:

Chris and Jordan both can work for their household. The best way is to achieve maximum utility by using the combination of their skills. Chris can go for household work and Jordan can go for marketplace work. They both can use combination of their specialization to achieve maximum utility.

6 0
3 years ago
Firms making a loss will compare the losses if it shuts down to the losses if it operates in the short run. What quantity will t
Ahat [919]

The quantity that would be produced by a firm that shuts down in the short run is zero units.

<h3>When would a firm shut down in the short run?</h3>

The short run is a period when at least one or more factors of production are fixed and the others are variable. In the short run, if the average variable cost is greater than the price, the firm should cease production. This means that zero units of output would be produced.

To learn more about when a firm should shut down, please check: brainly.com/question/13034691

7 0
2 years ago
On July 1 the Fisher Shoe Store paid $24,000 to Acme Realty for 6 months rent beginning $24,000 to Acme Realty for 6 months rent
pochemuha

Answer:

C) debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.

Explanation:

July 1, prepaid rent fro 6 months

Dr Prepaid rent 24,000

    Cr Cash

July 31, adjusting entry to record rent expense

Dr Rent expense 4,000

    Cr Prepaid rent 4,000

total prepaid rent = 24,000 for six months

after one month, 24,000 / 6 = 4,000 must be recorded as rent expense and prepaid rent must be credited.

3 0
3 years ago
A liquid company produces hand sanitizer which has demand of 300,000 units per year.
jarptica [38.1K]

Answer:

EOQ =   =  15,491.93 units

Optimal order interval   18.8 days   (19.36  orders in year)

Total cost = $150,774.60

Explanation:

<em>The Economic Order Quantity (EOQ) is the order size that minimizes the balance of ordering cost and holding cost. At the EOQ, the carrying cost is equal to the holding cost.</em>

It is computed using he formulae below

EOQ = √ (2× Co× D)/Ch

<em>Co- ordering cost per order- 20, </em>

<em>Ch -Holding cost per unit per annum- 10%× $0.5=  0.05</em>

<em>Annual demand: D- 300,000</em>

EOQ = √(2× 20 * 2,580)/(10%× 0.5)

       =  15,491.93 units

Assuming 365 days, the optimal order interval in dates

Number of orders per year

= annual demand/EOQ

= 300,000/ 15,491.93

= 19.36 times

<u><em>in days:</em></u>

= EOQ/300,000 × 365 days

=   (15,491.93/ 300,000) × 365 days

= 18.8 days

Total annual cost =

<em>Total cost Purchase cost + Carrying cost + ordering cost </em>

                                                                                 $

Purchase cost = $0.5 × 300,000 =              150,000

Carrying cost = (15,491.93/2) * 10%*0.5 =       387.29

Ordering cost = (300,000/15,491.93 ) × 20 = <u>387.29</u>

Total cost                                                      1<u>50,774.60</u><u> </u>

       

5 0
3 years ago
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