Answer:
Journal Entry
01 July Debit Investment $240 million Credit Bank $200 million Credit Discount on investment $40 million
31 Dec Debit Bank $7,2 Million Debit Discount on Bond $0.8 million Credit Interest Income $8 million
Debit Fair Value loss on investment $30 million Credit Investment $30 million
Explanation:
Interest is received semiannually
6%/2 = 3%
interest = $240 million * 3% =7,200,000
8%/2 = 4%
Interest market $200 million * 4% =8,000,000
Fair value loss = 240 million - 210 million
= 30 million loss because cost is greater than fair value
Answer:
If the effective tax rate increases then the net savings coming from investments will get lowered as a result the investment will have higher payback period (The increase in effective tax rate would lower demand of the product which means there is decline in net saving arising from the sale of the product). Likewise this decrease in annual net savings will also decrease the internal rate of return which shows that their are increased chances of project rejections. The NPV method is based on cash flows and relevant costing just like IRR and payback method but the only difference is that it assumes that the cash earned would be reinvested at cost of capital. The NPV will also decrease due to increased effective tax rate.
Answer:
The correct answer is the option B: second-degree price discrimination.
Explanation:
To begin with, the term of price discrimination, in marketing and economics, refers to the action of charge different prices to different consumers for the same product that do not vary in quality. This concept states fourth differents degrees in order to use the most beneficial strategy to one's company.
To continue,<em> the second-degree price discrimination</em> establishes that companies price products differently based on the preferences of various groups of consumers and furthermore it is very common to <u>apply this type of discrimination through quantity discounts</u> and to add an example, is very common to use this strategy in <u>warehouse retailers such as Costco.</u>
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