The relationship-specific investments are investments that are worth more in the context of a specific business relationship.
<h3>What are relationship-specific assets?</h3>
The defining characteristic of relationship-specific assets is that they are more valuable when used in a relationship than when used alone. An example of this is when an upstream supplier invests in her product to make it more suited to the needs of the downstream consumer. By facilitating investment between purchasers and suppliers of intermediate goods that is relationship-specific, banks help the economy flourish.
Relationship investments are described by Williamson's transaction cost theory of 1985 as the extent to which assets are devoted to a specific relationship producing a lock-in scenario for the investing party in inter-organizational relationships. Meanwhile, the relationship-specific investments, in Crawford's words, are those "whose rewards depend on the continuation of the relationship."
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Raw materials are goods that are for processing which will result in finished products which are for sale.
The raw materials inventory includes the metal of $13,000 and the cloth of $6,000 or a total of $19,000. The $2,000 cleaning supplies do not fall under the classification of raw materials, instead, this falls under prepaid supplies and later reclassified to supplies expense once consumed.
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Answer:
The amount of the loan was $ 13,953.48.
Explanation:
To determine what is the loan amount if the interest rate is 7.5% per year and the monthly interest payment is $ 1,250, the following calculation must be performed:
1250 x 12 = 15,000
1,075X = 15,000
X = 15,000 / 1,075
X = 13,953.48
Therefore, the amount of the loan was $ 13,953.48.