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Allushta [10]
3 years ago
8

The chapter argues that investment depends negatively on the interest rate because an increase in the cost of borrowing discoura

ges investment. However, firms often finance their investment projects using their own funds.
If a firm is considering its own funds (rather than borrowing) to finance investment projects, will high interest rates discourage the firm from undertaking these projects? Explain.
Business
1 answer:
WARRIOR [948]3 years ago
8 0

Answer: Yes they will.

Explanation:

With high interest rates, the company will be able to make better returns if they invested the money and took advantage of those interest rates instead of spending the money on their project.

Assets like bonds will be better to go into because they will offer a return based on the higher interest rates which will bring in good returns.

The company is free to use those funds to invest in projects if these projects will lead to a better return than could be gotten from holding bonds but if that is not the case, they should simply buy bonds and hold them for superior returns.

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The following transactions are for Kingbird Company.
Llana [10]

Answer:

a. The journal entries to record the transactions woule be the following:

To record the sales

3 dec                            Debit             Credit

Account receivables $473,800

Sales                                                 $473,800

To record the cost of goods sold

cost of goods sold      $320,000

Merchandise Inventory                    $320,000

To record the allowance

8 dec                                          Debit             Credit

Sales return and allowance    $22,800

Accounts receivable                                       $22,800

To record the cash received from the customer

13 dec                                          Debit             Credit

Cash                                         $446,490

Sales discount                         $4,510

Accounts receivable                                       $451,000

Explanation:

a. The journal entries to record the transactions woule be the following:

First we have to prepare the journal entry to record the sales and cost of goods sold according to the given data:

To record the sales

3 dec                            Debit             Credit

Account receivables $473,800

Sales                                                 $473,800

To record the cost of goods sold

cost of goods sold      $320,000

Merchandise Inventory                    $320,000

Next we have to Prepare the journal entry to record the allowance as follows:

To record the allowance

8 dec                                          Debit             Credit

Sales return and allowance    $22,800

Accounts receivable                                       $22,800

Finally we have to Prepare the journal entry to record the cash received from the customer as follows:

To record the cash received from the customer

13 dec                                          Debit             Credit

Cash                                         $446,490

Sales discount                         $4,510

Accounts receivable                                       $451,000

Cash=$451,000-$4,510=$446,490

Sales discount=$451,000*1%=$4,510

Accounts receivable=$473,800-  $22,800=$451,000

5 0
3 years ago
In an economy with population growth at rate n, the change in capital stock per worker is given by the equation:_______.
Natalija [7]

Answer:

B. Δk = sf(k) – (δ + n)k.

Explanation:

The Solow Growth Model, developed by Robert Solow, a Nobel Prize winning economist. It was the first neoclassical growth model which was was built upon the Keynesian Harrod-Domar model. The modern theory of economic growth is given by the Solow Model.

The equation below gives us the change in capital stock per worker with population growth at rate n;

Δk = sf(k) – (δ + n)k.

Where k: capital stock per worker in period t

s: savings rate

δ: rate of depreciation of capital

n: labor or number of workers

sf(k): savings per capita multiplied by a fraction of income saved.

6 0
3 years ago
Advances in technology are constantly changing how people work and conduct business. true or false
Evgen [1.6K]
TRUE. Advances in technology are constantly changing how people work and conduct business.

With the advancement of technology, people are adjusting to maximize the benefits they get from said advances. 

For example, before the creation of cellular phones, the means of communication were through mailed letters and telegraphs, then it evolved to land lines, beepers, cellular phones, and finally, the internet (skype, ym, im,etc.)
8 0
3 years ago
Read 2 more answers
Effective December 15th, 2018, the operating leases will be recorded: A) as an asset and liability on the balance sheet of the l
Shalnov [3]

Answer: C) on the balance sheet of the lessee with value equal to the present value of future lease payments.

Explanation:

According to IFRS 16 and US GAAP ASC 842 which commenced Jan 1, 2019 and Dec 15, 2018 respectively, Lease payments are to be recognized on the balance sheet of the Lessee at the present value of the future payments on the lease.

The discount rate to be used will be implicitly stated in the lease agreement if both parties were able to determine it.

4 0
2 years ago
Taylor Entertainment Center has 5 TVs on hand at the balance sheet date that cost $400 each. The net realiz- able value is $350
faltersainse [42]

Answer:

Under the lower-of-cost-or- net realizable value basis of accounting for inventories, the value that Taylor should report for the TVs on the balance sheet is $350 × 5 = $1,750

Explanation:

The lower-of-cost-or- net realizable value basis of accounting for inventories values inventory at the lower of its cost or net realizable value. This basis of accounting gives a <em>faithful representation</em> to the users of the value of assets in inventory that firm holds. This is  also <em>prudent</em> in that profits are not overstated in the Income statement.

4 0
3 years ago
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