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gayaneshka [121]
3 years ago
13

Irene has made Sara an offer on the purchase of a capital asset. Irene will pay (1) $200,000 cash or (2) $50,000 cash and a 6% i

nstallment note for $150,000 guaranteed by City Bank of New York. If Sara sells for $200,000 cash, she will invest the after-tax proceeds in certificates of deposit yielding 6% interest. Sara’s cost of the asset is $25,000. Why would Sara prefer the installment sale?
Business
1 answer:
AlexFokin [52]3 years ago
5 0

Answer:

Irene would prefer the instalment sale because she can defer the payment of tax until a future date. On the other hand, if she accept the cash sale, she would have to pay the tax immediately. The amount invested in certificate of deposit would be after tax.

Thus the value of an instalment payment would be greater than the value of a cash payment

Explanation:

You might be interested in
The journal entry to record direct labor used in process costing is a(n):___________
Degger [83]

Answer:

b. increase in assets and an increase in liabilities.

Explanation:

The journal entry to record the direct labor cost used is shown below:

Work in process Dr

   To wages payable

(Being the direct labor cost used is recorded)

Here the work in process is debited as it increased the assets and credited the wages payable as it also increased the liabilities

3 0
3 years ago
"You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 6 percent, –13 percent, 24 per
Vanyuwa [196]

Answer:

6.80%

Explanation:

The average nominal returns is the sum of the returns for 5 years divided by the number of returns considered( i.e 5, 5 returns for 5 years)

average nominal returns=(6%-13%+24%+18%+15%)/5

average nominal returns=10.00%

The Fisher's equation is shown thus:

(1 + i)  = (1 + r) (1 + π)

i=nominal return=10.00%

r=average real return=the unknown

π=inflation rate=3%

(1+10.00%)=(1+r)*(1+3%)

1.10=(1+r)*1.03

1+1=1.10/1.03

r=(1.10/1.03)-1

r=6.80%

7 0
3 years ago
Please give the answer to question one
Nataliya [291]

Answer:

A

Explanation:

A is the answer to the question

7 0
2 years ago
ABC Manufacturing employs some of the top professionals in its field, and because of their skills and experience, ABC is highly
andrew-mc [135]

Answer:

competitive advantage

Explanation:

A competitive advantage is the ability of a company to perform better than its competitors based on a unique value it offers to consumers. For example exclusive access to a resource, low pricing of same goods with competitors, highly skilled labour, geographic location, and brand recognition.

ABC manufacturing employs top professionals, so it is leveraging on its highly skilled labour to get competitive advantage in the industry.

5 0
3 years ago
You should always read the fine print before signing a contract.
Bess [88]
I would say yes, because a person would want to know fully what they are getting into.  
6 0
3 years ago
Read 2 more answers
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