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VMariaS [17]
2 years ago
15

You lend​ $5,000 to a friend for one year at a nominal interest rate of​ 10%. Inflation during that year is​ 5%. As a​ result, y

ou will receive​ ________ at the end of the​ year, but that money has a purchasing power of​ ________.
Business
2 answers:
sukhopar [10]2 years ago
6 0

Answer:

$500, $250

Explanation:

You lend​ $5,000 to a friend for one year at a nominal interest rate of​ 10%. Inflation during that year is​ 5%. As a​ result, you will receive​ $<u>500</u> at the end of the​ year, but that money has a purchasing power of​ $<u>250</u>.

The nominal rate determines the amount that will received which is 10% of $5000 = $500

However the real rate determines the purchasing power of the amount to be received which is: Nominal rate - Inflation rate = Real rate,

Therefore the real rate = 10% - 5% = 5%

5% x 1000 = $250

Inflation is the single major factor that affects the purchasing power of money, hence the inflation effect must always be subtracted from any returns lenders are expecting, to get their real returns.

jarptica [38.1K]2 years ago
6 0

Answer:

As a​ result, you will receive​ <u>$5,500</u> at the end of the​ year, but that money has a purchasing power of​ <u>$5,238</u>.

Explanation:

At the end of the year, you will receive $5,000 x (1 + 10%) = $5,000 x 1.1 = $5,500. That is basically the future value of your money.

But in order to determine the purchasing power of that money, we must determine its present value using the inflation rte as our discount rate:

present value = future value / (1 + r) = $5,500 / 1.05 = $5,238.10 ≈ $5,238

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The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending D
alexdok [17]

Answer:

The year-end adjusting entries for the uncollectible accounts will be:

April 13:

Debit Allowance for doubtful accounts             $6,530

Credit Accounts receivable                                $6,530

<em>(To record write-off of accounts receivable - Dean Sheppard)</em>

May 15:

Debit Cash                                                          $3,270

Credit Accounts receivable                               $3,270

<em>(To record collection on account - Dan Pyle)</em>

Debit Allowance for doubtful accounts            $5,410

Credit Accounts receivable                               $5,410

<em>(To record write-off of accounts receivable - Dan Pyle)</em>

July 27:

Debit Accounts receivable                                $6,530

Credit Allowance for doubtful accounts           $6,530

<em>(To re-establish accounts receivable from Dean Sheppard)</em>

Debit Cash                                                          $6,530

Credit Accounts receivable                               $6,530

<em>(To record collection on account - Dean Sheppard)</em>

December 31:

Debit Allowance for doubtful accounts           $13,330

Credit Accounts receivable                              $13,330

<em>(To record write-off of accounts receivable - Miscellaneous)</em>

Explanation:

  • April 13: Shipway Company wrote-off account of Dean Sheppard, this means there would be a reduction in both allowance for doubtful accounts and accounts receivable.
  • The receipt on May 15 of $3,270 reduced the accounts receivable but increased cash. However, the write-off of $5,410 caused a reduction in both the allowance account and accounts receivable.
  • When there was a receipt of $6,530 on July 27, the accounts receivable would be reinstated and then adjusted for the cash receipt.
  • Lastly, the write-off of the uncollectible accounts from miscellaneous customers were added up to arrive at $13,330.
8 0
3 years ago
A(n) ____ model is an outsourcing fee model that charges a variable fee based on the volume of transactions or operations perfor
Svet_ta [14]
A(n) (transection)  model is an outsourcing fee model that charges a variable fee based on the volume of transactions or operations performed by the application.(transection
7 0
3 years ago
TJ Maxx, a discount apparel and home decor store, recently added an online retail option. It cautiously promoted this online sho
marishachu [46]
<h2>TJ Maxx wanted to minimize <u>brand cannibalization</u></h2>

Explanation:

A) microtargeting : Micro targeting is basically a marketing strategy to identify the need of the people using "data-mining" technique. Normally used by politicians to get people interest during the time of election.

B) brand cannibalization : It is the reduction of one product due to the release of another new product. TJ Maxx is interested more on people visiting more to shops than online.

C) retail mixing : It constitutes of 6 “P's”. They are presentation, personnel, product, place, promotion, price.

D) retail channel omnification: Activities pertaining to the direct marketing are termed as retail channel omnification.

5 0
2 years ago
Determine the type of bias involved. A local businessman is proposing a new sports stadium in a metropolitan area. He puts up bi
Rus_ich [418]

Answer: This is called <u>Self-interest bias</u>.

Explanation:

When someone is using this type of bias they are doing it for their own self interest. They will use all information gathered to use the information that will benefit themselves and their interests. This can be considered unethical in some types of businesses. The person using self interest bias will try to blame others for any failures that they may have. They may also refuse to take personal responsibility in any situation.

These  are three other types of bias;

  1. Selection bias
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  3. Confounding

3 0
3 years ago
Credenza Industries is expected to pay a dividend of $1.70 at the end of the coming year. It is expected to sell for $62 at the
Brrunno [24]

$3.56 is the capital gain

<u>Explanation:</u>

<u>Credenze industries </u>

The Dividend = 1.70 , Cost of capital = 9% , Selling price =62 , calculation of Expected capital gain =?

<u>In order to calculate the Present market price (PM) , </u>

Let the PM (Present market value) = x

The Cost of equity = the change in market price + dividend

9 \% \text { of } x=(62-x)+1.70

=> X = $ 58.44 .

Therefore, the Capital Gain that has been gained is = $ 3.56

6 0
3 years ago
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