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Lesechka [4]
2 years ago
13

Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of soda, one bag of ch

ips, and one comic book. In year one, the basket costs $9.00. In year two, the price of the same basket is $8.00. From year one to year two, there isdeflation at an annual rate of 1.25%. In year one, $72.00 will buy____baskets, and in year two, $72.00 will buy____baskets. This example illustrates that, as the price level falls, the value of money____ .
Business
1 answer:
Virty [35]2 years ago
8 0

Answer:

Year 1, Year 2 purchasing power = 8 , 9 (respectively). As price level fall, value of money<u> Increases </u>

Explanation:

Year one purchasing power = Money ($) / Price per basket = 72 / 9 = 8

Year two purchasing power = Money ($) / Price per basket = 72 / 8 = 9

This implies that, as price level falls (from 9 to 8 here) ,the value of money ie purchasing power increases (from 8 to 9)

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Which of the following statements is correct?
Marina CMI [18]

Answer:

Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations. (A)

Explanation:

Option A- This statement is true.

Option B- This is false. After-tax operating Income is calculated as Operating profit less interest less Depreciation and less tax

Option C-This is false. They will have the same operating incomes. Operating income is calculated as Sales less operating cost.

Option D- False.

Option E- False.

8 0
3 years ago
To help finance a new plant, Roxxon, Inc. just sold a noncallable 40 year bond. This $1,000 par bond sells for $1,155 and has a
murzikaleks [220]

Answer:

4.96%

Explanation:

In order to determine the component after-tax cost of debt first we need to  compute the before tax cost of debt by applying the RATE formula which is to be shown in the attachment below:

Given that,  

Present value = $1,155

Future value or Face value = $1,000  

PMT = 1,000 × 8.25% ÷ 2 = $41.25

NPER = 40 years × 2 = 80 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after applying the above formula

1. The pretax cost of debt is 3.54%  × 2 = 7.08%

2. And, the after tax cost of debt would be

= Pretax cost of debt × ( 1 - tax rate)

= 7.08% × ( 1 - 0.30)

= 4.96%

8 0
3 years ago
Callaway Golf Co. leases telecommunication equipment from Photon Company. Assume the following data for equipment lease form Pho
inessss [21]

Answer:

This lease is  regarded and classified  as Capital lease.

Explanation:

This lease is  regarded and classified  as Capital lease.

Here, Callaway Golf Co. is the body financing the leased asset but the right ownership is with Photon Company.

Now; the present value of future payment is calculated as:

Present value of future payment =[PVA 6%,5 × Annual payment ]+[PVF 6%,5 × Residual value]

=[4.46511 × 31000] +[0.74726 × 15500]

= 138418.27+ 11582.53

= 150000

However the present value of minimum lease payment is equal or more than 90% fair market value ,as such we therefore conclude that this  lease is a capital lease.

3 0
3 years ago
Which of the following statements is not a difference between business markets and consumer​ markets?A. Buyers face more compl
marusya05 [52]

Answer:

E : the market is very small and limited

Explanation:

The statement that the market is very small and limited  is not a difference between business markets and consumer markets as the real difference is :

Business market larger in size :

If we talk from a Marketing Perspective point of view it Innovates through technological push and fanatics-breakthroughs which result in a rapid increase in the number of customers in the market and as the size of the market becomes larger.

3 0
3 years ago
Experience indicates that strategic alliances Group of answer choices work best when they are aimed at achieving a mutually bene
nikdorinn [45]

Answer: Stand a reasonable chance of helping a company reduce competitive disadvantage but very rarely form the basis of a durable competitive advantage over rivals

Explanation:

Strategic alliance occurs when two or more companies join hands together in order to achieve strategic outcome that's mutually beneficial to the parties involved.

It should be noted that companies to into Strategic alliance in order to improve market access, improve supply chain efficiency and to also gain economies of scale.

Lastly, it should be noted that strategic alliances stand a reasonable chance of helping a company reduce competitive disadvantage but very rarely form the basis of a durable competitive advantage over rivals.

3 0
3 years ago
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