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Licemer1 [7]
3 years ago
15

Although the real assets constitute the true productive capacity of an economy, it is hard to conceive of a modern economy witho

ut well-developed financial markets and security types.
How would the productive capacity of the US economy be affected if there were no markets in which to trade financial assets?
Business
1 answer:
Liula [17]3 years ago
8 0

Answer:

Productive capacity of an economy is a function of the real assets of the economy. Real assets include plant, machinery and knowledge used to generate goods and services. Whereas financial assets are individual's claims on income generated by real assets.

Advantages of Financial assets:

  • Financial assets help large firms to raise the capital required to finance their investments projects in real assets.
  • Trading in financial assets help maintaining a lower cost of capital as financing through financial assets is easier.
  • Lower cost of capital would attract more investments.

All these benefits of financial assets will disappear in the absence of trade markets for financial assets. Absence of such markets will result in higher cost of capital as financial assets will no longer be available for various business expansion and investment projects.

Therefore, productive capacity of U.S. economy would be affected adversely if there were no trade markets for financial assets.

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Klivinich is a manufacturer of oral hygiene products. In addition to manufacturing and selling oral hygiene products, Klivinich
olga55 [171]

Answer:

Option C Achieve a competitive advantage

Explanation:

The reason is that anything brings an upperhand over the other competitors is competitive advantage. This might be due to product uniqueness or due to customer after sales services or anything in our product that the customer values more than the feature of other competitors. In this scenario, the advice of the K Company is valued by the customers and thats the reason they prefer its products because they give valuable advice with their products.

7 0
3 years ago
Alice is single and self-employed in 2019. Her net business profit on her Schedule C for the year is $150,000. What is her self-
JulijaS [17]

Answer:

$19,790

Explanation:

A taxpayer’s tax base for computing a self-employed taxpayer’s self-employment tax (i.e., net earnings from self-employment) is the taxpayer’s net business profit from Schedule C multiplied by 92.35%.

So, Alice’s net earnings from self-employment is her net profit from Schedule C of $150,000 x 92.35% = $138,525.

Alice will owe $15,773 ($127,200 maximum amount x 12.4%) in Social Security taxes and $4,017 ($138,525 x 2.9%) for the Medicare component of FICA taxes.

Alice owes total self-employment tax of $19,790 ($15,773 + $4,017).

She is not subject to additional Medicare tax because her net earnings from self-employment do not exceed $200,000.

4 0
3 years ago
Read 2 more answers
Yummy Peanut Butter created a new​ coconut-flavored peanut butter that it tested in a small number of representative cities. The
Sati [7]

Answer:

B.

standard test markets

Explanation:

Standard test markets is when a set of representative cities are selected and the full marketing mix is tested in these areas before a new product launch. The new products are sold through their normal channels to simulate reality.

Yummy peanuts is testing its new coconut flavored peanut butter in a group of representative cities. Aimed at forecasting national sales and profit. This is use of standard test markets.

4 0
3 years ago
The debt has an interest rate of 8.50% (short term) and 10.50% (long term). The expected rate of return on the company's shares
viva [34]

Answer:

Re = 16.02%

Explanation:

current stock price 36 x 7,660,000 = 275,760,000

cost of equity = 17.5%

current short term debt = 141,600,000

cost of short term debt = 8.5%

current long term debt = 210,600,000

cost of long term debt = 10.5%

total financing = 627,960,000

  • equity = 275,760,000 / 627,960,000 = 0.4391
  • short term debt = 141,600,000 / 627,960,000 = 0.2255
  • long term debt = 210,600,000 / 627,960,000 = 0.3354

WACC = (0.4391 x 0.175) + (0.2255 x 0.085 x 0.75) + (0.3354 x 0.105 x 0.75) = 0.0768 + 0.0144 + 0.0264 = 0.1176 or 11.76%

under the new structure:

total financing = 627,960,000

  • equity = 325,760,000 / 627,960,000 = 0.5188
  • short term debt = 141,600,000 / 627,960,000 = 0.2255
  • long term debt = 160,600,000 / 627,960,000 = 0.2557

assuming WACC remains unchanged:

0.1176 = (0.5188 x Re) + (0.2255 x 0.085 x 0.75) + (0.2557 x 0.105 x 0.75) = (0.5188 x Re) + 0.0144 + 0.0201 = (0.5188 x Re) + 0.0345

0.5188 x Re = 0.1176 - 0.0345 = 0.0831

Re = 0.0831 / 0.5188 = 0.1602 or 16.02%

4 0
3 years ago
The following information is available for Montrose Company at December 31: Cash in bank account $ 8,540 Petty cash $ 250 Short-
ANEK [815]

Answer:

Cash $10,430 ; Cash equivalents $20,400

Explanation.

Cash consist of all currencies in hand or any convertible asset which can be converted to cash immediately.

It is to be noted that the assets with high liquidity will be included in cash and cash equivalent balance. They can quickly be converted to cash and would normally have 90 or lesser days to mature.

Solution.

$

Cash in bank. 8,540

Petty cash. 250

Check from customer. 1,350

Money order. 290

Cash. 10,430

The check has a very short maturity period since it will clear within 3-4 working days.

Money order can be cashed immediately .

Therefore;

Cash value is $10,430

For cash equivalent,

Cash equivalent = Money market fund balance + Treasury bills maturing in 60days

Cash equivalents = $10,400 + $10,000

=$20,400.

The amounts considered as cash and cash equivalents as of 31 December are ;

Cash $10,430 , $20,400 respectively.

8 0
2 years ago
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