Answer is A.!!!
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Based on the purchase price of the equipment and the increase in annual income, the accounting rate of return is 60%.
<h3 /><h3>What is the accounting rate of return?</h3>
This can be found by the formula:
= Average annual income - Average investment
The average investment is:
= Purchase price / 2
= 25,000 / 2
= $12,500
The accounting rate of return is:
= 7,500 / 12,500
= 60%
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Answer:
Economic integration agreement is when countries within a particular geographical area decide to remove or relax tariff or non-tariff barriers to trade between themselves and also to coordinate and harmonize their fiscal and economic policies. Free trade area is the simplest form of an economic integration; it is when governments of member countries agree to remove trade restriction between each other and when member countries are given the freedom to determine their own external trade policies towards non-members.
Supporters of free trade area argue that it is beneficial to the country based on the trade creation argument. Trade creation is where high-cost domestic production is replaced by more efficiently produced imports from within the group; that is, more expensive domestic products are replaced by lower priced imports from countries within the group. The trade creation argument is hinged on the fact that a free trade area ensures that trade is generated over and above what would otherwise have happened if there was no integration. Further, the removal of tariffs allows members to specialize in those products for which they have a comparative advantage leading to a variety of cheap imports for domestic consumers, thereby increasing living standards or welfare gains. Trade creation also creates an incentive for high cost domestic producers to cut cost so as to remain competitive thereby enhancing efficiency.
On the other hand, a free trade area is criticized on the basis of trade diversion. This is where trade with a low-cost country outside the group is influenced by higher–cost products supplied from within the group; this results in a less efficient allocation of resources as trade from outside the group is replaced by trade from within the group. Trade diversion could mean that local consumers would have to buy products at less competitive prices. Another argument would be that a free trade area would lead to a removal of tariff between member countries thereby resulting in a cessation of government revenue from tariffs. As opposed to a free trade area, free trade would increase world output and employment, raise quality and lower prices of goods as firms have access to factor inputs; it will also increase world living standards or enhances welfare gains. A free trade agreement only restricts these potential advantages to a particular geographical space.
Explanation:
Answer:
1. October 1
Dividends (Cr) 1950
Dividend Payable (Dt) 1950
2. October 15
No journal entry required
3. Record the payment of cash dividends
Dividend Payable (Cr) 1950
Cash (Dt) 1950
Explanation:
(<em>3,900 shares of common stock outstanding</em>) *(<em>declared $0.50 per share dividend</em>) = 1950
Answer:
a. True
Explanation:
from the CAPM formula we can derive the statemeent as true.
risk free = 0.05
market rate = 0.12
premium market = (market rate - risk free) 0.07
beta(non diversifiable risk) = 0
Ke 0.05000
As the beta multiplies the difference between the market rate and risk-free rate a beta of zero will nulify the second part of the equation leaving only the risk-free rate. This means the portfolio is not expose to volatility
