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2 years ago

In words, what does it mean when an economic consultant states:" kevin's income elasticity of red wine is equal to 6?

1 answer:

6 0

When an economist says that "Kevin's income elasticity of red wine is 6" he means that if Kevin's income increases by 10%, the quantity of red wine demanded by Kevin rises by 60%. So, red wine is income elastic. Since the income elasticity is greater than 1, red wine is a luxury good for Kevin.

Income elasticity measures the change in the quantity of goods demanded relative to a change in income.

If an increase in income results in a decrease in the quantity of goods demanded, then that good is an inferior or cheap good. The income elasticity of a cheap good is negative.

If the demand for a good rises with an increase in income, then that good is a normal good. The income elasticity of normal goods is greater than zero.

If an increase in income results in a greater increase in the quantity of goods demanded, then that good is a luxury good. The income elasticity of a luxury good is greater than 1.

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Under an operating lease: (Select all that apply.)Check All That ApplyThe lessee reports amortization expense and interest expen

Alja [10]

Answer:

The lessee reports a single amount of lease expense, which is equal to interest expense plus amortization expense, in its income statement.

The lessee reports lease expense on a straight-line basis and the lessor reports lease revenue on a straight-line basis over the lease term.

Explanation:

An operating lease is basically renting an asset from a lessor where the lessee will pay a certain amount every period for the use of the asset.

This rent payment is equal to the interest expense plus amortization expense and will be reported in the income statement of the lessee as an expense.

This amount will also be reported on a straight-line basis for the duration of the lease term which means that even if rent increases, it will still have to be reported by the same amount over the lease period because the lease increase should have been taken into account already.

The lessor also reports lease revenue on a straight-line basis over the lease term.

3 0

3 years ago

Income statement _______ Click on an event in any transaction report b. Balance sheet _______ Click an account on any report c.

goblinko [34]

Answer and Explanation:

a Income statement = Reports revenues and expenses

The income statement only records the revenues earned and expenses incurred

b Balance sheet = Reports Assets, liabilities and Equities

The balance sheet records the 3 items i.e assets, liabilities and stockholder equity

With the help of the accounting equation, the balance sheet should be matched

c Statement of Cash flows = Includes operating, Investing & Financing

The cash flow statement consist of operating activities, investing activities, and financing activities. It records only cash payments and cash receipts transactions

d AR Aging Report= Reflects unpaid invoices for current period

It shows the invoices which are not paid

e AP Aging Report = Reflect unpaid bills for current period

It shows the bills which are not paid

f Inventory valuation report = Reports Inventory Quantities on hand

It shows the quantities of inventory remains on till date

g Profit and loss report = Another name for Income statement

The other name of income statement is profit and loss account or report

h To view a transaction report = Click an account on any report

For seeing the transaction report we have to just click on any report

i To view a source document = Click on an event in any transaction report

For seeing the source document we have to just click on the event of any transaction report

j % of income check box = Click to add a new column in a report

For percentage of income check box we need to add a new column in a report

4 0

3 years ago

Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price

Cloud [144]

Answer:

Yield with 6-day maturity is 7.70%

Yield with 18-day maturity is 2.57%

Explanation:

The formula for yield on repurchase is given as:

y = ( PAR – P ) / P x (360 / t )

P=Purchase price

PAR=Repurchase price

t= number of days of the transaction

In first scenario,PAR is $39 million,P is $38.95 million and t=6

y=($39000000-38950000)/38950000*(360/6)

y=7.70%

In the second scenario,details remained the same except for t that is 18

y=($39000000-38950000)/38950000*(360/18)

y=2.57%

This implies the longer the maturity the lesser the yield since yield is computed on daily basis.

3 0

3 years ago

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be

V125BC [204]

Answer:

a) required rate of return = 10%

b)Also, if there is no growth then Return on Equity will be equal to the Required rate of return. Hence there won't be any change.

c) a cut in the dividend payout to 25% will have no effect or impact and as such the stock price will remain the same.

A complete elimination of dividend will not affect the stock price as well.

Explanation:

The question is in three parts and will be answered accordingly

a) The Required Rate of Return = (The Dividend Expected for the next year/ Current Price of Stock) + the Growth rate

First, we calculate the Dividend expected per share for the next year

=earnings per share x Dividends pay out ratio

=$2 /$10 = 20%

Secondly, we now calculate the return on equity as follows

= Expected Earnings Per share / Current Selling price

= $2 x (1-50%) = 10%

The third is to calculate the Growth rate =

Return on Equity x (1 - Dividend payout ratio)

= 20% x (1-50%) = 10%

Using this with the formula of required rate of return

= ($1 /$10) +10% = 20%

b) First the assumption is that all earnings were paid as dividend with no reinvestment and in this scenario, the lack of reinvestment will mean no growth. Also, if there is no growth then Return on Equity will be equal to the Required rate of return. Hence there won't be any change.

c) Because the Return on Equity is equal to required rate of return, it means a cut in the dividend payout to 25% will have no effect or impact and as such the stock price will remain the same.

A complete elimination of dividend will not affect the stock price as well.

6 0

3 years ago

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lys-0071 [83]

Answer:

W-2, 1099, 1040, I-9, W-4

Explanation:

5 0

3 years ago