Answer:
E. Compensation
Explanation:
Compensation method is an effective technique in businesses to clarify problems and justify decisions between managers and employees. In the current scenario, Wynette is using the compensation method to clarify and justify her purchase decision. She is giving different reasons why she chose an expensive printer over others; this is a compensation method because it will help her to justify her decision.
Answer: 5.9%
Explanation:
Before:
Equity is calculated as:
= Total Assets / Equity Multiplier
= $ 175,000 / 1.2
= $ 145,833
Therefore, ROE will be:
= (Turnover × Profit Margin) / Equity
= ($ 395,000 × 5.3%) / $ 145,833
= $ 20935 / $145,833
= 0.1436
= 14.36%
After:
New Total Assets will be:
= $ 175,000 - $ 51,000
= $ 124,000
Equity
= Total Assets / Equity Multiplier
= $ 124,000 / 1.2
= $ 103,333
ROE will then be:
= (Turnover × Profit Margin) / Equity
= ($ 395,000 × 5.3%) / $ 103,333
= $ 20935 / $ 103,333
= 0.2026
= 20.26%
Therefore, the change in ROE will be:
= 20.26% - 14.36%
= 5.9%
= 4.035%
Answer:
a. less wealthy and they buy less.
Explanation:
we are assuming a situation where the price level rises (inflation rises), so anyone holding cash will be able to purchase a smaller amount of goods with the same amount of cash simply because the goods are more expensive. E.g. you purchased 10 goods with $100, but if the inflation rate increases to 10%, you will be able to purchase only 9 goods with the same $100. As inflation rises, people holding cash (or other monetary form) will lose wealth and purchasing power.
