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kirza4 [7]
3 years ago
11

Suppose two athletes each sign 10-year contracts for $80 million. In one case, we’re told that the $80 million will be paid in 1

0 equal installments. In the other case, we’re told that the $80 million will be paid in 10 installments, but the installments will increase by 5 percent per year. Who got the better deal?
Business
1 answer:
marusya05 [52]3 years ago
7 0

Answer:

The athlete with equal installments got the better deal.

Explanation:

Two athletes each sign 10-year contracts for $80 million.

In one case, we’re told that the $80 million will be paid in 10 equal installments.

In the other case, the $80 million will be paid in 10 installments, but the installments will increase by 5 percent per year.

The one with equal installments will get $8 million every year.

But the one with increasing installments will get smaller payments initially as his payments were to be increased by 5% each year.

Though the total value of both the annuities will remain the same.

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Galen Company income under variable costing is $1,050,000. Fixed production costs in ending inventory are $300,000 and $250,000
lana [24]

Answer:

Income under absorption costing = $1,100,000

Explanation:

Marginal and absorption costing are two different methods to deal with fixed production overheads and and decide whether or not they are included in valuation of inventory.

<u>Valuation of inventory</u>

Opening and closing inventory are valued at variable cost under variable costing.  Whereas in absorption costing, opening and closing inventory are valued at full production cost (including fixed production overheads).

<u>Reconciling profits reported under two different methods</u>

When inventory levels increase or decrease during a period then profits will differ under absorption and marginal costing because of fixed production cost.

Net Income under absorption costing = Income under variable costing + fixed production cost in ending inventory – fixed production cost in beginning inventory

= $1,050,000 + $300,000 - $250,000

= $1,100,000

7 0
3 years ago
You can buy an item for $125 on a charge with the promise to pay $125 in 60 days. Suppose you can buy an identical item for $115
Margarita [4]

Answer:

Effective annual interest rate=0.52%

Explanation:

Step 1: Express the formula for calculating interest

The formula for calculating interest can be expressed as;

I=PRT

where;

P=principal amount borrowed

R=annual interest rate as a percentage

T=number of years

Step 2: Determine the value of the variables P, R and T

In our case;

I=$10

P=(125-10)=$115

R=unknown=r

T=2 months=2/12=1/6 years

replacing in the expression;

10=115×r×(2/12)

10=(230/12)r

r=10×12/230=0.5217

0.5217 rounded off to the nearest 2 decimal places is:

r=0.52%

Effective annual interest rate=0.52%

4 0
3 years ago
An idea from monetarism that has been absorbed into mainstream macroeconomics would be the Multiple Choice effects of aggregate
vladimir1956 [14]

Answer:

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Explanation:

5 0
2 years ago
Jessica is a one-third owner in Bikes-R-Us, an S corporation that experienced a $45,000 loss this year (year 1).
Arlecino [84]

Answer:

a. $15,000

b. $10,000 & $3,000

c.  $3,000

Explanation:

a. The amount of loss deducted in a year will be equal to the stock basis in the company.

The excess amount of loss will be carry to the future years and deducted, if there is conditional stock basis in the company.

The amount is Jessica allowed to deduct in year 1: ($45,000 x 1/3) = $15,000

b. Her stock and debt bases in the corporation at the end of year 1:

=> Stock basis at the end of year 1: $10,000 - $10,000 = 0

=> Remaining amount of loss: $15,000 - $10,000 = $5,000 => Remaining loss: $5,000 - $3,000 = $2,000

So, Jessica has a suspended loss of $2,000 at the end of year 1

c. The profit is $12,000

Share of J: $12,000 x 1/3 = $4,000

Out of this $4,000, the $3,000 (one-third) will be its debt basis and $1,000 will be stock basis.

The amount of $2,000 loss will first be deducted from the stock basis and then from the debt basis.

3 0
3 years ago
Bethany and Claiborne want to form a limited liability company (LLC) to manage their business, DoReMi Music. Like corporations,
Ivenika [448]

Answer:

Nine jurisdiction which are California, District of Columbia, Florida, Idaho, Iowa, Nebraska, New Jersey, Utah, and Wyoming

Explanation:

The Uniform Limited Liability Company Act (ULLCA) was an act that was formed in 1995 and was amended in 1996 and 2006 which allows small businesses enjoy tax advantage of a partnership.

6 0
3 years ago
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