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NARA [144]
2 years ago
11

Because of the compounding effect:

Business
1 answer:
luda_lava [24]2 years ago
6 0

Answer: c. small changes in economic growth rate lead to large GDP changes over time.

Explanation:

If there is even a small change in the rate at which the economy is growing, this increase will increase by even more the year afterward and then even more as time goes on. This is because the interest is being compounded overtime.

Look at the future value formula that shows compounding for instance:

Future value = Amount * (1 + rate) ^ number of periods

Assume even a change of 2% in the growth rate. In 30 years, this rate would have increased the economy by:

= 1 * ( 1 + 2%)³⁰

= 1.81

Which is a rate of:

= 1.81 - 1

= 81%

What started off as only 2% became 81% in 30 years. This is what compounding does.

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1. Describe the effect each action below will have on the money supply. Explain your reasoning.
makkiz [27]
The Fed sells $5 billion worth of T-bonds on the open market.
5 0
3 years ago
The budget director for Kanosh Cleaning Services prepared the following list of expected selling and administrative expenses. Al
Harrizon [31]

Answer:

Kanosh Cleaning Services

a. Schedule of Cash Payments for S&A Expenses

                                                                       October November December

Equipment lease expense                                     $7,500  $7,500    $7,500

Prior month’s salary expense, 100%                               0    8,200       8,700  

Cleaning supplies                                                     2,800    2,730      3,066

Insurance premium                                                  7,200            0              0

Depreciation on computer                                              0            0              0

Rent                                                                           1,700      1,700        1,700

Miscellaneous expenses                                           700         700          700

Total disbursements for operating expenses  $19,900  $20,830  $21,666

b. Salaries payable = $9,000

c. Prepaid insurance = $3,600

Explanation:

a) Data and Calculations:

                                                October   November  December

Budgeted S&A Expenses

Equipment lease expense       $7,500        $7,500      $7,500

Salary expense                           8,200          8,700        9,000

Cleaning supplies                      2,800          2,730        3,066

Insurance expense                     1,200          1,200         1,200

Depreciation on computer         1,800          1,800         1,800

Rent                                             1,700          1,700         1,700

Miscellaneous expenses             700             700           700

Total operating expenses    $23,900    $24,330   $24,966

Schedule of Cash Payments for S&A Expenses

                                                                       October November December

Equipment lease expense                                     $7,500  $7,500    $7,500

Prior month’s salary expense, 100%                               0    8,200       8,700  

Cleaning supplies                                                     2,800    2,730      3,066

Insurance premium                                                  7,200            0              0

Depreciation on computer                                              0            0              0

Rent                                                                           1,700      1,700        1,700

Miscellaneous expenses                                           700         700          700

Total disbursements for operating expenses  $19,900  $20,830  $21,666

b. Salaries payable = $9,000

c. Prepaid insurance = $3,600 ($7,200 - $3,600)

6 0
2 years ago
Ayayai Inc. had the following balance sheet at December 31, 2019.
Mrrafil [7]

Answer:

(a) Increase in cash = $50,200

(b) Total Assets =  Liabilities and Stockholders' Equity = $298,900

Explanation:

Note: There are errors as date and name inconsistency in the requirements in this question. The requirements are therefore correctly stated before answering the question as follows:

(a) Prepare a statement of cash flows for the year 2020 for Ayayai Inc.

(b) Prepare the balance sheet as it would appear as of December 31, 2020.

The explanation of the answer is now provided as follows:

(a) Prepare a statement of cash flows for the year 2020 for Ayayai Inc.

Note: See part (a) of the attached excel file for the statement of cash flows for the year 2020 for Ayayai Inc.

In the attached excel file, we have:

Increase in cash = $50,200

(b) Prepare the balance sheet as it would appear as of December 31, 2020.

Note: See part (b) of the attached excel file for the balance sheet as it would appear as of December 31, 2020.

In the attached excel file, we have:

Total Assets =  Liabilities and Stockholders' Equity = $298,900

Download xlsx
8 0
2 years ago
Great Harvest Bakery purchased bread ovens from New Morning Bakery. New Morning Bakery was closing its bakery business and sold
ddd [48]

Answer:

Particulars                                  Amount

Purchase price                         $700,000

Add: Freight cost                     $35,000

Add: Electrical connections    $5,000

Add: Labor costs                      $37,800

Add: Bred dough used            $900

Add: Safety guards                  <u>$1,500</u>

Total cost of Equipment         <u>$780,200</u>

<u></u>

Note: Repairs cost of $5,000 will not be included

5 0
3 years ago
Assume again that the cost of capital is 7 percent and the effective tax rate is 40 percent. How would the payback, internal rat
vfiekz [6]

Answer:

If the effective tax rate increases then the net savings coming from investments will get lowered as a result the investment will have higher payback period (The increase in effective tax rate would lower demand of the product which means there is decline in net saving arising from the sale of the product). Likewise this decrease in annual net savings will also decrease the internal rate of return which shows that their are increased chances of project rejections. The NPV method is based on cash flows and relevant costing just like IRR and payback method but the only difference is that it assumes that the cash earned would be reinvested at cost of capital. The NPV will also decrease due to increased effective tax rate.

4 0
3 years ago
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