Answer:
The answer is Balance sheet accounts are overstated and income statement accounts are understated.
Explanation:
The real rate of return is 3.15%.
What is real rate of return?
The annual percentage of financial gain on an investment that has been prorated for inflation is known as the real rate of return. As a result, the real rate of return provides an accurate representation of the real purchasing power of the a given sum of money over time. The investor can calculate how much more of a nominal return seems to be real return by adjusting this same nominal return to account for inflation. Investors must account for the effects of additional factors, including such taxes and investing fees, in addition to adjusting for inflation, in order to calculate real returns on their investments or to make investment decisions. Subtracting this same nominal interest rate from the inflation rate yields the real rate of return.
1+real rate = (1+rate of return) / (1+inflation)
1 + real rate = (1+0.0645) / (1+0.032)
1 + Real Rate = 1.0315
Real Rate = 0.0315 = 3.15%
To learn more about real rate of return
brainly.com/question/3578105
#SPJ4
Answer and Explanation:
The computation is shown below:
Fixed cost is
= $500,000 + $1,000,000
= $1,500,000
And, the marginal cost is
= $0.25 + $0.10
= $0.35 per paer
Now
as we know that
AFC = FC ÷ Q
Now for At 1,000,000 papers,
AFC is
= 1,500,000 ÷ 1,000,000
= $1.50/mo
At 800,000
, it would be
AFC = 1,500,000 ÷ 800,000
= $1.875/mo
MC = $0.35 per paper and the same is not changed
Now for break even, the average total cost is
ATC = AFC + AVC
ATC = FC ÷ Q + VC ÷ Q
VC = MC × Q
ATC = FC ÷ Q + MC
ATC = FC ÷ Q + 0.35
At Q = 1,000,000,
ATC = 1.50 + 0.35
ATC = $1.85
At Q = 800,000
, it would be
ATC = 1.875 + 0.35
= $2.225
As it can be seen that
The AFC changes from 1.50 to 1.875 which shows an increment of 0.375.
The MC remains constant or same at 0.35 as the printing and delivery costs per paper are remain same
And, The minimum amount that we must charge to break even rises i.e. from 1.85 to 2.225. That is a rise of 0.375
