1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
VLD [36.1K]
3 years ago
15

When modeling the right to develop an oil property as a real option, and in the presence of fixed costs, using oil price volatil

ity in the option-pricing model will
Business
1 answer:
lora16 [44]3 years ago
4 0

Answer:

overestimate because the value of the option depends on the volatility of revenue

Explanation:

The greater the market volatility, the greater the range that would be needed to determine the option premium. This would end up causing an overestimation of the premium value.

Therefore making use of oil price volatility in the option-pricing model will overestimate as value of option is dependent on how volatile the revenue is.

You might be interested in
For each of the following types of indirect expenses and service department expenses, identify one allocation basis that could b
hodyreva [135]

Answer: (A) Computer service expenses of production scheduling for operating departments

Explanation:

 The computer services expenses of the production scheduling is one of the type of indirect expenses and also the type of service department expenses type in the operating department.

 The indirect expenses is one of the type of expenses that cannot be directly contribute with the cost object or services in the business department expenses.

 According to the given question, the computer service expenses is one of the allocation basis that is used as the indirect expenses in an organization or firm and the indirect expenses are categorized into two main parts that is:

 1) Fixed

 2) Recurring

Therefore Option (A) is correct answer.          

5 0
3 years ago
Prepare the journal entry to record Regis’s employer payroll taxes resulting from the January 8 payroll. Regis’s state unemploym
Vilka [71]

Answer:

1a.

FICA-Social Security 5,369.20

FICA-Medicare 1,255.70

FUTA 519.60

SUTA 4,676.40

1B.

Dr Office salaries expense 25,760.00

Dr Sales salaries expense 60,840.00

Cr FICA—Social sec. taxes payable 5,369.20

Cr FICA—Medicare taxes payable 1,255.70

Cr Employee fed. inc. taxes payable 12,760.00

Cr Employee medical insurance payable 1,440.00

Cr Employee union dues payable 780.00

Cr Salaries payable 64,995.10

2.

Dr Payroll taxes expense 11,820.90

Cr FICA—Social sec. taxes payable 5,369.20

Cr FICA—Medicare taxes payable 1,255.70

Cr State unemployment taxes payable 4,676.40

Cr Federal unemployment taxes payable 519.60

Explanation:

1a. Calculation for the amounts for each of these four taxes of Regis Company.

REGIS Company’s:

Tax January 8 earnings

Subject to tax ×Tax Rate= Tax Amount

FICA-Social Security

86,600× 6.20%= 5,369.20

FICA-Medicare 86,600×1.45%= 1,255.70

FUTA 86,600×0.60%=519.60

SUTA 86,600× 5.40% =4,676.40

1B. Preparation of the journal entry to record Regis Company's January 8 employee payroll expenses and liabilities

Jan 8

Dr Office salaries expense 25,760.00

Dr Sales salaries expense 60,840.00

Cr FICA—Social sec. taxes payable 5,369.20

Cr FICA—Medicare taxes payable 1,255.70

Cr Employee fed. inc. taxes payable 12,760.00

Cr Employee medical insurance payable 1,440.00

Cr Employee union dues payable 780.00

Cr Salaries payable 64,995.10

2. Preparation of the journal entry to record Regis's employer payroll taxes resulting from the January 8 payroll

Jan 8

Dr Payroll taxes expense 11,820.90

(5,369.20+1,255.70+4,676.40+519.60)

Cr FICA—Social sec. taxes payable 5,369.20

Cr FICA—Medicare taxes payable 1,255.70

Cr State unemployment taxes payable 4,676.40

Cr Federal unemployment taxes payable 519.60

Calculation for the amount Subject to tax

Office salaries $25,760

Sales salaries $60,840

Subject to tax=$86,600

4 0
3 years ago
Which statement is true about the retail inventory method? Group of answer choices It may not be used to estimate inventories fo
mr_godi [17]

Answer:

The answer is: There are different versions of the retail inventory method.

Explanation:

There are several types of retail inventory method:

  1. the conventional (lower of average cost or market) method,
  2. the cost method
  3. the LIFO retail method
  4. the dollar value LIFO retail method

The retail inventory method is very useful for large retailers (e.g. grocery stores, hypermarkets, etc.). Its greatest advantage is that the inventory balance can be calculated without a physical count.

5 0
3 years ago
QUESTION 1 Buchanan Corp. forecasts the following payoffs from a project: Outcome Probability of Outcome Assumptions $ 1,100 25
Lorico [155]

Answer:

$2,700

Explanation:

Calculation for the expected value of the outcomes

Using this formula

Expected value=respective outcome*Respective probability

Let plug in the formula

Expected value=(0.25*1100)+(0.55*2300)+(0.20*5800)

Expected value=$275+$1,265+$1,160

Expected value=$2,700

Therefore the expected value of the outcomes will be $2,700

5 0
3 years ago
According to management scholar Henry Mintzberg, which of the following is true of managers?
Ad libitum [116K]

Answer:

They have work that is characterized by fragmentation, brevity, and variety.

Explanation:

Hentry Mintzberg, a famous American non-fiction author, wrote in one of his books on management about the roles of managers. In it, he described their work as being fragmented, short, and varied.

Fragmented means that they often have to stop what they're doing in order to jump into something else that may be more urgent. Brevity refers to the fact that they usually do things quickly because of how many obligations they have. Variety refers to the various types of work they have to perform within their obligations.

7 0
3 years ago
Other questions:
  • This is the person or persons who offers a good or service.
    6·1 answer
  • How does the economy of Cuba differ from the economy of North Korea? In North Korea, the government’s control of the economy has
    8·1 answer
  • Dash Plumbing is an established company with 12 employees and a small office in the suburbs of Atlanta. The company had an old c
    10·1 answer
  • you are forming a new company that delivers food to residents across college campuses. the primary focus is
    6·1 answer
  • Tamery Corp. is engaged in marketing various goods and services. It buys products from various manufacturers and sells them to b
    7·1 answer
  • True Moto Corp. (TMC) is a leading automobile company. The company has been able to sustain its competitive advantage primarily
    14·1 answer
  • At year end, Tangshan China Company balance sheet showed total assets of $60 million, total liabilities (including preferred sto
    11·1 answer
  • Two or more products are produced using limited resources. The firm would like to determine how many units of each product it sh
    14·1 answer
  • Which quality is a requirement In order for a destination to become a tourism destination area (TDA)?
    7·2 answers
  • Smashed Pumpkins Co. paid $192 in dividends and $617 in interest over the past year. The company increased retained earnings by
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!