<span>The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window. :)</span>
In a situation wherein Country Y has a progressive tax system for income, with no credits or deductions, a CEO earning $2.5 million per year would pay the most as a percentage of income in the country Y. Therefore, the option D holds true.
<h3>What is the significance of a progressive tax system?</h3>
A progressive tax system can be referred to or considered as a system wherein the percentage of tax to be levied increases with an increase in the total taxable income for an individual. The rates of taxation under this system are defined under percentage.
In the situation given above, when a CEO in country Y earns $2.5 million, i.e., more than any other person mentioned above, he will be the one who will have to pay the most taxes as a part of percentage of his income.
Therefore, the option D holds true and states regarding the significance of the progressive tax system.
Learn more about progressive tax system here:
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Answer:
the coefficient of elasticity is 0.5. Thus, demand is inelastic.
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Price elasticity = 2/4 = 0.5
Because demand is less than1, big g has an inelastic demand.
Answer:
$4,038
Explanation:
Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.
Present Value = Future Value x (1/ ( 1 + interest rate ) ^ number of periods)
Present Value = 6,000 x (1/ ( 1 + 0.08) ^ 5)
Present Value = 6,000 x 0.68058
Present Value = $4,038
Answer:
future worth:
project A 11,615.26
project B 12,139.18
It should choose project B as their future value is greater
IRR of project A: 13.54%
We should remember that the IRR is the rate at which the net value is zero thus, equals the inflow with the cash outlay
It is calculate with excel or financial calculator due to the complex of the formula.
Explanation:
Project A
We calculate the future value of the cash flow per year and cost as we are asked for future value. The salvage value is already at the end of the project life so we don't adjust it.
Revenues future value
C 15,000
time 8
rate 0.12
FV $184,495.3970
Expenses future value
C 3,000
time 10
rate 0.12
FV $52,646.2052
Cost future value
Principal 40,000.00
time 10.00
rate 0.12000
Amount 124,233.93
Net future worth:
-124,233.93 cost - 52,646.21 expenses + 184,495.40 revenues + 4,000 salvage value
future worth 11,615.26
Project B
cost:
Principal 60,000.00
time 10.00
rate 0.12000
Amount 186,350.89
expenses 52,646.21 (same as previous)
revenues
C 24,000
time 7
rate 0.12
FV $242,136.2815
TOTAL
242,136.28 + 9,000 - 52,646.21 - 186,350.89 = 12,139.18
Internal rate of return of project A
we write the time and cash flow for each period.
Time Cash flow
0 -40,000
1 -3,000
2 -3,000
3 12,000
4 12,000
5 12,000
6 12,000
7 12,000
8 12,000
9 12,000
10 16,000
IRR 13.54%
Then we write on excel the function =IRR(select the cashflow)
and we got the IRR of the project
