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3 years ago

Assume the Expectations Hypothesis regarding the term structure of interest rates is correct.

Business

1 answer:

S_A_V [24]3 years ago

6 0

Answer:

2.5% is the current two years interest rate

Explanation:

If the first year interest rate is 2% and expected coming year interest rate is 3% based on the hypothetical projection which is believed to be correct, then the interests rate for the two years will be the average of the interest of the two years in focus which gives us:

Current IR = IR (yr 1) + IR (yr 2) / no of years

Current IR = 2 + 3 / 2 = 2.5

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On January 2, 2015, Quick Delivery Company traded in an old delivery truck for a newer model. The exchange lacked commercial sub

fenix001 [56]

Answer:

$36,000

Explanation:

The first step is to calculate the fair value of the new truck

(List price-cash paid with trade)-(original cost -accumulated depreciation)

= (36,000-30,000)-(24,000-16,000)

= 6000-8000

= loss of $2000

Therefore the cost of the new truck for financial accounting purposes can be calculated as follows

(Original cost- accumulated depreciation)+cash paid with trade-loss

= (24,000-16,000)+30,000-2000

= 8,000 + 30,000 - 2,000

= 38,000-2,000

= $36,000

Hence the cost of the new truck for financial accounting purposes is $36,000

7 0

3 years ago

Suppose the production function in medieval Europe is Y 5 K 0.5L0.5, where K is the amount of land and L is the amount of labor.

Sonbull [250]

Answer:

a) Y = 500

b) Wages: 2.5

Rental price: 2.5

c) labor Share of output: 0.370511713 = 37.05%

Explanation:

$Y = 4K^{0.5} \times L^{0.5}$

if K = 100 and L = 100

$Y = 5(100)^{0.5} \times (100)^{0.5}$

$Y = 50 \times 10$

Y = 500

wages: marginal product of labor = value of an extra unit of labor

dY/dL (slope of the income function considering K constant while L variable)

$ax^b = bax^{b-1}$

$Y = 5K^{0.5} \times L^{0.5}$

$Y' = 5K^{0.5} \times 0.5 L^{-0.5}$

$Y' = 2.5K^{0.5} \times L^{-0.5}$

$Y' = 2.5(\frac{K}{L})^{0.5}$

With K = 100 and L = 100

$Y' = 2.5(\frac{(100)}{(100)})^{0.5}$

Y' = 2.5

rental: marginal product of land = value of an extra unit of land

dY/dK (slope of the income function considering K variable while L constant)

$Y = 5K^{0.5} \times L^{0.5}$

$Y' = 2.5K^{-0.5} \times L^{0.5}$

$Y' = 2.5(\frac{L}{K})^{0.5}$

L = 100 K = 100

$Y' = 2.5(\frac{100}{100})^{0.5}$

Y' = 2.5

c) we use logarithmic properties:

$Y = 50 \times 10$

$log500 = log(50 \times 10)$

$log500 = log50 + log10$

50 was the land while 10 the labor

2.698970004 = 1.698970004 + 1

share of output to labor: 1/2.698970004 = 0.370511713

5 0

3 years ago

swenson Saws produces bows, frame, dovetail, and tenon saws used by craft furniture makers. During an 8-hour shift, a saw is pro

RUDIKE [14]

Answer:

Given: Total shift time = 8 hours = 8 * 60 = 480 minutes

time required for production of one saw = 6 minutes

Demand for Bow saw = Demand for frame saw = Demand for dovetail saw = 1/2 * Demand of Tenon saw

a) Mixed model schedule:

Mixed model schedule

Product no. per batch

Bow Saw 1

Frame Saw 1

Dovetail Saw 1

Tenon Saw 2

Total 5

Therefore 2 Tenon Saw, and each bow, frame, and dovetail saws will be produced before the cycle is repeated.

b) 2 Tenon Saw, 1 bow, 1 frame, and 1 dovetail saws will be produced under production sequence for one unit production.

The length of cycle will be 5*6=30 minutes i.e. the cycle will repeat once in 30 minutes for 8 hours means totally it will repeat 16 times during one shift.

c) Number of saws Swenson produce in one shift = Number of Bow saw Swenson produce in one shift + Number of Frame saw Swenson produce in one shift + Number of Dovetail saw Swenson produce in one shift + Number of Tenon saw Swenson produce in one shift

Explanation:

7 0

3 years ago

Read 2 more answers

LO 8.4The fixed factory overhead variance is caused by the difference between which of the following?

Zanzabum

Answer: The correct answer is "actual fixed overhead and applied fixed overhead".

Explanation: The fixed factory overhead variance is caused by the difference between <u>actual fixed overhead and applied fixed overhead.</u>

There are two types of variations, one is produced because it determines whether too much or too little is spent on fixed overhead; and the other is produced because the real production can be higher or lower than the expected level.

5 0

3 years ago

Read 2 more answers

"Aerospace Dynamics will invest $196,000 in a project that will produce the following cash flows. The cost of capital is 10 perc

Likurg_2 [28]

Answer:

-$419.41

Explanation:

The computation is shown below:

Year Cash flows Discount factor Present value

0 -$196,000 1 -$196,000 (A)

1 $45,000 0.9090909091 $40,909.09

2 $60,000 0.826446281 $49,586.78

3 $54,000 0.7513148009 $40,571.00

4 -$51,000 0.6830134554 -$34,833.69

5 $160,000 0.6209213231 $99,347.41

Total present value $195,580.59 (B)

Net present value -$419.41 (A - B)

The discount factor is computed below:

= (1 + interest rate)^number of years

4 0

4 years ago