Demonstrating opportunity cost is done through production

The SP Corporation makes 48,000 motors to be used in the production of its sewing machines. The average cost per motor at this l

gizmo_the_mogwai [7]

Answer:

f the company buys the component, income will decrease by $148,800.

Explanation:

We will take into account only the avoidable costs.

Make in-house:

Direct materials $ 10.70

Direct labor $ 9.70

Variable manufacturing overhead $ 4.05

Total unitary cost= $24.45

Buy:

Price= $27.55

We need to determine the total cost of both options:

Make in-house= 24.45*48,000= $1,173,600

Buy= 27.55*48,000= $1,322,400

Difference= 1,173,600 - 1,322,400= $148,800

If the company buys the component, income will decrease by $148,800.

3 0

3 years ago

An investor purchases a mutual fund share for $100. The fund pays dividends of $2, distributes a capital gain of $3, and charges

Tju [1.3M]

Answer:

5%

Explanation:

Calculation for the net rate of return from this investment

First step is to calculate The dollar return

The dollar return=$2 + $3 + ($101 − $100) − $1

The dollar return =$2 + $3 + $1 − $1

The dollar return =$5

Now let The rate of return

The rate of return =$5/$100

The rate of return= 5%

Therefore the rate of return is 5%

4 0

3 years ago

Yesterday, you entered into a futures contract to buy euro at $1.50/€. Your initial margin was 45% and your maintenance margin i

Marat540 [252]

Answer:

$1.1786

Explanation:

Given

Initial purchase price = $1.50

Initial margin = 45%

maintenance margin is 30%

Margin call price = InitiaL purchase price × [1 - InitiaL margin / 1- maintenance margin]

= $1.50 × [1-45% / 1-30%]

=$1.50 × [0.55/0.70]

=$1.1786

6 0

3 years ago

Read 2 more answers

The following financial information was summarized from the accounting records of Train Corporation for the current year ended D

tensa zangetsu [6.8K]

Answer: $18500

Explanation:

The income from operations for the rail divisions will be calculated thus:

For the rail division,

Sales = $91800

Cost of goods sold = $45500

Direct operating expense = $27800

Income from operations:

= $91800 - $45500 - $27800

= $18500

3 0

3 years ago

Assuming the issuer does not default, can capital gains or losses be a component of the holding period return on a zero-coupon b

tamaranim1 [39]

Yes, because the bond's yield to maturity may have changed.

Do zero coupon bonds have a yield?

Without accounting for any interest payments, zero-coupon bonds always demonstrate yields to maturity adequate to their normal rates of return. The yield to maturity for zero-coupon bonds is additionally known as the spot rate.

What is the difference between a zero-coupon bond and a coupon bond?

Regular bonds, which also are called coupon bonds, pay interest over the lifetime of the bond and also repay the principal at maturity. A zero-coupon bond doesn't pay interest but instead trades at a deep discount, giving the investor a profit at maturity once they redeem the bond for its full face value.

Advantages Of Zero-Coupon Bond:

The Zero Coupon bonds eliminate the reinvestment risk. Zero-Coupon bonds don't let any periodic coupon payments, and hence a hard and fast interest on Zero Coupon bonds is guaranteed.

Learn more about zero coupon bond :

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3 0

2 years ago