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OLga [1]
2 years ago
14

Answer the following questions about the (real) inflation tax, assuming that the price level starts at 100.

Business
1 answer:
Rus_ich [418]2 years ago
7 0

Answer:

a) $900 after 1 year

b) $810 after 2 years

Explanation:

This deals with the time value of money concept. This states that money is worth more today than the same amount is worth sometime in the future. The real purchasing power is the nominal purchasing power discounted back as per the prevailing inflation rate.

For a)

$1000 after one year will be worth 1000 * 0.9 = $900 or a reduction of $100 as 1000 today is worth only 900 after 1 year.

For b)

The inflation rate discounts real purchasing power year over year so after 2 years the real purchasing power will be as follows,

Real purchasing power = 900 * 0.90 = $810 which is discounted by 10% inflation for 2 years.

Hope that helps.

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The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 8 percent to help finance a new playground fa
NeTakaya

Answer:

10%

Explanation:

Given that,

Interest at last year debt = 8%

Current year cost of debt = 25% higher

Firms paid for debt last year = 10%

Firms paid for debt in current year = 12.50%

Kd - cost of debt

Yield = Interest at last year debt × (1 + increase in cost of debt)

         = 8% × (1 + 0.25)

         = 8% × 1.25

         = 10%

Kd = Yield (1 – T)

Kd = 10% (1 – 0)

     = 10% (1)

     = 10%

Therefore, after tax cost of debt would be 10%.

8 0
3 years ago
Stockholders' equity totaled $94,000 at the beginning of the year. During the year, net income was $24,000, dividends of $9,000
Tomtit [17]

Answer:

$131,000

Explanation:

The computation of the ending balance of stockholder equity is shown below:

= Beginning balance of stockholder equity + net income - dividend paid + additional common stock issued

= $94,000 + $24,000 - $9,000 + $22,000

= $131,000

Therefore, the ending balance of stockholder equity is $131,000

We simply added the net income and the additional common stock issued and deduct the dividend paid to the beginning balance of stockholder equity so that the ending balance could come

7 0
3 years ago
. Assume you are participating in your employer's direct deposit program. On payday, the employer deposits your ________ into yo
Tems11 [23]
On pay day, the employer deposits your NET SALARY into your bank account.
Direct deposit program is a salary payment program in which an employer works together with the bank to deposit the employees salary directly into their accounts on the pay day of each month.
7 0
3 years ago
B.F. Goodrich has been manufacturing and marketing automotive tires for over one hundred years. It spends much of its marketing
hjlf

Answer:

maturity

Explanation:

Based on the information provided within the question it can be said that the tires are in the maturity stage of their product life cycle. This is the longest stage in the product life cycle in which the introduction and growth stages has already passed and the product advertisements have minimal impact on sales since people have already seen the product. This seems to be the case since Goodrich has sold it's tires for more than a hundred years and only focuses on short term marketing.

8 0
3 years ago
According to a book by a Harvard Business School professor, some organizational cultures simply cannot meet the challenges posed
vekshin1

Answer:

A) Adaptability

Explanation:

The company could not adapt to the current trends in the market. organizational adaptability is concerned with how firms could quickly adjust their business processes to changes that enhances their growth and make give them the ability to compete with rivals.

Many advantages are embedded in adjusting to the trend in the market, one of which is:

1. They value their employees

2. They have a well defined goals

3. They become more creative

4 0
3 years ago
Read 2 more answers
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