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anastassius [24]
3 years ago
6

After getting her degree in marketing and working for 5 years for a large department store, Sally started her own specialty shop

in a regional mall. Sally's current lease calls for payments of $1,000 at the end of each month for the next 60 months. Now the landlord offers Sally a new 5-year lease that calls for zero rent for 6 months, then rental payments of $1,050 at the end of each month for the next 54 months. Sally's cost of capital is 11 percent. By what absolute dollar amount would accepting the new lease change Sally's theoretical net worth?
Business
1 answer:
alekssr [168]3 years ago
4 0

Answer:

$3,751.90

Explanation:

we must find the present value of both alternatives

alternative 1, keep paying $1,000 per month for 60 months

present value = monthly payment x PV annuity factor

monthly payment = $1,000

PV annuity factor = [1 - 1/(1 + 0.9167%)⁶⁰ ] / 0.9167% = 45.9136

present value = $1,000 x 45.91361 = $45,991.36

alternative 2, pau $1,050 per month for 54 months starting after 6 months

monthly payment = $1,050

PV annuity factor = [1 - 1/(1 + 0.9167%)⁵⁴ ] / 0.9167% = 42.4406

present value in 6 months = $1,050 x 42.4406 = $44,562.63

present value today = $44,562.63 / 1.055 = $42,239.46

Sally's net worth increases by $45,991.36 - $42,239.46 = $3,751.90

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In a competitive market with identical firms, A. firms cannot earn positive economic profit in either the short run or long run.
Ksenya-84 [330]

Answer:

The answer is C.

Explanation:

In a competitive market, all firms produce identical goods and services. No firm or seller can influence the prevailing market price. To increase their revenue, firms must increase their outputs.

In this industry, firms make economic profit(revenue minus accounting cost minus implicit cost) in the short run but this economic profit reduces to zero in the long run because more firms that are attracted by the short run profit can enter the industry freely. Firms can also exit with little or no cost.

4 0
3 years ago
Residents of the town of Smithfield like to consume hams, but each ham requires 10 people to produce it and takes a month. If th
Hunter-Best [27]

Answer:

10 hams

Explanation:

It is given that 10 people can produce 1 ham in a month. It is assumed that whatever is produced is consumed. So, 100 people will produce 10 hams that is 100 ÷ 10 = 10 in a month. So, 100 people can consume 10 hams, that are produced in a month.

So, residents can consume maximum 10 hams (same amount as produced) in a month.

4 0
3 years ago
Scenario 13-6 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As
marysya [2.9K]

Answer:

total cost of farming = $380

so correct option is d. $380

Explanation:

given data

cost of seeds = $130

Farmer Ziva charges = $25

time = 10 hours

solution

so total cost of farming is calculated as

total cost of farming = cost of seeds + opportunity cost

so put value

total cost of farming = $130 + ( $25 × 10 )

total cost of farming = 130 + ( 250 )

total cost of farming = $380

so correct option is d. $380

4 0
3 years ago
A review of the accounting records of Baird Manufacturing indicated that the company incurred the following payroll costs during
ankoles [38]

Answer:

a. $363,000

b. $827,200

Explanation:

The computations are shown below:

a. Payroll cost would be

=  Salary of the company president + Salary of the chief financial officer + Salary of the vice president of marketing +  Salaries of administrative secretaries + Commissions paid to sales staff

= $75,000 + $42,000 + $40,000 + $60,000 + $146,000

= $363,000

And, for computing payroll cost first we have to determine the total cost which is shown below:

= Salary of the vice president of manufacturing + Salaries of middle managers (department heads, production supervisors) in manufacturing plant + Wages of production workers + Salaries of engineers and other personnel responsible for maintaining production equipment

= $50,000 + $147,000 + $703,500 + $133,500

= $1,034,000

Now the cost of goods sold would be

= Total cost × sales units ÷ number of units produced

= $1,034,000 × 4,000 units ÷ 5,000

units

= $827,200

3 0
3 years ago
Which term describes a distribution of the company’s assets back to the owners of the business?.
Sveta_85 [38]

Answer:

dividend is the correct answer.

Explanation:

5 0
2 years ago
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