All categories

3 years ago

Suppose a bank gets a new deposit of $100 cash and it has a 20% required reserve ratio. If

Business

1 answer:

JulijaS [17]3 years ago

4 0

Answer:

C) $500

Explanation:

First we must determine the money multiplier = 1 / reserve ratio:

money multiplier = 1 / 20% = 5

The bank's checkable deposits originally increase by $100, and since it will be able to lend all the money it can, $80, its checkable deposits will also increase by $80 x 5 (money multiplier) = $400.

So the total increase in the bank's checkable deposits = $100 (original deposit) + $400 (money created through loans) = $500

You might be interested in

Parents of young children have been known to drive out of their way so their kids will not see McDonald's Golden Arches and plea

Pavel [41]

know what the Golden Arches brand symbol means.

7 0

4 years ago

Read 2 more answers

Rent expense in Volusia Company's 2016 income statement is $420,000. If Prepaid Rent was $70,000 at December 31, 2015, and is $9

d1i1m1o1n [39]

Answer:

$445,000

Explanation:

The rent in Volusian company income statement for 2016 is $420,000

The prepaid rent is $70,000 at December 31 2015 and $95,000 at December 31 2016

Therefore the cash paid for rent in 2016 can be calculated as follows

= $420,000+($95,000-$70,000)

= $420,000 + $25,000

= $445,000

5 0

3 years ago

Palencia Paints Corporation has a target capital structure of 25% debt and 75% common equity, with no preferred stock. Its befor

Ivenika [448]

Answer:

Ke 0.173103448

WACC 14.63250%

Explanation:

From the gordon model we determinate Ke

$\frac{divends}{return-growth} = Intrinsic \: Value$

$\frac{divends}{Price} = return-growth$

$\frac{divends}{Price} + growth = return$

D1 2.7 (we are given with D0 so we multiply by (1+g) to get D1

P 29

g 0.08

$$Cost of Equity =\frac{2.7}{29} +0.08$

Ke 0.173103448

Now we use this value to determinate the WACC

$WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})$

Ke 0.1731

Equity weight 0.75

Kd 0.11

Debt Weight 0.25

t 0.4

$WACC = 0.1731(0.75) + 0.11(1-0.4)(0.25)$

WACC 14.63250%

7 0

3 years ago

Promoting goods and services to customers is a function of *

jek_recluse [69]

Marketing Is promotions good and services

8 0

3 years ago

Economic cost can best be defined as_____________.

Maksim231197 [3]

Answer:

The correct answer is letter "C": the income the firm must provide to resource suppliers to attract resources from alternative uses.

Explanation:

Economic costs represent payments to suppliers a firm makes to obtain and keep the services of a given resource. Besides, economic costs consider the benefits and costs of selecting one choice over another. Then, economic costs analyze the opportunity cost of choosing one resource for production compared to others.

8 0

3 years ago