Given:
April 2, 2017 - paid $3,721,000 for 1,525,000 tons of ore deposit
installed machine costing $213,500. 7 year life. No salvage value. will be abandoned when ore deposit is completely mined.
May 1, 2017 - mining begins. 166,200 tons of ore mined and sold.
At the end of the year, depletion of the ore deposit and depreciation of the machinery must be recorded.
3,721,000 / 1,525,000 = 2.44 depletion rate per ton
2.44 * 166,200 = 405,528
entry on Dec. 31: Debit Credit
Depletion expense - Mineral deposit 405,528
Accumulated depletion - Mineral deposit 405,528
Depreciation of machine is not computed based on straight line method. It is computed based on the ratio of the ore deposit mined and sold to the total ore deposits.
(166,200 / 1,525,000) * 213,500 = 23,268
entry on Dec. 31 Debit Credit
Depreciation expense - Machinery 23,268
Accumulated depreciation - Machinery 23,268
Answer:
The production function is homogeneous of the first degree
Explanation:
The Solow Growth Model can be described as an exogenous model of economic growth that analyzes changes in the level of output in an economy over time as a result of changes in the population.
In this case, Slow growth model is adopted most times after the economy has been affected due to various occurrence of disaster, such as the natural disasters eg Tsunami, hurricane..
In this case, the company will focus on the production of a particular product to boost the economy.
Answer:
purchase cost $86,670
useful life 3 years, 6,480 operating hours
residual value $2,430
a. the straight-line method
depreciation expense per year = ($86,670 - $2,430) / 3 = $28,080
-
depreciation year 1 = $28,080 x 9/12 = $21,060
- depreciation year 2 = $28,080
- depreciation year 3 = $28,080
- depreciation year 4 = $28,080 x 3/12 = $7,020
b. units-of-output method.
depreciation per hour = ($86,670 - $2,430) / 6,480 = $13
-
depreciation year 1 = 1,200 x $13 = $15,600
- depreciation year 2 = 2,300 x $13 = $29,900
- depreciation year 3 = 1,900 x $13 = $24,700
- depreciation year 4 = 1,080 x $13 = $14,040
c. the double-declining-balance method.
-
depreciation year 1 = 2 x 1/3 x $86,670 x 9/12 = $43,335
- depreciation year 2 = $14,445 + (2 x 1/3 x $28,890 x 9/12) = $28,090
- depreciation year 3 = $4,815 + (2 x 1/3 x $9,630 x 9/12) = $9,630
- depreciation year 4 = $1,605 + ($3,210 - $2,430) = $2,385
Answer:
0.296875
Explanation:
Given the following :
Probability distribution of risky funds :
- - - - - - - - - - - - - - stock fund(S) - - bond fund(B)
Expected return - - - 15% - - - - - - - - - - 9%
Std - - - - - - - - - - - - - 32% - - - - - - - - - - 23%
Correlation between funds return = 0.15
Sure rate = 5.5%
To calculate the Sharpe ratio we use the formula :
Sharpe Ratio = (Expected Return of Investment - Risk Free Rate) / Standard Deviation of excess return of investment
For the stock fund :
Expected return = 15%
Risk free rate = market sure rate = 5.5%
Standard deviation = 32%
Sharpe ratio of stock fund :
(15% - 5.5%) / 32%
= 9.5% / 32%
= 0.296875
For Bond fund :
Expected return = 9%
Risk free rate = market sure rate = 5.5%
Standard deviation = 23%
Sharpe ratio of bond fund :
(9% - 5.5%) / 23%
= 3.5% / 23%
= 0.1521739
Therefore the Sharpe ratio of the best feasible CAL is the higher of the two ratios which is 0.296875
<span>Answer:
E(R) = 3.80 + .88(9.60 - 3.80) = 8.90 percent</span>