Answer:
c. feels the marginal benefit of an extra hour of studying exceeds the marginal cost of not playing basketball.
Explanation:
Russel made a choice to study for an hour instead of playing basketball. When making choices people weigh the benefits of an action against its opportunity cost.
Opportunity cost is the forgone alternative when we choose to do something.
In this instance Russell chose to study and the opportunity cost was to enjoy playing a basketball game.
For him to choose to study it means he saw the benefit of reading to be greater than the marginal cost of playing basketball. So he chose the most beneficial activity for him.
Answer:
if YTM at 4% price : $2,902.1237
if YTM at 8% price : $1,788.0448
The bonds are above face value asthey offer a higher coupon payment than the market yield therefore the bond holders are willing to pay above theri face value
Explanation:
the market price of the bond will be the present value of coupo payment and maturity:
C 150.000
time 30
rate 0.04
PV $2,593.8050
Maturity 1,000.00
time 30.00
rate 0.04
PV 308.32
PV c $2,593.8050
PV m $308.3187
Total $2,902.1237
No we repeat the process with the yield at 8%
C 150.000
time 30
rate 0.08
PV $1,688.6675
Maturity 1,000.00
time 30.00
rate 0.08
PV 99.38
PV c $1,688.6675
PV m $99.3773
Total $1,788.0448
Answer:
5.71%
Explanation:
The after tax cost of debt=pretax cost of debt*(1-t)
where t is the tax rate of 35% or 0.35
pretax cost of debt=yield to maturity
The yield to maturity can be determined using rate formula in excel as below:
=rate(nper,pmt,-pv,fv)
nper is the number of coupon interest payable by the bonds i.e 12 coupons in 12 years
pmt is the annual coupon=$1000*9.5%=$95
pv is the current market price-flotation cost=$1,100-$48=$1052
fv is the face value of $1000
=rate(12,95,-1052,1000)=8.78%
After tax cost of debt=8.78%
*(1-0.35)=5.71%
Answer:
nominal interest rate = 5%
real interest rate = 3%
Explanation:
given data
deposit previous = $2,000
deposit present = $2,100
CPI consumer price index rises = 200 to 204
to find out
nominal interest rate and real interest rate
solution
we get here first nominal interest rate that is express as
nominal interest rate = ( deposit present - deposit previous ) ÷ deposit previous × 100 ..........................1
put here value we get
nominal interest rate = 
× 100
nominal interest rate = 5%
and
now we get here inflation rate that is
inflation rate = ( CPI present - CPI previous ) ÷ CPI previous × 100 .............2
inflation rate = 
× 100
inflation rate = 2%
and
real interest rate will be as
real interest rate = nominal interest rate - inflation rate .................3
real interest rate = 5% - 2%
real interest rate = 3%
Answer:
An increase of $2,500
Explanation:
During cash-basis accounting method, all income and expenses that results to ACTUAL CASH INFLOW and OUTFLOW will be recorded. Thus, those income and expenses that applies for the period will not be recorded yet as long as there is no actual cash outflow. And all income made on account for the period will not be recognized unless there is an actual collection. Based on the stated facts, Sussman Co.,recorded $1,900 sales instead of the actual sales of $5,600 using accrual basis and has never been recorded the expenses incurred in the accrued salaries.
So, $5,600 less $1,900 cash collection which already have recorded on cash basis method, there will be an additional sales to be recorded at $3,700 less the salaries expense already incurred but not yet paid of $1,200. There will be an additional income of $2,500 after restatement.
