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torisob [31]
3 years ago
15

A consumer is 20 years old and expects to live to age 80. He has a current wealth of $100,000, an annual income of $100,000, and

plans on retiring when his is 60 years old. Assume he smooths his consumption according to the life-cycle hypothesis. (He does not plan to leave any money to his kids when he dies).
Show an equation that would explain his Annual consumption C
Compute this consumer’s savings in the year when he is 45 years old.
Compute this consumer’s wealth in that same year.
Which if the following would change his annual consumption more:

(1) he wins a $1 million lottery today, or
(2) his annual income is $120,000 (starting today). SHOW why. SHOW all work.
Business
1 answer:
Feliz [49]3 years ago
8 0

Answer:

Given Wealth: $100,000 (w)

Annual Income: $100,000 (y)

<u>Equation: Annual Consumption (C)  </u>

Annual Consumption (C) = w + Ry/T

Substitute all value in equation  

C = 100,000 + (40 × 100,000)/60

C = 100,000 + (4,000,000)/60

C = 4,100,000/60

C = 68333.33

<u>At 45 Years Old: </u>

Annual Saving 68333.33 is spend every year

= 100,000 – 68333.33

= $ 31,667

Then,

= $31,667 × 25

= $791,675

<u>Consumer Wealth </u>

Consumer Wealth = $100,000 + $791,675

Consumer Wealth = $891,675

<u>Annual Consumption More: (i) $1 Million Lottery </u>

C = $1000000 + (40 × 100,000) / 60

C = $1000000 + $4000000 / 60

C = $5000000 / 60

C = $83333.3

<u>Annual Income is $120,000 </u>

C = 100,000 + (40 × 120,000)/60

C = 100,000 + 4800000

C = 4900000/60

C = $81,666.6

At 1 million lottery, his consumption is high  

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MasterCom Corporation corporation produces a semiconductor chip used on communications. the direct materials are added at hte st
Mariana [72]

Answer:

a. The equivalent units of work done in​ June=   450,000

b. The total manufacturing cost per chip= $ 12.199= $ 12.2

Explanation:

a. The equivalent units of work done in​ June

Units Started                                                                  475,000

Units Completed                                                             425,000

Units still in Process completed 50% =  (50,000 * 50%) 25,000

The equivalent units of work done in​ June  =        450,000

b. The total manufacturing cost per chip

Direct material cost                 $935,750

Conversion costs                 $4,554,000

The total manufacturing     $ 5489750

The total manufacturing cost per chip =   $ 5489750/450,000

  The total manufacturing cost per chip       = $ 12.199= $ 12.2

3 0
3 years ago
XYZ Development, Inc. leases commercial space to businesses. Most of the leases are long-term, from five to fifteen years in len
prisoha [69]

Answer:

B. Escalator Clause

Explanation:

An escalation clause is a clause in a lease or contract that guarantees a change in the agreement price once a particular factor beyond control of either party affecting the value has been determined. An important example of this is a contract that adjusts for inflation.

4 0
3 years ago
Compound interest means that interest is calculated on:.
ira [324]

Answer: initial principal

Explanation:

Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

6 0
2 years ago
The Tuck Shop began the current month with inventory costing $10,000, then purchased inventory at a cost of $35,000. The perpetu
GREYUIT [131]

Answer:

$500 shrinkage

Explanation:

Calculation to determine the amount of shrinkage occurred during the month

Using this formula

Shrinkage=Ending inventory-Actual count

Let plug in the formula

Ending inventory=$10,000 + $35,000 - $30,000 Ending inventory= $15,000

Shrinkage=$15,000 - $14,500

Shrinkage= $500

Therefore the amount of shrinkage occurred during the month is $500

6 0
3 years ago
A quality control activity analysis indicated the following four activity costs of an administrative department:
Doss [256]

Answer:

total sales are the internal failure costs is 2%

Explanation:

given data

form to reduce errors =  $15,000

customer complaints = 75,000

Verifying = 30,000

Correcting errors = 60,000

Total = $180,000

sales = $3,000,000

to find out

total sales are the internal failure costs

solution

we know here that internal failture cost is express as

internal failture cost  = correcting error in form   ...........1

internal failture cost  =  $60000

and

internal failture cost as % of total cost is here as

internal failture cost to sale = \frac{internal\ failture\ cost}{sales}   .......2

internal failture cost to sale = \frac{60000}{3000000}

internal failture cost to sale = 2%

so total sales are the internal failure costs is 2%

3 0
3 years ago
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