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3 years ago

Which of the following would not be considered leakage in the circular flow model? A imports

Business

2 answers:

NeX [460]3 years ago

6 0

Answer: B: transfer payments

Transfer payments would not be considered leakage in the circular flow model.

Explanation:

Transfer payments are payments or money made to an individual that has not performed any current service. It is also referred to as money given to a person who has not rendered any good for it. It is used by local, state and federal governments as a way of redistributing money to those in need such as the unemployed, aged, disabled people and so on.

eduard3 years ago

3 0

The answer is

C. savings

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Julie has just retired. Her company's retirement program has two options as to how retirement benefits can be received. Under th

olchik [2.2K]

Answer:

First option will be recommended.

Explanation:

To determine which option to be taken, we calculate the net present value each option generates. The option generating higher NPV should be recommended.

- Net present value of first option = Lump sum receipt = $150,000.

- Net present value of second option will be found by discounting cash flows at investing rate 12% and calculated as followed:

+ Present value of 20 equal annual payment of $14,000 + Present value of $60,000 paid in 20 years = (14,000/12%) x [ 1 - 1.12^(-20)] + 60,000/1.12^20 = $110,792.

As net present value of the first option is higher than the second option, first option will be recommended.

8 0

3 years ago

Compute the standard cost for one hat, based on the following standards for each hat: Standard Material Quantity: 3/4 yard of fa

Taya2010 [7]

Answer:

$21.65

Explanation:

The computation of the standard cost is shown below:

= Material cost + labor cost + factory overhead cost

where,

Material cost = 3 ÷ 4 × $5 per yard

= $3.75

Labor cost = 2 hours × $5.75 = $11.5

And, the factory overhead cost is

= $3.20 × 2 hours

= $6.4

So, the standard cost is

= $3.75 + $11.5 + $6.4

= $21.65

3 0

2 years ago

Describe the differences and similarities surrounding the circumstances that caused the financial crisis during the 1980s and th

Lerok [7]

Answer:

The financial crisis that began in the 1980s was the result of lax government regulations and management fraud that led to the closure of more than 1,000 savings and loans. The 2007 crisis was the result of risky mortgage loans and investments connected with those loans. In each case the situation resulted in borrowers’ inability to pay back loans and caused many to lose their homes due to foreclosure.

Explanation: Took the practice test on edge and this was the sample response. ^-^

3 0

2 years ago

Read 2 more answers

Case Study: Assume that are the financial manager of a company, which is considering a

krok68 [10]

Answer:

Explanation:

The calculation can be done using sensitivity analysis

The sensitivity analysis is done as follows:

Scenario NPV Deviation in NPV from orignial scenario % depletion

Original 6140513

Unit sale decreases by 10% 5286234 -854279 13.91%

Price per unit decreases by 10% 2894254 -3246259 52.87%

Variable cost per unit increases 10% 5286234 -854279 13.91%

Cash fixed cost per year increases by 10% 6062851 -77662 1.26%

Calculation of original NPV

Sales (350000 * 22) 7700000

Less: Variable cost (350000 * 11) -3850000

Less: Fixed cost -350000

Less: Depreciation [(2000000 - 200000) / 4] -450000

Profit before tax 3050000

Less: Tax at 30% -915000

Profit after tax 2135000

Add: Depreciation 450000

Cash flow after tax 2585000

0 1 2 3 4

Initial investment -2000000

Working capital -600000

Cash flow after tax 2585000 2585000 2585000 2585000

Working capital released 600000

Residual value 200000

Net cash flows -2600000 2585000 2585000 2585000 3385000

PVF at 10% 1 0.9091 0.8264 0.7513 0.6830

Present value -2600000 2350000 2136364 1942149 2312001

NPV 6140513

Calculation of NPV when unit sales decrease by 10%

Sales (315000 * 22) 6930000

Less: Variable cost (315000 * 11) -3465000

Less: Fixed cost -350000

Less: Depreciation [(2000000 - 200000) / 4] -450000

Profit before tax 2665000

Less: Tax at 30% -799500

Profit after tax 1865500

Add: Depreciation 450000

Cash flow after tax 2315500

0 1 2 3 4

Initial investment -2000000

Working capital -600000

Cash flow after tax 2315500 2315500 2315500 2315500

Working capital released 600000

Residual value 200000

Net cash flows -2600000 2315500 2315500 2315500 3115500

PVF at 10% 1 0.9091 0.8264 0.7513 0.6830

Present value -2600000 2105000 1913636 1739669 2127928

NPV 5286234

Calculation of NPV when price per unit decrease by 10%

Sales (350000 * 19.8) 6237000

Less: Variable cost (350000 * 11) -3850000

Less: Fixed cost -350000

Less: Depreciation [(2000000 - 200000) / 4] -450000

Profit before tax 1587000

Less: Tax at 30% -476100

Profit after tax 1110900

Add: Depreciation 450000

Cash flow after tax 1560900

0 1 2 3 4

Initial investment -2000000

Working capital -600000

Cash flow after tax 1560900 1560900 1560900 1560900

Working capital released 600000

Residual value 200000

Net cash flows -2600000 1560900 1560900 1560900 2360900

PVF at 10% 1 0.9091 0.8264 0.7513 0.6830

Present value -2600000 1419000 1290000 1172727 1612526

NPV 2894254

Calculation of NPV when variable cost per unit increases 10%

Sales (350000 * 22) 7700000

Less: Variable cost (350000 * 12.1) -4235000

Less: Fixed cost -350000

Less: Depreciation [(2000000 - 200000) / 4] -450000

Profit before tax 2665000

Less: Tax at 30% -799500

Profit after tax 1865500

Add: Depreciation 450000

Cash flow after tax 2315500

0 1 2 3 4

Initial investment -2000000

Working capital -600000

Cash flow after tax 2315500 2315500 2315500 2315500

Working capital released 600000

Residual value 200000

Net cash flows -2600000 2315500 2315500 2315500 3115500

PVF at 10% 1 0.9091 0.8264 0.7513 0.6830

Present value -2600000 2105000 1913636 1739669 2127928

NPV 5286234

Calculation of NPV when cash fixed cost per year increases by 10%

Sales (350000 * 22) 7700000

Less: Variable cost (350000 * 11) -3850000

Less: Fixed cost -385000

Less: Depreciation [(2000000 - 200000) / 4] -450000

Profit before tax 3015000

Less: Tax 30% -904500

Profit after tax 2110500

Add: Depreciation 450000

Cash flow after tax 2560500

0 1 2 3 4

Initial investment -2000000

Working capital -600000

Cash flow after tax 2560500 2560500 2560500 2560500

Working capital released 600000

Residual value 200000

Net cash flows -2600000 2560500 2560500 2560500 3360500

PVF at 10% 1 0.9091 0.8264 0.7513 0.6830

Present value -2600000 2327727 2116116 1923742 2295267

NPV 6062851

3 0

3 years ago

Following are the January transactions:

lesya692 [45]

Answer:

a) Received a $795 deposit from a customer who wanted her piano rebuilt in February.

Account Debit Credit

Cash $795

Unearned Revenue $795

b) Rented a part of the building to a bicycle repair shop: $545 rent received for January.

Account Debit Credit

Cash $545

Rent Revenue $545

c) Delivered five rebuilt pianos to customers who paid $14,425 in cash.

Account Debit Credit

Cash $14,425

Service Revenue $14,425

d) Delivered two rebuilt pianos to customers for $7,600 charged on account.

Account Debit Credit

Accounts Receivable $7,600

Service Revenue $7,600

e) Received $6,400 from customers as payment on their accounts.

Account Debit Credit

Cash $6,400

Accounts Receivable $6,400

f) Received an electric and gas utility bill for $750 for January services to be paid in February.

Account Debit Credit

Utilities Expense $750

Utilities Payable $750

g) Ordered $1,140 in supplies.

Account Debit Credit

Supplies Expense $1,140

Supplies Payable $1,140

h) Paid $3,400 on account in January.

Account Debit Credit

Cash $3,400

Accounts Payable $3,400

i) Paid $16,900 in wages to employees in January for work done this month.

Account Debit Credit

Cash $16,900

Wage Expense $16,900

j) Received and paid cash for the supplies in (g).

Account Debit Credit

Cash $1,140

Supplies Payable $1,140

8 0

2 years ago