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Anton [14]
3 years ago
7

If the federal reserve increases the interest rate on bank deposits at the fed, banks will want to hold question 4 options: fewe

r reserves, so the reserve ratio will fall. fewer reserves, so the reserve ratio will rise. more reserves, so the reserve ratio will fall. more reserves, so the reserve ratio will rise.
Business
1 answer:
Annette [7]3 years ago
4 0
If the federal reserve increases the interest rate on bank deposits at the fed, banks will want to hold <span>more reserves, so the reserve ratio will rise.</span>
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Quartz Corporation is a relatively new firm. Quartz has experienced enough losses during its early years to provide it with at l
8_murik_8 [283]

Answer:

a. Quartz’s reservation price = $306,006.68

b. New Leasing Company’s reservation price = $234,034.25

Explanation:

Given:

Cost = Cost of the equipment = $970,000

n = number of years of lease term = 4

r = cost of borrowing rate = 10%, or 0.10

t = tax rate = 30%, or 0.30

DF = Discounting factor or PV of $1 = ((1-(1/(1 + r))^n)/r) = ((1-(1/(1 + 0.10))^5)/0.10) = 3.16986544634929

a. What is Quartz’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The implication of the zero effective tax rate is that depreciation tax shield foregone does not exist. In addition, there is no difference between the after-tax lease payment and the pre-tax payment, and there is also no difference between the pre-tax cost of debt and the after-tax cost.

Quartz’s reservation price can therefore be calculated by setting net advantage to leasing (NAL) equal to zero and solve as follows:

NAL = 0 = Cost – (PMT * DF) ………… (1)

Substituting the relevant values into equation (1), we have:

0 = $970,000 – (PMT * 3.16986544634929)

$970,000 = PMT * 3.16986544634929

PMT = $970,000 / 3.16986544634929

PMT = $306,006.68

Quartz’s reservation price = PMT = $306,006.68

b. What is New Leasing Company’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Depreciation tax shield = (Cost / n) * t = ($970,000 / 4) * 30% = $72,750

New r = After-tax debt cost = r * (1 - t) = 0.10 * (1 - 0.30) = 0.07

New DF = ((1-(1/(1 + New r))^n)/New r) = ((1-(1/(1 + 0.07))^5)/0.07) = 4.10019743594759

The New Leasing Company’s reservation price can therefore be calculated by setting NPV to zero as follows:

NPV = 0 = -Cost + (PMT * (1 – t) * New DF) + (Depreciation tax shield * New DF)

0 = -$970,000 + (PMT * (1-0.30) * 04.10019743594759) + ($72,750 * 4.10019743594759)

$970,000 - ($72,750 * 4.10019743594759) = PMT * (1-0.30) * 04.10019743594759

$671,710.636534813 = PMT * 2.87013820516331

PMT = $671,710.636534813 / 2.87013820516331

PMT = $234,034.25

New Leasing Company’s reservation price = PMT = $234,034.25

8 0
3 years ago
Join know plz plz join the code is 651360 blooket join ;)
Dennis_Churaev [7]
Okayyyyyyyyyyyyyyy :)))
5 0
3 years ago
One of the more important business applications of demand elasticity is the relationship between price and total revenue. For ea
user100 [1]

Answer:

Part 1.  inelastic.

Part 2. inelastic.

Part 3. inelastic.

Explanation:

When the coefficient of elasticity of demand is less than 1, demand is inelastic, when it is equal to 1, demand is unitary elastic, when it is greater than 1, demand is elastic, and when it is equal to zero demand is perfectly inelastic.

Part 1

Price Elasticity of demand =  (dQ/dP) x P/Q

  Where : dQ = Change in Quantity

               dP = Change in Price

                 P = Initial or Old price

                 Q = Initial of Old Quantity

               dQ = $35,000 - $40,000 = - $5,000

                dP = $10 - $8 = $2

                  P = $8  

                  Q = $40,000  

Price Elasticity of demand = (-$5,000/$2) * $8/ $40,000

                       = 2,500 * 1/5000 = -0.5

Disregard the minus sign,  since elasticity of demand is less than 1, demand is inelastic.

Part 2

Price Elasticity of demand =  (dQ/dP) x P/Q

                dQ = $1,800 - $2,000 = - $200

                dP = $50 - $40  = $10

                  P = $40

                  Q = $2,000  

Price Elasticity of demand = (-$200/$10) * $40/ $2,000

                       = 20 * 0.02 = -0.4

Disregard the minus sign,  since elasticity of demand is less than 1, demand is inelastic.

Part 3

Price Elasticity of demand =  (dQ/dP) x P/Q

                dQ = $120 - $150 = - $30

                dP = $5 - $4  = $1

                  P = $4

                  Q = $150

Price Elasticity of demand = (-$30/$1) * $4/ $150

                       = 30 * 2/75 = - 0.8

Disregard the minus sign  since elasticity of demand is less than 1, demand is inelastic.

5 0
3 years ago
A good is excludable if: a) Those who are unwilling or unable to pay for the good do not obtain its benefits. b) It is not possi
N76 [4]

Answer:

The correct answer is letter "A": Those who are unwilling or unable to pay for the good do not obtain its benefits.

Explanation:

The excludability feature of goods does not allow individuals to have access to them without having paid for them. Thus, non-excludable goods are those that no one cannot prevent its use. <em>Private goods</em> (clothing, vehicles, houses) are excludable but they are also considered rival goods since when one person uses it another individual cannot consume the goods.

4 0
3 years ago
Read 2 more answers
An agricultural manager requires work
Art [367]

Answer:

C-Being able to obtain legal informational on grant programs

Explanation:

8 0
2 years ago
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