The government began to print more money. The increase in the ‘money supply’ which happens faster than the economic growth leads to inflation. When the government prints more money then it brings down the value of the money in the market.
Answer:
see calculation and working below
Explanation:
operating activities section
Net income $ 8,500
Adjust for changes in non- cash items :
Amortization expense $1,500
Adjust for changes in working capital :
Prepaid expenses increase ($ 3,000)
Inventory increase ($500)
Accounts payable decrease ($1,000)
Net Cash Provided by Operating Activities $5,500
These results are evidence of
"<span>
the endowment effect".</span>
The endowment effect<span>, in behavioral finance<span>, portrays a situation in which an individual qualities
something that they officially possess more than something that they don't yet
claim. Studies have indicated over and again that individuals will esteem
something that they effectively claim more to a comparable thing they don't
possess. It doesn't make a difference if the thing being referred to was bought
or gotten as a gift, the impact still stays.</span></span>
Answer:
a) Pre-tax cost of debt is 8.45%
b) After tax cost of debt is 5.07%
Explanation:
a) Given:
Debt issue outstanding = $15.5 million
Semi-annual coupon rate = 0.063 / 2 = 0.0315
Assumed par value (FV) = $1,000
Coupon payment (pmt) = 0.0315 × 1000 = $31.5
Current bond price (PV) = 92% of $1,000 = $920
Time period (nper) = 5 × 2 = 10 periods
Calculate semi-annual rate using spreadsheet function =Rate(nper,pmt,PV,FV)
Semi-annual rate = 4.14%
Pmt and FV are negative as they are cash outflows.
YTM = 4.14 × 2 = 8.28%
Effective annual rate = 
= 
= 0.0845 or 8.45%
b) Tax rate is 40%
After tax cost of debt = Pre tax cost of debt × (1 - 0.4)
= 0.0845 × 0.6
= 0.0507 or 5.07%
Answer: The answer is as follows:
Explanation:
From these numbers, we can conclude that USA has a comparative in producing cars and France has a comparative advantage in producing bottles.
Opportunity cost shows that how many units of one good have to be foregone in order to produce one additional unit of other good.
In USA:
Opportunity cost of producing bottles = 
= 0.75
Opportunity cost of producing cars = 
= 1.33
In France:
Opportunity cost of producing bottles = 
= 0.55
Opportunity cost of producing cars = 
= 1.8
Above calculations clearly shows that USA has a lower opportunity in producing 1 unit of car as compared to the France, so it has a comparative advantage in producing cars.
Whereas, France has a lower opportunity in producing 1 unit of bottle as compared to the USA, so it has a comparative advantage in producing Bottles.