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sergeinik [125]
3 years ago
15

Assume there are no prospective investment projects (I) that will yield an expected rate of return (r) of 25 percent or more, bu

t there are $5 billion of investment opportunities with an expected rate of return between 20 and 25 percent, an additional $5 billion between 15 and 20 percent, and so on. If the real interest rate is 15 percent in this economy, the aggregate amount of investment will be
Business
1 answer:
bazaltina [42]3 years ago
8 0

Answer:

$10 billion

Explanation:

The aggregate amount of investment = the $5 billion that yield a 20-25% rate of return + the $5 billion that yield a 15-20% rate of return.

Both amounts are included because their rates of return are higher than the current interest rate in the economy (15%).

You might be interested in
A 15% increase in sales resulted in a 40% increase in net income for Company A and a 60% increase in net income for Company B. B
Ivahew [28]

company B has the greater operating leverage

What is operating leverage?

A cost-accounting method called operating leverage assesses how much a company or project can raise operating income by raising revenue. A company with significant operating leverage creates sales with a high gross margin and low variable costs.

The break-even point of a business is determined using operating leverage, which also aids in determining the right selling prices to cover all expenditures and make a profit.

Regardless of whether they sell any units of product, businesses with significant operational leverage must cover a bigger amount of fixed costs each month.

Low-operating-leverage businesses may have high variable costs that are directly related to sales, but they also have fewer monthly fixed expenses.

Learn more about operating leverage with the help of given link:-

brainly.com/question/6238482

#SPJ4

3 0
1 year ago
The following are a series of unrelated situations. Answer the questions relating to each of the five independent situations as
Solnce55 [7]

Answer:

Determine its bad debt expense for 2020. Bad debt expense for 20  

Cr Bad Debt Expense $ 524 - Credit, which means a profit in the income statement.

Allowance for Uncollectible Accounts Balance

$ 4,380  - $524 = $ 3,856

Explanation:

December 31, 2020  

Dr Accounts receivable $ 48,200

Cr Allowance for Uncollectible Accounts $ 4,380

Net Credit Sales $ 1,253,200

Buffalo Company estimates its bad debt expense to be 8% of gross accounts receivable.

Determine its bad debt expense for 2020. Bad debt expense for 20  

Dr Allowance for Uncollectible Accounts $ 524

Cr Bad Debt Expense $ 524

Allowance for Uncollectible Accounts Balance

$ 4,380  - $524 = $ 3,856

The allowance for uncollectible Accounts must reflect as balance the value estimated as bad debts, which is 8% of gross accounts receivable. $48,200*0,08 = $3,856

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % estimated of accounts receivables as CREDIT, if the company had balances that differ from that value then it must be adjusted to the new estimated value.

Bad accounts are those credits granted by the company and there is no possibility of being charged.

"When customers buy products on credits but the company cannot collect the debt, then it's necessary to cancel the unpaid invoice as uncollectible."

One way is to directly cancel bad debts at the time it was decided that the credit is bad, the total amount reported as bad debt expenses negatively affect the income statement and the accounts receivable are reduced by the same amount, less assets

The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.

When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Allowance for Uncollectible Accounts (credit)

At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit)  with accounts receivable (credit), with this we are recognizing the bad credit of the company.

8 0
2 years ago
Answer following question with true or false and explain.A firm's profit margin is 5%, its debt/assets ratio is 56%, and its div
maria [59]

Answer:

False

Explanation:

As a company's sales level increases, its current assets will increase, e.g. cash, inventories, accounts receivables increase. generally, also the fixed assets increase, specially if the firm was previous producing at full capacity even before total sales increased. But as sales increase, not only do the company's assets increase, its current liabilities generally increase also, and its profits should increase. In this case, 60% of the company's profits are reinvested in the company, and the liabilities represent more than half of the total assets. Therefore, it is possible that the company needs external financing, but it is also possible that it doesn't. You cannot assume that the company will necessarily need external financing, because retained earnings  and the increase in current liabilities might be enough to finance the company's growth in sales.

8 0
2 years ago
Builder Products, Inc., uses the weighted-average method in its process costing system. It manufactures a caulking compound that
geniusboy [140]

Answer:

Explanation:

Beginning WIP inventory                    74000  

Add: Units started during May           390000  

Less: Ending inventory                        34000  

Units completed and transferred       430000  

1                        Equivalent Units

                                                            Whole units Materials    Conversion

Beginning WIP inventory                    74000           74000        74000

Started & completed                          356000     356000        356000

Ending inventory                                34000           23800         10200

Units accounted for                           464000         453800        440200

                                                                Materials Conversion  

Equivalent units of production         453800    440200  

2    

Cost Data:                                                 Total Material Conversion

Beginning WIP inventory                  142800     98800       44000

Current costs                                      755960    513830      242130

Total cost to account for                    898760    612630      286130

Divided by Equivalent units                                    453800 440200

Cost per Equivalent unit                           2.00      1.35 0.65

Materials Conversion  

Cost per Equivalent unit                           1.35 0.65  

3    

Cost Assignment:    

Ending Work in process:    

Material                                                 32130  

Conversion                                            6630  

Total Ending Work in process             38760  

4    

Cost of units completed and transferred    

Material                                                 580500  

Conversion                                            279500  

Total                                                       860000  

5    

Cost to be accounted for:    

Beginning WIP inventory                       142800  

Current costs                                          755960  

Total costs to be accounted for            898760  

Cost accounted for as follws:    

Cost of units completed and transferred 860000  

Cost of ending work in process            38760  

Total costs accounted for                      898760  

6 0
2 years ago
The accounts receivable turnover is computed as __________ divided by __________. sales; accounts receivable sales; average acco
tekilochka [14]

Answer:

sales ; average accounts receivables

Explanation:

Accounts receivable turnover refers to how a business firm manage its assets. Businesses, companies uses accounts receivables to know and quantify how perfectly goods bought on credit by their customers are being paid back. It also measures how business gives credit and collects back it's debt .It is calculated as net sales divided by average accounts receivables.

6 0
3 years ago
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