Answer:
A. The total market value of steel used to produce car and total market value of car itself are summed
Explanation:
Double Counting refers to multiple inclusion of Intermediate goods' value in value of Final Goods . Final Goods are goods used for self consumption , investment & Intermediate Goods are goods used for further processing , further resale .
Eg : Farmer sold wheat to miller for 100 . Miller sells flour to baker for 150 (miller value added = 150 - 100 = 50) .Baker sells bread to consumers for 200 (baker value added = 200 - 150 = 50) . But ,Value of Bread (200) already includes value of flour (150) , which further includes value of wheat (100) and value added at each stage 50 each.
If including value of both final good (Bread) and intermediate good (Wheat , flour) : Bread value would be 100+150+200 = 450 which is much overvalued above real value 200, including all intermediate goods value , because of Double Counting of IC goods value in Final Good
Similarly : Steel used as Intermediate good to produce Final Good Car , if included in Car Value - will lead to Double Counting
Answer:
6.5%
Explanation:
Initial investment= $809100-$22900
= $786200
Annual incremental net operating income= $141500-$89900
=$51600
Therefore, the formular for simple rate of return is:
Annual incremental net operating income/ Initial investment
= $51600/$786200
= 0.065×100
= 6.5%
Thus, the simple rate of return on the investment is closest to 6.5%
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Answer:
net cash used by investing activities = $280,000
Explanation:
Cash flow from Investing Activities :
Proceeds from Sale of Land $120,000
Purchase of Equipment ($315,000)
Proceeds from Sale of debt securities ($85,000)
Net Cash used by Investing activities ($280,000)
therefore,
Wainwright should report as net cash used by investing activities in its 2020 statement of cash flows of $280,000
Answer:
a.) The proportional up movement , u, for the currency can be calculated using the following formula:
u = eStd Dev * Square root of t
u = e0.06*square root of 0.25
u = 1.0305
b.) Probability of up movement, p , = (a - d) / (u - d)
where a = ert where r = 0.025, t = 0.25
a = e0.025*0.25 = 1.0063
d = 1 / u = 1 / 1.3050 = 0.7663
p = (1.0063-0.7663) / (1.3050-0.7663)
p = 0.46
1-p = 1-0.46 = 0.54
c) Price of an American Call Option on the currency : we use binomial tree for that , as follows: The amounts below line indicate the option price and figures above line indicate the underlying asset price which is 0.55555