Suppose that you deposit $4,500 in your bank and the required reserve ratio is 18 percent. The maximum loan your bank can make as a direct result of your deposit is 3690.
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What exactly is a bank loan and the required reserve ratio?</h3>
- A loan is a quantity of money that one or more people or businesses obtain from banks or other financial organizations in order to handle their finances in connection with anticipated or unforeseen circumstances.
- By doing this, the borrower creates a debt that must be repaid with interest within a predetermined time frame.
- The percentage of deposits that authorities mandate a bank maintain in reserves and refrain from lending out is known as the required reserve ratio.
- If the required reserve ratio is 1 to 10, a bank can only lend out $0.90 of every dollar it has on deposit, but it must retain $0.10 in reserves.
Hence, The maximum loan your bank can make as a direct result of your deposit is 3690.
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Answer:
B) the sale of goods to a customer.
Explanation:
When goods are sold to a customer, the cost of goods sold account is debited by the same value that the finished goods inventory is credited.
For example, suppose a company sells $1,000 worth of goods to a customer, and the sales price is $1,200. The customer pays by cash the full value of the goods. The journal entry would be:
Account Debit Credit
Cash $1,200
Sales Revenue $1,200
Cost of Goods Sold $1,000
Finished Goods Inventory $1,000
Answer:
Explanation:
a) investors wil receive 6% x ( 1-0.35)
= 3.9% risk free debt after tax.
After tax return from risk free preferred stock earnings must be equal.
to evaluate the cost of capital fro preferred stock = 3.9%/(1-0.15)
= 4.59%
b) the after-tax debt cost of capital = 6% x (1- 0.40)
= 3.60%.
therefore, 3.60% is cheaper than the 4.59% preffered stoch cost per capital
c) r* = 1 - [{(1 - 0.40)(1 - 0.15)} / (1 - 0.35)] = 1 - 0.7846 = 0.2154, or 21.54%
Hence, 4.59% x (1 - 0.2154) = 3.60%
Answer:
c. Not-for-profit organizations need to make money to continue operating.
Explanation:
Non-profit organisations mainly focus on meeting their set objectives for example ensuring education is provided to poor children, health services reach the less privileged in society, and so on.
On the other hand for profit organisations mainly focus on turning a profit for the benefit of the business owners.
The manager for a non-profit organization will be as concerned with his or her organization's financial well-being as the for profit manager.
This is because non- profit organisations tend to have a tight budget and they will need to effectively manage resources available to them to ensure they keep functioning.
