Answer: 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
Explanation:
Q=1200 - 4P and Q=-240 + 2P
In a free market quantity demand =quantity supplied
1200 -4P = -240 +2P
P =240
Sub P
Q* = 240
Socially optimal quantity is
Marginal social benefit (MSC)= marginal social cost(MSC), including external damage =MEC
MPC= marginal private cost =inverse of supply function
MPC = (1/2)*Q + 120
MEC=12
MSC =(MPC +MEC) = (1/2)Q +120 +12
MSC= MPB where MPB is marginal private benefit = inverse of demand functn
MPB = 300 -(1/4)Q
(1/2)Q + 132 =300 - (1/4)Q
Q° = 224
Difference btw Q* & Q° = 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
Answer:
The multiple choices are:
a. $1132
b. $1044
c. $ 962
d. $1153
e. $ 988
The correct option is C,$962
Explanation:
The price a rational and prudent investor like me would be willing to pay for the bond today is the present worth of future cash inflows receivable from the bond issuer,which comprises of annual coupon interest and the face value at maturity.
=-pv(rate,nper,pmt,fv)
rate is required rate of return expected by investor of 10%
nper is 5 years since the investor intends to hold the bond for 5 years
pmt is the annual coupon interest=$1000*9%=$90
fv is the face value of $1000
=-pv(10%,5,90,1000)=$962.09
The current price is $962
Answer:
The note payable will be presented in the financial statement at the face amount minus a discount calculated at the imputed interest rate.
Explanation:
The imputed rate is the rate at which the present value of the face amount of the note will be equal to the amount at which it is originally recorded.
Notes issued or received in exchange for goods or services that do not bear interest at a fair rate are reported at an amount equal to the fair value of the note, the fair value of the goods or services, or the present value of the note using a fair interest rate, whichever is more readily determinable.
The difference between the recorded amount and the face value is considered a discount and the applicable interest rate regardless of which method is used to value the note.
Because of this, the note is reported at its face amount minus a discount calculated at the imputed interest rate.
