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VMariaS [17]
3 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]3 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]3 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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Depreciation:
iragen [17]

Answer:

B. Is the process of allocating the cost of a plant asset to expense.

Explanation:

Depreciation is an expense indicating a reduction in the value of the capital assets due to tear and wear, obsolescence, consumption, time span, etc. It's listed on the income statement debit side. It is a non-cash item that has no effect on the cash balance.

Moreover, it is a process in which there is an allocation of the cost of fixed assets to the expense account over their estimated useful life

4 0
3 years ago
Three salesmen worked for Sentient Jet, a small luxury airline charter service. They signed a noncompete agreement, promising no
AVprozaik [17]

Answer:

For this situation, the choices ought to be against the three workers. This is principally because of the way that the inability to execute the understanding will bring about the hopeless damage which can be looked by the previous managers. The odds of a material change any inconclusive time later on doesn't bring about any sort of material change.  

Simultaneously, if there is an adjustment in the administration of the association, it doesn't bring about any sort of material change which can be used by somebody in that reality that the contract not to contend was revoked.

6 0
3 years ago
Read 2 more answers
Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. June 1 Purchased raw m
Gelneren [198K]

Answer:

raw materials    20000 debit

accounts payable   20000

WIP         8000 debit

factory overhead 1000 debit

raw materials   9000 credit

WIP           84000 debit

factory overhead 24000 debit

wages payables  108000 credit

factory overhead     10100  debit

cash   10100 credit

WIP   49000 debit

factory overhead   49000 credit

Finished Goods   18000 debit

WIP inventory   18000 credit

COGS   15000 debit

Finished Goods   15000 credit

Explanation:

The indirect materials and labor will be considered actual factory overhead thus debited into that account

same procedures applies to the repair and utilities paid in cash we have to posted into factory overehad

from the cost sheet we determiante 7,000 labor hours we apply the $7 overhead rate per our to get the amount of applied overhead

The finished goods will increase while the WIP inventory decrease by the ammount transferred out

The COGS is an expense which decreases our finished goods inventory as we sale them and are no longer in our possesion.

5 0
3 years ago
Use this end-of-period spreadsheet to answer the questions that follow. Finley Company End-of-Period Spreadsheet For the Year En
Alexeev081 [22]

Answer:

Explanation:

The retained earning are the earnings of the business organization which is earned until the date.

The net income or net loss would reflect in the statement of the retained earning account.

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

The journal entry is shown below:

Retained earnings A/c Dr $3,000

          To Dividend A/c $3,000

(Being dividend account is closed)

4 0
3 years ago
As of November 29, it appears that Notel will report earnings per share (EPS) of $1.15 for the quarter ended November 30. Which
astra-53 [7]

Answer: D.  The company reissues the treasury stock it holds.

Explanation:

Earnings per share is calculated by dividing the Net Income by the weighted average number of shares that a company has outstanding. If the company reissues treasury stock, this would increase the number of average stock outstanding thereby increasing the denominator of the EPS equation which would have the effect of reducing the Earnings per share.

For instance, if a company had net income of $50 and common equity outstanding of $40, the EPS would be;

= 50/40

= $1.25

If the company reissues treasury stock of $30, the EPS would change to;

= 50/ (40 +30)

= $0.71

8 0
3 years ago
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