Answer:
a. borrowers gain at the expense of lenders
Explanation:
Inflation refers to the sustained increase of the price of a commodity over a period of time.
It can be caused due to increase in production cost or increased demand of a good or service.
The losers during inflation are the creditors because the money loaned out had more value or purchasing power compared to what is repaid. This is due to the fact the borrower will still owe the lender the same amount .
If the country can produce a good or service at a lower opportunity cost, it has a comparative advantage.
<h3>
What is comparative advantage?</h3>
- In an economic model, agents have a comparative advantage over others if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to the trade.
- Comparative advantage describes the economic reality of trade advantages for people, firms, or nations as a result of disparities in their factor endowments or technological progress.
- (The absolute advantage, comparing output per time (labor efficiency) or per quantity of raw material (monetary efficiency), is typically considered more intuitive but less accurate – productive trade is possible as long as the opportunity costs of manufacturing commodities vary between countries.)
Therefore, if the country can produce a good or service at a lower opportunity cost, it has a comparative advantage.
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Answer:
Value of scholarship today = $30,484.90
Explanation:
The value of the Scholarship is the present value of the annual payment of $9,000 discounted as the annual interest rate of 7% per annum.
This can be computed using the formula below
Present Value = Annual cash flow × (1- (1+r)^(-n)/r)
n -number of years, r-interest rate
rate r- 7%, n=4, Annual cash flow = 9,000
Present Value = 9,000× (1-1.07^-4)/0.07
= 9,000× 3.3872
= $30,484.90
Value of scholarship today = $30,484.90
Answer:
a. $7,505
b.$6,840
Explanation:
a. Computation for the after-tax cost of the expense assuming that Firm A incurs the expense
Using this formula
After-tax cost = Deductible Expense - (Firm A Marginal tax rate* Deductible Expense)
Let plug in the formula
After-tax cost = ($9,500 - ($21%*9500)
After-tax cost = ($9,500 - $1,995)
After-tax cost=$7,505
Therefore the after-tax cost of the expense assuming that Firm A incurs the expense is $7,505
B. Computation for the after-tax cost of the expense assuming that Firm Z incurs the expense
Using this formula
After-tax cost = Deductible Expense - (Firm Z Marginal tax rate*Deductible Expense)
Let plug in the formula
After-tax cost =$9,500 -(28%*$9500)
After-tax cost =($9,500 - $2,660 )
After-tax cost=$6,840
Therefore the after-tax cost of the expense assuming that Firm Z incurs the expense is $6,840
