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3 years ago

1. The level of prices and the value of money

Business

1 answer:

Marizza181 [45]3 years ago

8 0

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

In year one, the basket costs $8.00.

In year two, the price of the same basket is $7.00.

Deflation= (7/8)-1= - 12.5%

In year one, $40.00 will buy ________ baskets, and in year two, $40.00 will buy ________ baskets.

Year 1= 40/8= 5 baskets

Year 2= 40/7= 5.71 baskets

The value of money rises.

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7. Alice has $15,000 for investment purposes and suppose Alice’s MARR is 18% compounded monthly. Her bank has offered the follow

stepladder [879]

Answer:

a) Annual Worth of net gain is $6793.0184

b) Annual Worth of net gain is $6395.557

c) Annual Worth of net gain is $6922.65

Recommendation: Option C is the best option for Alice

Explanation:

a) Alice will get $200 per month for 5 years which means for 60 months at the rate of 18% compounded monthly.

So FV of that cash flow

= FV(18%/12,60,-200)

= 19242.9303

A lump sum amount of $17000 at the end of 5th year

Total Worth = 19242.9303 + 17000

= $36242.9303

Annual worth = $36242.9303 / 3.1271

= $11589.94

Net Gain = $36242 - $15000

= $21242.9303

Annual Worth of net gain = $21242.9303 / 3.1271

= $6793.0184

b) Racehorse share will be worth $35000 on 5 years.

Annual Worth = $35000 / 3.1271

= $11192.48

Net Gain = $35000 - $15000

= $20000

Annual Worth of net gain = $20000 / 3.1271

= $6395.557

c) Saving account will generate funds after 5 years

= FV(18%/12,60,,-15000)

= $36648.30

Net Gain = $36648.30 - $15000

= $21648.30

Annual Worth = $36348.30 / 3.1271

= $11719.58

Annual Worth of net gain = $21648.30 / 3.1271

= $6922.65

Therefore, Option c is best for Alice.

8 0

3 years ago

If Supply and Demand have the normal shapes (not perfectly elastic or inelastic), a "tax on sellers" (as defined by Mankiw) will

Oxana [17]

Answer:

The answer b false

Explanation:

The effect of the tax on the supply-demand equilibrium is to shift the quantity toward a point where the before-tax demand minus the before-tax supply is the amount of the tax. The price the buyer pays rises, but generally by less than the tax.

6 0

2 years ago

Read the scenario. The citizens of Country D have noticed that the average prices of most goods within their nation have begun t

Kazeer [188]

Answer:

stagflation

Explanation:

This country is undergoing a process of stagflation, which is the combination of stagnation in economic activity and high inflation. The recipe for stagflation is exactly as described. Decrease in real wages caused by the inflation process and decrease in consumption because agents are becoming poorer and more fearful about the future.

5 0

3 years ago

Jason Jewelers reported the following in its statement of cash flows: Net cash provided by operating activities $140,000 Net cas

Elodia [21]

Answer:

The total net increase in cash is $ 110,000

Explanation:

Net Increase (Decrease) in Cash = Net cash provided/(used) by operating activities + Net cash provided/(used) by investing activities + Net cash provided/(used) by financing activities.

Net Increase (Decrease) in Cash= $140,000 + $120,000 -$ 150,000

= $ 110,000

This represents increase in cash inflow .

6 0

2 years ago

Use the following information to answer next three questions: IO PI IRR LIFEProject 1 $300,000 1.12 14.38% 15 yearsProject 2 $15

Evgesh-ka [11]

Answer:

Project 1

Explanation:

IO PI IRR LIFE

Project 1 $300,000 1.12 14.38% 15 years

Project 2 $150,000 1.08 13.32% 6 years

Project 3 $100,000 1.20 16.46% 3 years

Assume that the cost of capital is 12%.

We should invest in the projects that have the highest profitability index (PI) first.

PI = present value of project's cash flows / initial outlay

Projects with a high PI should also have high IRRs and this applies to this situation:

Project 3 has a PI of 1.2 and an IRR of 16.46%
Project 1 has a PI of 1.12 and an IRR of 14.38%
Project 2 has a PI of 1.08 and an IRR of 13.32%

If the protects weren't mutually exclusive and the company had enough money for the 3 of them, then it should invest in all of them. But that is not the case, here, since the company has to decide in which project it will invest (only 1 project). The first option should be project 3, but since it cannot be repeated, and its life is short, I would go for project 1.

Besides, it is the only possible answer since you have to choose only 1 project (remember projects are mutually exclusive).

6 0

2 years ago