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Helen [10]
3 years ago
15

Assume the spot rate for the British pound currently is £.6369 per $1. Also assume the one-year forward rate is £.6421 per $1. A

risk-free asset in the U.S. is currently earning 3.2 percent. If interest rate parity holds, what rate can you earn on a one-year risk-free British security?
Business
1 answer:
inna [77]3 years ago
5 0

Answer:

4.04%

Explanation:

Using the Interest rate parity formula according to this theory the forward exchange rate of  should be equal to the spot rate multiplied by the interest rate of the domestic country divided by the interest rate of the foreign country so from this formula

F=S*(1+i)/(1+r)

we derive

(1+r)=F/S*(1+i)

1+r =0.6421/0.6369*(1.032)

1+r =1.0404

 r   = 0.0404/4.04%

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Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants t
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Answer:

Appliance Possible Inc. (AP)

a) Flexible Budgets for productions level:

i) Production level of 90,000 units:

Unit variable cost = $13 $(7+4+2)

Total Variable Costs = 90,000 x $13 = $1,170,000

Fixed Costs = $225,000

Total Costs = $1,395,000

ii) Production level of 105,000 units:

Total Variable costs = 105,000 x $13 = $1,365,000

Fixed Costs = $225,000

Total Costs = $1,590,000

iii) Production level of 120,000 units:

Total Variable costs = 120,000 x $13 = $1,560,000

Fixed Costs = $225,000

Total Costs = $1,785,000

b) If AP sells the toaster ovens for $18 each, to make a profit of $309,000 before taxes, units to be sold are:

Break-even Point + Target Profit =  (Fixed Cost + Target Profit)/Contribution per unit

Contribution per unit = $18 - $13 = $5

= ($225,000 + $309,000)/ $5

= $534,000/$5

= 106,800 units

Explanation:

a) A flexible budget tries to change the level of output.  It is a technique used to assess performance under different volumes or activities.  It helps management to make the right decisions, given the fact that different levels of activity may call for different cost and revenue reflections.

b) To make a target profit, the fixed cost is added to the target profit and divided by the unit contribution.  This produces the number of units to be sold in order to achieve the target profit.

c) Contribution is the difference between the selling value and the variable costs.  It is the element that covers fixed costs and generates profit before taxes.

7 0
3 years ago
5. Michael told Greg to sell his collection of vintage heavy metal band t-shirts. He
kiruha [24]

Answer:

The correct answer is Greg. He is the agent.

Explanation:

First of all, the term <em>agent</em>, in business, is understand as the individual that currently <em>manages another person's business affairs</em> and that commonly spend much of his time negotiating contracts for his clients.

Secondly, according to the definition of agent, it is understandable that in this case the agent is Greg due to the fact that he is the one that has to sell the collection, under Michael's orders.

4 0
3 years ago
Read the scenario below and then answer the question. Sample scenario: Scientists have created a new grass seed that stops grass
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Answer: a good with an elastic supply

Explanation:

Price elasticity of supply simply refers to how the changes in market price of a good bring about a responsiveness to the supply of such good.

Based on the information given, the best description of the grass seed that is described in this scenario is that it's a good that has an elastic supply. This is because the price of the good in thus case, is sensitive to the changes in the price.

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3 years ago
Read 2 more answers
The income statement for the Shamrock, Inc. for the month ended July 31 shows Service Revenue $17,510, Salaries and Wages Expens
Greeley [361]

Answer:

July 31

Dr Service revenue $17,510

Cr Income summary $17,510

July 31

Dr Income summary $14,230

Salaries and Wages Expense $9,760, Maintenance and Repairs Expense $3,070 Income Tax Expense $1,400

July 31

Dr Income summary 3,280

Cr retained earnings 3,280

July 31

Dr Retained earnings 1,660

Cr Dividends 1,660

Explanation:

Preparation of the closing journal entries

July 31

Dr Service revenue $17,510

Cr Income summary $17,510

(To close revenue account)

July 31

Dr Income summary $14,230

(9,760+3,070+1,400)

Salaries and Wages Expense $9,760, Maintenance and Repairs Expense $3,070 Income Tax Expense $1,400

(To close expense accounts)

July 31

Dr Income summary 3,280

(17,510-14,230)

Cr retained earnings 3,280

(To close net income/loss to retainedearnings)

July 31

Dr Retained earnings 1,660

Cr Dividends 1,660

(To close dividends to retained earnings)

5 0
3 years ago
Outdoor Gear Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October: Var
yanalaym [24]

Answer:

$1,482 unfavorable

Explanation:

Calculation to determine the variable overhead flexible-budget variance

Using this formula

Variable overhead flexible-budget variance=Variable overhead spending variance Unfavorable + Variable overhead efficiency variance Unfavorable

Let plug in the formula

Variable overhead flexible-budget variance=$1,300 (U) + $182 (U)

Variable overhead flexible-budget variance= $1,482 (U)

Therefore the variable overhead flexible-budget variance is $1,482 unfavorable

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3 years ago
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