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Brilliant_brown [7]
3 years ago
14

Mary is deciding whether to book the cheaper flight home from college after her final​ exams, but​ she's unsure when her last ex

am will be. She thinks there is only a ​%10 chance that the exam will be scheduled after the last day she can get a seat on the cheaper flight. If it is and she has to cancel the​ flight, she will lose ​$150. If she can take the cheaper​ flight, she will save ​$50. ​a) If she books the cheaper​ flight, what can she expect to​ gain, on​ average? ​b) What is the standard​ deviation?
Business
1 answer:
frez [133]3 years ago
7 0

Answer:

(a) Expected gain = 30

(b) Standard deviation = 66.03

Explanation:

From the question, we are given the following:

Probability of loss = 10%

Loss amount = $150

Probability of Saving = 100% - Probability of loss = 100% - 10% = 90%

Saving amount = $50

Therefore, we proceed as follows:

a) If she books the cheaper​ flight, what can she expect to​ gain, on​ average?

This can be calculated as follows:

Expected gain = (Probability of loss * (-Loss amount)) + (Probability of Saving * Saving amount) = (10% * (-150)) + (90% * 50) = -15 + 45 = 30

b) What is the standard​ deviation?

Standard deviation can be described as a measure of the amount of variation a set of values. This can be calculated from the variance as follows:

Variance = (Probability of loss * (-Loss amount - Expected gain)^2) + (Probability of Saving * (Saving amount - Expected gain)^2) = (10% * (-150 - 50)^2) + (90% * (50 - 30)^2) = (10% * (-200)^2) + (90% * (20)^2) = (10% * 40,000) + (90% * 400) = 4,000 + 360 = 4,360

Standard deviation = Variance^0.5 = 4,360^0.5 = 66.03

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Answer:

The correct answer is D. Assign appropriate, but differing, discount rates to each project and then select the projects with the highest net present values.

Explanation:

The discount rate is the cost of capital that is applied to determine the current value of a future payment.

The discount rate is used to "discount" future money. It is widely used when evaluating investment projects. It tells us how much money is worth now from a future date.

The discount rate is the inverse of the interest rate, which serves to increase the value (or add interest) in the present money. The discount rate, on the other hand, detracts from the future money when it is transferred to the present, except if the discount rate is negative, in case it will mean that the future money is worth more than the current one. The interest rate is used to obtain the increase to an original amount, while the discount rate is subtracted from an expected amount to obtain an amount in the present.

Except in exceptional cases, the discount rate is positive because before the promise of receiving money in the future we have the uncertainty of whether we will receive it or not, since there may be a problem that prevents us from receiving that money. Therefore, the farther the money we are going to receive, the less it will be worth now.

6 0
3 years ago
A technique to bring changes in the
son4ous [18]

Explanation:

A technique to bring changes in the

entire organization, rather man

focusing attention on individuals to

bring changes easily is Organizational development

8 0
3 years ago
The ​short-run market supply curve shows the quantity supplied by all the firms in the market at each price when​ _____.
Pani-rosa [81]

Answer:

The ​short-run market supply curve shows the quantity supplied by all the firms in the market at each price when each firm's plant and the number of firms remain the same.

Explanation:

The short-run market supply curve is derived from each invidividual short-run supply curve at a given price, stating it as the sum of the quantities supplied by all the firms at this price.

If each firm's plant and the number of firms remain the same, you can calculate the market supply curve.

3 0
3 years ago
Kathleen Cole Inc. acquired the following assets in January of 2012. Equipment, estimated service life, 5 years; salvage value,
Lunna [17]

Answer:

1. Debit : Equipment Depreciation : $102000

Credit : Equipment Accumulated Depreciation : $102000

2. Debit : Building Depreciation account : $16857

Credit : Building Accumulated Depreciation : $16857

Explanation:

A change in accounting estimate occurs when there is new information that surfaces, affecting the initial situation. It can affect the carrying amount of an asset or liability as well as alter the accounting for existing and future assets or liabilities.

1. The equipment has a cost of $525000 and its depreciation was changed to using the straight line method after 3 years of use. Straight- line depreciation per year:

(Cost of asset - salvage value) / number of useful years.

The cost of asset and the number of useful years left would have to be found since the machine already depreciated using the sum-of-years-digits.

Number of useful years left : 5 - 3 = 2

Accumulated depreciation is required to find what the asset costs at the beginning of 2015.

Depreciation using sum-of-years-digits:

Sum-of-years-digits is an accelerated form of depreciation based on the assumption that an asset’s productivity reduces with time.

(Cost - Salvage value) x (remaining useful life of asset / sum of years digits)

Sum-of-years-digits = 1 + 2 + 3 + 4 + 5 = 15

Depreciation for 2012 :

($525000 - $15000) / (5/15) = $170000

Depreciation for 2013 :

($525000 - $15000) / (4/15) = $136000

Depreciation for 2014 :

($525000 - $15000) / (3/15) = $102000

Total depreciation: $102000 + $136000 + $170000 = $408000

Cost of asset at Jan 2015 = $525000 - $408000 = $117000

Thus, depreciation expense for 2015 = ($117000 - $15000) / 2 = $51000

Debit : Equipment Depreciation : $51000

Credit : Equipment Accumulated Depreciation : $51000

2. The building has a cost of $693000. It is depreciated using the straight-line method of depreciation. Hence, the depreciation expense is the same annually throughout the life of the asset.

Annual depreciation = (Cost of asset - salvage value) / number of useful years

Useful number of years was initially 30 years, later in 2015, it was changed to 40 years.

In order to find the depreciation for 2015, we need to find the cost of asset at the beginning of 2015 and the estimated useful life years left.

Estimated useful life years left : 40 - 3 = 37 years

Cost of asset :

To find this, we require the accumulated depreciation.

Depreciation for one year:

(693000 - 0) / 30 = $23100

$23100 x 3 = $69300 for 3 years

Cost of asset at the beginning of 2015 :

693000 - $69300 = $623700

This would mean that the depreciation expense for 2015 is:

($623700) / 37 = $16857

Debit : Building Depreciation account : $16857

Credit : Building Accumulated Depreciation : $16857

3 0
3 years ago
On March 1, 2022, Wildhorse Company acquired real estate, on which it planned to construct a small office building, by paying $9
Nitella [24]

Answer:

The amount to be reported as the cost of the land is $ 114,200

Explanation:

Cash paid for the land = $ 98,000

Net cost of demolishing old ware house = $ 11,000 - $ 3,100 = $ 7,900

Attorney's fee = $2,000

Real estate broker's fee = $ 6,300

Total cost of the land = Cash paid for the land + Net cost of demolishing old ware house + Attorney's fee + Real estate broker's fee

= $98,000 + $ 7,900 + $2,000 + $ 6,300

= $ 114,200

4 0
3 years ago
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