Answer:
A) the probability that the asset will pay well is 51.16% and the probability that it pays poorly is 48.84%.
B) She should not invest in the asset because the expected value = the price asset, there is no expected profit.
Explanation:
There are 2 probable returns:
- Asset will pay well = P = $45,000
- Asset will pay poorly = 1 - P = $2,000
since the principal = $20,000, and the expected value = $20,000, the expected value equation would be:
45,000p + 2,000(1 - p) = 20,000
45,000 + 2,000 - 2,000p = 20,000
43,000p = 22,000
p = 0.5116 or 51.16%
1 - p = 48.84%
Answer: d. Mary's made her decision at the marginal because the considered the benefit and cost of one additional hour of playing the piano.
Explanation: Making marginal decisions or making decision on the margin involves making comparison between the cost and benefit attached to a particular behavior or involvement before making a decision. In the scenario above, the additional benefit attached to playing one more hour of piano and the cost incyrred by cutting reading hour by one hour was weighed and considered by Ben before finally making a decision. This means the decision was made on the margin.
A 401(k) gives you tax breaks, therefore I'd say A.
Answer:
The correct answer is Debit Cash and Credit Noted Payable
Explanation:
The journal entry for borrowing the cash is as follows:
Cash A/c.......................Dr $7,500
Notes Payable A/c.......Cr $7,500
As Jarrett company borrowed the amount of $7,500, so cash is increasing and any increase in asset account will be debited. Therefore, the cash account is debited. Whereas he signed a notes payable against the cash so notes payable account is credited.