Answer:
Severe floods affecting aggregate demand and aggregate supply can be equated with bad weather destroying crops. In this regard, the supply of goods and services will be slower or harder to keep up with depending on the demand given. The losses suffered as a result of the sever floods will result in the demand for goods and services to increase but the measured supply thereof might not be sufficient given the extreme backlog and circumstances created by the sever floods.
In this scenario, the effects on the output (goods and services) supplied will be slower in the short-run until businesses and farms are restored to stable working conditions. The demand thereof (for output) will increase and has inverse relationship with the supply of goods and services, until there is an equilibrium point reached when the supply of goods and services meet the demand required. Prices in the short term will increase until conditions have become stable. This will affect the GDP of the businesses negatively.
In the long-run, the demand for goods and services will decrease as conditions stabilise and the supply of goods and services will even out to meet the demand required. Depending on the far reaching effects of the severe floods, equilibrium and stable demand and supply may take a while to become normal again. In the long-run the price of goods and services should decrease as the demand required is met through the supply of goods and services. This will affect the GDP of the businesses positively.
Explanation:
To understand the answer given above, you have to understand the inverse relationship there is between the aggregate demand and aggregate supply.
Aggregate supply is the complete number of units (goods and services) supplied to the market (i.e. produced and sold in the market) which is also the gross domestic profit (GDP). In the short-run for this question, the GDP will decrease initially until conditions become stable.
Aggregate demand is the total domestic spending consumers have on goods and services in the economy. The GDP will increase in the long-run as the demand and supply is met and becomes steady.
Answer:
The company has current ratio almost half than the industry average. This is an indication that the company has lesser current assets than industry average. The ability of the company to meet its short term obligations is not suitable as the other companies in the industry are maintaining double current ratio. The ratio should never go below 1 as if it does the company may face its operational financing and working capital management issues.
The debt to equity ratio is significantly higher than the other companies of the same industry. The industry average is 4 whereas the company has ratio 20. This is significantly higher which indicates that there is heavy burden of debt on the company. High debt/ equity ratio indicates high risks. Investors avoid investing in such companies which have high debt/ equity ratio.
Explanation:
The company can go for equity financing as it will also help reduce its debt / equity ratio. The company will become less riskier and financing will be divided in debt and equity. The debt burden on assets will be reduced. There can be reduction in certain debt covenants. The company can use equity financing to fund its operations as well as purchase of non current assets to increase production and ultimately profitability of the company could rise.
<span>The fixed costs start the company at a net of -$100 million per year. Each plane that is produced and sold earns the company a net of +$1 million (-2 + 3). This would mean that the company would need to sell 100 airplanes in order to break even for the year.</span>
Answer:
There is no correct answer is these options. But the correct answer is $113.41
Explanation:
The formula to solve this is:
Po = D1/r - g
Po is the Current price of the common stock
D1 is the future dividend payment
r is the rate of return
g is the growth rate.
This is quite different from the usual(single stage). This is Two-stage Dividend Discount Model. To solve this;
D1(Dividend in year 1) is $3.15( $2.42 x 1.3)
D2(Dividend in year 2) is $3.78(3.15 x 1.2)
D3(Dividend in year 3) is $4.15($3.78 x 1.1)
D in subsequent years is $4.36(4.15 x 1.05)
P3(price of stock in year 3) = $4.36/0.083 - 0.05
=$132.12
Now the stock's current market value is
$3.15/1.08 + $3.78/1.08^2 + $4.15/1.08^3 + $132.12^3
The price of the stock is $113.41
Answer:
C) Yes, income will increase by $250.
Explanation:
normal selling price $8
special order for 15,000 at $4 each
incremental costs per plane:
- direct materials $1.25
- direct labor $2.05
- variable manufacturing overhead $0.50
- decals $0.05
- total $3.85 per plane
plus $2,000 in special machine
gain/loss resulting from special order = total revenue - incremental costs per plane - special machine = ($4 x 15,000) - ($3.85 x 15,000) - $2,000 = $60,000 - $57,750 - $2,000 = $250
net profits will increase by $250
