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3 years ago

How will the increase in government spending financed by borrowing affect national savings?.

Business

1 answer:

Whitepunk [10]3 years ago

8 0

Increament in government spending which is financed by borrowing will most likely affect national savings.

This is because borrowing money means you are spending from your future income.

The negative effect of spending borrowed money will most likely be felt when the money is not used for money yielding ventures.

This means that when borrowed money is not used to boost the economy of a country, it will most likely lead to the depletion of the national savings or reserve.

<h3>Viable areas to utilizing borrowed money</h3>

Infrastructure development
power
Education
Health
Transportation
Research

Learn more about National Savings at brainly.com/question/15109837

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Consider a one-year project that costs $126,000, provides an income of $70,000 a year for 5 years, and costs $225,000 to dispose

Inessa [10]

Answer:

Present Value (PV) of cash flows are as follows.

(i) Discount rate = 0%

$\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(0 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(0 \%, 5)$ $=-126,000+70,000 \times 5-225,000$

= - 1

Since PV < 0, the project should not be undertaken.

(ii) Discount rate = 2%

$\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(2 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(2 \%, 5)$

$|=-126,000+70,000 \times 4.7135-225,000 \times 0.9057$

= 156

Since PV > 0, the project should be undertaken.

(iii) Discount rate = 5%

$\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(5 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(5 \%, 5)$

$=-126,000+70,000 \times 4.3295-225,000 \times 0.7835$

= 772

Since PV > 0, the project should be undertaken.

(ii) Discount rate = 10%

$\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(10 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(10 \%, 5)$

$=-126,000+70,000 \times 3.7908-225,000 \times 0.6209=-126,000+265,356-139,707$

= - 351

Since PV < 0, the project should not be undertaken.

4 0

3 years ago

Current operating income for Bay Area Cycles Co. is $40,000. Selling price per unit is $100, the contribution margin ratio is 20

svlad2 [7]

Answer:

Instructions are below.

Explanation:

Giving the following information:

Operating income= $40,000.

Selling price per unit is $100

Contribution margin ratio= 0.20

Fixed expense is $160,000

<u>First, we need to calculate the unitary variable cost. We can use the contribution margin ratio formula:</u>

<u></u>

contribution margin ratio= (selling price - unitary variable cost) / selling price

0.2 = (100 - unitary variable cost) / 100

unitary variable cost= 80

<u>Now, the contribution margin:</u>

Contribution margin= 100 - 80= $20

<u>Finally, the number of units being sold:</u>

Total contribution margin= operating income + fixed costs

Total contribution margin= 40,000 + 160,000= 200,000

Unitary contribution margin= Total contribution margin/number of units

20= 200,000 / number of units

number of units= 200,000/20

number of units= 10,000 units

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LekaFEV [45]

Answer:

The answer is B.

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4 years ago

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