Making a Decision as Chief Financial Officer: Contingent Liabilities

In a free market system, ____. A. central planning determines supply B. government forces primarily determine prices C. most ne

natka813 [3]

Answer: Option E

Explanation: In a free market system the prices of goods and services produced are determined by the market forces of demand and supply. This are also known as open market.

The intervention of govt. in regulating such markets is very minimal. Thus, the control in such markets stands in hands of private owners. Therefore, the private owners produce with the single aim of profit maximization in such economies.

Hence we can conclude that the right option is E.

4 0

2 years ago

ou want to buy a new sports coupe for $81,500, and the finance office at the dealership has quoted you an APR of 6.3 percent for

Natasha_Volkova [10]

Answer:

a. The monthly payment will be <u>$1,664.91</u>.

b. The effective annual rate on this loan is 6.49%.

Explanation:

a. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

This is calculated by using the formula for calculating the present value of an ordinary annuity as follows:

PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)

Where;

PV = Present value or price of new sports coupe = $81,500

P = Monthly payment = ?

r = Monthly interest rate = Annual percentage rate (APR) = 6.3% / 12 = 0.063 / 12 = 0.00525

n = number of months = 60

Substitute the values into equation (1) and solve for P as follows:

85,500 = P * ((1 - (1 / (1 + 0.00525))^60) / 0.00525)

85,500 = P * 51.3541976210894

P = 85,500 / 51.3541976210894

P = $1,664.91

Therefore, the monthly payment will be <u>$1,664.91</u>.

b. What is the effective annual rate on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Effective annual rate (EAR) refers to the interest rate that is received by an investor in a year after adjusting for compounding.

Since the APR in the question is paid monthly, it implies that it is compounded monthly and the EAR can be computed using the following formula:

EAR = ((1 + (APR / n))^n) - 1 .............................(1)

Where;

APR = 6.3% = 0.063

n = Number of compounding periods or months in a year = 12 months

Substituting the values into equation (1), we have:

EAR = ((1 + (0.063 / 12))^12) - 1

EAR = 1.06485133891298 - 1

EAR = 0.06485133891298

EAR = 6.485133891298%

EAR = 6.49% rounded to 2 decimal places

Therefore, the effective annual rate on this loan is 6.49%.

8 0

2 years ago

Inacio Corporation uses the weighted-average method in its process costing system. Data concerning the first processing departme

lakkis [162]

Answer:

Option D , $15.12

Explanation:

Weighted-average method :

Materials

Units transferred to the next department = 10,300

Ending work in process:

Materials: 1,200 units × 90% = 1080

Equivalent units of production =10,300+1080= 11,380

Materials

Cost of beginning work in process inventory= $2,700

Costs added during the period = $173,900

Total cost (a) =$173,900+$2,700 = $176,600

Equivalent units of production (b)= 11,380

Cost per equivalent unit (a) ÷ (b) = $15.51

The cost per equivalent unit for materials for the month in the first processing department is closest to $15.51

3 0

2 years ago

Using the word “CAPITALISM,” create an acrostic poem that demonstrates your understanding of the term. Feel free to come back an

pogonyaev

Answer:

Capitalism is an economic system based on investing money in the expectation of making a profit. The means of production are usually privately owned by private entrepreneurs who often use wage labor to create added value. In doing so, they enjoy a great deal of legal freedom to dispose of these means, free enterprise production. This freedom also means that there is competition, which means that entrepreneurs have an interest in increasing the efficiency of their company. Hence, the capital owner will not fully consume the profit but reinvest in the business and capital accumulation takes place. The distribution of products is regulated by the market, in which the role of the government is, in principle, limited to that of market master.

6 0

2 years ago

On January 1, 2016, Parker Company issued bonds with a face value of $62,000, a stated rate of interest of 11 percent, and a fiv

nignag [31]

Answer:

Parker Company

a. Amortization Table

Date Interest Discount

Cash Payment Expense Amortization Carrying Value

January 1, 2016 $57,639

December 31, 2016 $6,820 $7,493 $673 58,312

December 31, 2017 6,820 7,581 761 59,073

December 31, 2018 6,820 7,679 859 59,932

December 31, 2019 6,820 7,791 971 60,903

December 31, 2020 6,820 7,917 1,097 62,000

b. The carrying value that would appear on the 2019 balance sheet is:

= $60,903.

c. The interest expense that would appear on the 2019 income statement is:

= $7,791.

d. The amount of cash outflow for interest that would appear in the operating activities section of the 2019 statement of cash flows is:

= $6,820.

Explanation:

a) Data and Calculations:

Face value of bonds = $62,000

Proceeds from the issue = 57,639

Bonds discount = $4,361

Stated rate of interest = 11% paid annually on December 31

Effective rate of interest = 13%

December 31, 2016:

Interest expense = $7,493 ($57,639 * 13%)

Interest payable = $6,820 ($62,000 * 11%)

Discount amortization $673 ($7,493 - $6,820)

Bond value = $58,312 ($57,639 + $672)

December 31, 2017:

Interest expense = $7,581 ($58,312 * 13%)

Interest payable $6,820 ($62,000 * 11%)

Discount amortization $761 ($7,581 - $6,820)

Bond value = $59,073 ($58,312 + $761)

December 31, 2018:

Interest expense = $7,679 ($59,073 * 13%)

Interest payable $6,820 ($62,000 * 11%)

Discount amortization $859 ($7,679 - $6,820)

Bond value = $59,932 ($59,073 + $859)

December 31, 2019:

Interest expense = $7,791 ($59,932 * 13%)

Interest payable $6,820 ($62,000 * 11%)

Discount amortization $971 ($7,791 - $6,820)

Bond value = $60,903 ($59,932 + $971)

December 31, 2020:

Interest expense = $7,917 ($60,903 * 13%)

Interest payable $6,820 ($62,000 * 11%)

Discount amortization $1,097 ($7,917 - $6,820)

Bond value = $62,000 ($60,903 + $1,097)

3 0

2 years ago