All categories

3 years ago

Which of the following statements is FALSE?

Business

1 answer:

Mandarinka [93]3 years ago

3 0

Answer:

C. The annual percentage rate indicates the amount of interest including the effect of compounding.

Explanation:

Annual interest rate, indicates the simple interest that can be earned annually on the investment, until and unless it is clearly mentioned to be compounded with the time period defined it cannot be concluded that the interest is carrying the compound benefit.

Therefore, the above stated option C is a false statement.

Final Answer

C. The annual percentage rate indicates the amount of interest including the effect of compounding.

You might be interested in

Payback Period Payson Manufacturing is considering an investment in a new automated manufacturing system. The new system require

MrRissso [65]

Answer:

a. 4 years

b. 5 years

Explanation:

The payback period is the time taken for the cash inflows from an investment to equal to the initial cash outflow or amount invested. To get this, the cash inflow are deducted from the outflows until the net is zero.

Considering both expected cash flows (all amounts in $);

Period Initial out flow Inflow Balance Inflow Balance

Year 0 (1,200,000) 0 (1,200,000) 0 (1,200,000)

Year 1 300,000 (900,000) 150,000 (1,050,000)

Year 2 300,000 (600,000) 150,000 (1,050,000)

Year 3 300,000 (300,000) 400,000 (1,050,000)

Year 4 300,000 0 400,000 (1,050,000)

Year 5 100,000 (1,050,000)

From the table above, with an inflow of $300,000 yearly, the inflows would equal the total outflow in 4 years while the annual cash flows: $150,000, $150,000, $400,000, $400,000, and $100,000 would make the inflows equal to the outflows in 5 years.

3 0

3 years ago

Read 2 more answers

Magic Company adds materials at the beginning of the process in Department A. The following information on physical units for De

Dvinal [7]

Answer:

Equivalent units

a) Weighted average = 523,200 units

b) FIFO = 480,000 units

Explanation:

FIFO Method.

Fully worked units: These represent units of inventory that were started in a current period and completed that same period. The fully worked units are calculated in order to separate the opening inventory from the the newly introduced when accounting for completed units under the FIFO.

For magic company , fully worked units is

= 480,000 - 72,000 = 408,000 units

Equivalent units using Weighted Average

Here, there are no distinction between opening inventory and the newly introduced.

Equivalent Units

Completed unit (100%× 480,000) = 480,000

Closing inventory (60% × 72,000) = 43,200

Total equivalent units 523,200

Equivalent Units using FIFO

Item Equivalent Units

Opening inventory (40% × 72,000) = 28,800

Fully worked (100%× 408,00) = 408,000

Closing inventory (60% × 72,000) = 43,200

Total equivalent units 480,000 

Equivalent units

a) Weighted average = 523,200 units

b) FIFO = 480,000 units

8 0

3 years ago

The total cost (in dollars) of manufacturing x auto body frames is C(x)=60,000+400x. (A) Find the average cost per unit if 20

Nesterboy [21]

Answer:

a) Average price per unit = 700

b) average marginal cost = -1.5 dollars/frame

c) For 201 frames are produced = $698.5

Explanation:

Given Data:

C(x) = 60000 + 400x

a) Average cost for 200 units:

Total Cost of 200 units will be:

C(200) = 60000 + 400(200)

C(200) = 140,000

Total Cost of 200 units = 140,000

Average price per unit = Total Cost / number of units

Average price per unit = 140,000/200

Average price per unit = 700

b) Marginal Average Cost:

We know that marginal cost = $C^{'}$ (x)

And the average marginal cost = $\frac{d}{dx}$ $\frac{C(x)}{x}$

So,

= the derivative of ( $\frac{60,000 + 400(x)}{x}$ )

= the derivative of ( $\frac{(60,000)}{x} + 400$ )

= $\frac{-60,000}{x^{2} }$ + 0

So,

average marginal cost = $\frac{-60,000}{x^{2} }$

at x = 200 units

average marginal cost = $\frac{-60,000}{200^{2} }$

average marginal cost = -1.5 dollars/frame

c) Average cost per frame if 201 frames are produced:

We already seen in the part b that, the average marginal cost is decreasing by 1.5 dollars /frame. So,

if 201 frames are produced the instead of 200 then the difference is of 1 frame and we discussed that average marginal cost of 1 frame is decreasing at 1.5 dollars per frame.

So,

As we know the average cost from part a = 700 dollars.

Therefore, for 201 item = 700 dollars -1.5 dollars

For 201 frames are produced = $698.5

5 0

3 years ago

Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% return fro

goblinko [34]

Answer:

Project A Project B

Initial investments ($170,000) ($115,000)

CF Year 1 $42,500 $34,500

CF Year 2 $58,500 $52,500

CF Year 3 $82,795 $68,500

CF Year 4 $92,900 $68,500

CF Year 5 $67,500 $68,500

using an excel spreadsheet and the IRR function, the internal rate of return of each project is:

Project A's IRR = 26.02%
Project B's IRR = 36.31%

We can use the discount rate (12%) to calculate the projects' NPV, we do not need it to calculate their IRR:

Project A's NPV = $70,855
Project B's NPV = $88,815

6 0

3 years ago

Partnership records show the following capital balances at the date of Hopkin's withdrawal: M. Hammel, $80,000; D. Hopkins, $210

Anestetic [448]

Answer:

Dr D. Hopkins, Capital 210,000

Cr P. Houghton, Capital 10,000

Cr M. Hammel, Capital 10,000

Cr Cash 230,000

Explanation:

Preparation of the December 31 journal entry for the partnership.

Based on the information given the December 31 journal entry for the partnership will be :

Dr D. Hopkins, Capital 210,000

Cr P. Houghton, Capital 10,000

(100,000-80,000/2)

Cr M. Hammel, Capital 10,000

(100,000-80,000/2)

Cr Cash 230,000

3 0

2 years ago