Please help economics

A friend of Mr. Richards recently won a law suit for $30 million. They have the ability to either take the payments over 10 year

denis23 [38]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

A friend of Mr. Richards recently won a law suit for $30 million. They can either take the payments over 10 years or settle today for cash of $25 million. Mr. Richard is optimistic that he can earn a 6% return on the money and that they should settle for $25 million today and he will invest it for them.

First, we need to find the present value of the 30 million.

To do that we need to calculate the final value.

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {3,000,000*[(1.06^10)-1]}/0.06= 39,542,385

PV= FV/(1+i)^n= 39,542,385/1.06^10= 22,080,261

B) Now we know that the present value of option B is higher. One dollar today is better than one dollar tomorrow. It is better to receive the money now to invest it.

5 0

3 years ago

Which factor will not cause an increase in demand for good X? a decrease in the price of good X a decrease in income if good X i

Roman55 [17]

Answer:

I believe it's "a decrease in income if good X is an inferior good"

Explanation:

If the price is decreased people are more likely to buy it. If people have more money they are more likely to buy more thinks including good X. An increase in popularity with good X is sure to make more people want to buy it, so the second option is the only one that really makes sense.

8 0

3 years ago

Soft drink sales are declining as more consumers are concerned about their health. This represents a change in the __________. A

Firlakuza [10]

Answer:

product concept

Explanation:

The definition of the product concept implies that customers prefer goods that have higher quality, price, and functionality than a standard product. In some niche markets such as computers and mobile phones, the definition is really true.

The product concept relates to a compulsory philosophy to provide the consumer with the best model possible according to need and requirement. A product is not sufficient on its own and needs the performance of many other market aspects such as advertising, shipping, sales, operation, etc.

6 0

4 years ago

Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. Company is currently operating at 75 p

irina [24]

Relevant Information:

The relevant information is as under:

Segmented income statements appear as follows:

Product Original Strawberry Orange

Sales 65,200 85,600 102,400

Variable costs (44,000) (77,200) (80,200)

Contribution margin 21,200 8,400 22,200

Fixed costs allocated (9,400) (12,000) (14,200)

Operating profit (loss) 11,800 (3,600) 8,000

Answer:

The product not be closed because it is generating net cash flows of ($3,060), which will generate loss for the organization. The better option would be to not abandoning the manufacturing of Strawberry.

Explanation:

Relevant costing says that any savings or losses are relevant if it satisfy following three conditions:

Is a cash flow.
Future related (Not arising due to Past bindings).
Differential or Incremental in nature.

Its crystal clear that any inflows and outflows that are considered would be cash in nature, not related to past events it must be arising as a consequence of taking the decision whose consequences are we considering now, I mean it must arise in future due to the decision made which are considering. The last condition is the concept of differential that lies in the heart of relevant costing and is easily understood by following the following steps:

Step 1: What are the losses or savings if we don't make decision?

Step 2: What are the losses or savings if we make the decision?

Step 3: The difference between step one and two is differential or incremental cost.

Here we learned that relevant cost arises if we take the decision (closing manufacturing of Strawberry), and it doesn't arises if we don't take the decision (not abandoning manufacturing of Strawberry).

Relevant costs associated with the decision are as under:

Step 1 Step 2 Step 3

Make Decision If we Don't Differential

Revenue loss (85,600) - (85,600)

Variable Costs Savings 77,200 - 77,200

Fixed costs Savings (W1) 5340 - 5340

Operating Profit (3,060)

Working1: Fixed costs Savings

Total Fixed costs =21400+12000+14200 = $35,600

The saving is 15% of the total fixed cost and is as under:

Fixed costs Savings = $35,600 * 15% = $5340

Note:

Kindly also practice the following question:

brainly.com/question/14423321

8 0

3 years ago

Sam buys fuel for his construction vehicles from the local distributer. He uses 8,500 gallons a month. The local distributor cha

3241004551 [841]

Answer:

He should order 681.66 gallons to minimize the cost, but he have a 500 gallon tank he can fill, so he will order 500 gallons every time, to minimize the cost.

Explanation:

According to the given data we have the following:

h = handling cost per unit = $ 9

S = Ordering cost per order = $20.5

He uses 8,500 gallons a month, therefore, the annual demand D= 8,500*12 = 102,000 gallons .

Therefore, the optimal ordering quantity would be= [ (2*D*S) / h ]1/2

=681.66 units

He should order 681.66 gallons to minimize the cost, but he have a 500 gallon tank he can fill, so he will order 500 gallons every time, to minimize the cost.

3 0

3 years ago