Answer:
Salt Creek should make a journal entry to record full one year depreciation expenses relating to the mower at 31st December 2017 as followed;
Dr Depreciation expenses - Machinery $1,690
--------Cr Accumulated depreciation - Machinery $1,690
Explanation:
Depreciation refers to the fall in the value of an asset. The annual depreciation expenses relating to Mower would be calculated as;
Annual depreciation expense = (Initial cost of Mower - Estimated salvage value) / Expected useful life.
= ($17,500 - $600) / $10
= $16,900 / $10
= $1,690
Since the Mower is purchased on January 1st, 2017, at 31st December 2017, Salt creek should make a entry to record full year depreciation expense.
Taylor Company began manufacturing operations on January 2, 20X1. During 20X1 Taylor reported pre-tax book income of $150,000 and had taxable income of $200,000. Taylor had a temporary difference relating to accrued product warranty costs which are expected to be paid as follows: 20X2$30,00020X3$15,00020X4$5,000 The enacted tax rates are 21% for 20X1 and 20X2; and 25% for 20X3 and 20X4. The deferred tax asset at the end of 20X1 is:
Answer:
$11,300
Explanation:
The computation of the deferred tax asset is shown below:
= 21%(20X2 Expense) + 25%(20X3 and 20X4 Expense)
= 21%($30,000) + 25%($15,000) + 25%($5,000)
= $6,300 + $3,750 + $1,250
= $11,300
ohnson Inc. is a job-order manufacturing company that uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 95,000 and estimated factory overhead is $617,500. The following information is for September of the current year. Job A was completed during September, and Job B was started but not finished. September 1, inventories Materials inventory $ 8,600 Work-in-process inventory (All Job A) 33,400 Finished goods inventory 72,500 Material purchases 120,500 Direct materials requisitioned Job A 76,000 Job B 39,000 Direct labor hours Job A 5,300 Job B 3,100 Labor costs incurred Direct labor ($8.50/hour) 71,400 Indirect labor 14,600 Supervisory salaries 7,100 Rental costs Factory 8,100 Administrative offices 2,900 Total equipment depreciation costs Factory 9,150 Administrative offices 3,250 Indirect materials used 13,100 Required: 1. What is the total cost of Job A
Answer:
$188,900
Explanation:
The computation of the total cost of JOb A is shown below:
= Work in process + material requistioned + direct labor + applied overhead
= $33,400 + $76,000 + 5,300 × $8.50 + 5,300 × $617,500 ÷ 95,000
= $33,400 + $76,000 + $45,050 + $34,450
= $188,900
Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 70% probability that the firm will have a 20% return and a 30% probability that the firm will have a -30% return. The standard deviation for the return on an portfolio of 20 type S firms is closest to ________.
Answer: 23%
Explanation:
First calculate the expected return:
= (70% * 20%) + (30% * (-30%))
= 5%
Then use that to calculate variance:
Variance:
= (70% * (20% - 5%)²) + (30% * (-30% - 5%)²)
= 5.25%
Standard Deviation:
= √5.25%
= 23%
Levi is replying to an email a customer sent seeking information about his company’s products. Which greeting should he avoid using in a business email?
A.
Hi
B.
Hey
C.
Hello
D.
Dear
Select the correct answer.
Which statement is true in the context of business etiquette for sending digital messages?
A.
Digital messages should use abbreviations.
B.
Digital messages should be informal.
C.
Digital messages should be courteous.
D.
Digital messages should use a colorful font.
Select the correct answer.
Which of these messages would be considered inappropriate for business communication?
A.
Good night
B.
Goodbye
C.
OK, bye
D.
See you tomorrow
define subprime mortgages.
Subprime mortgage, a type of home loan extended to individuals with poor, incomplete, or nonexistent credit histories. Because the borrowers in that case present a higher risk for lenders, subprime mortgages typically charge higher interest rates than standard (prime) mortgages
Lucas Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Units in beginning work in process inventory 900 Materials costs $ 9,600 Conversion costs $ 7,700 Percent complete with respect to materials 60 % Percent complete with respect to conversion 45 % Units started into production during the month 8,100 Units transferred to the next department during the month 6,900 Materials costs added during the month $ 115,800 Conversion costs added during the month $ 120,500 Ending work in process inventory: Units in ending work in process inventory 2,100 Percent complete with respect to materials 75 % Percent complete with respect to conversion 20 % The cost per equivalent unit for conversion costs for the first department for the month is closest to:
Answer:
$17.51
Explanation:
Note that Lucas Corporation uses the weighted-average method
Equivalent units
Conversion costs = 6,900 x 100 % + 2,100 x 20 %
= 7,320
Total Cost
Conversion costs = $ 7,700 + $ 120,500
= $128,200
Cost per equivalent unit
Cost per equivalent unit = $128,200 / 7,320 = $17.51
Conclusion
The cost per equivalent unit for conversion costs for the first department for the month is closest to $17.51.
define securitization.
Riverbed Corporation has the following accounts included in its December 31, 2020, trial balance: Accounts Receivable $111,900, Inventory $295,000, Allowance for Doubtful Accounts $9,080, Patents $80,900, Prepaid Insurance $9,790, Accounts Payable $79,100, and Cash $32,000. Prepare the current assets section of the balance sheet. (List Current Assets in order of liquidity.)
Answer:
$439,610
Explanation:
Preparation for the current assets section of the balance sheet
Current assets
Cash $32,000
Accounts Receivable$111,900
Allowance for Doubtful Accounts($9,080)$102,820
($111,900-$9,080)
Inventory $295,000
Prepaid Insurance $9,790
Total current assets $439,610
($32,000+$102,820+$295,000+$9,790)
Therefore the current assets section of the balance sheet is $439,610
The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $48,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 18,000 2 22,000 3 25,000 4 12,000 5 7,000 a. If the cost of capital is 9 percent, what is the net present value of selecting a new machine
Answer:
$19,385.93
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-48,000.
Cash flow in year 1 = $18,000.
Cash flow in year 2 = $22,000.
Cash flow in year 3 = $25,000.
Cash flow in year 4 = $12,000.
Cash flow in year 5 = $7,000.
I = 9%
NPV = $19,385.93
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Edward and Tony are fraternity brothers. Edward has a dinner party to celebrate getting a new job. Tony helps Edward out with the dinner party, coming 3 hours before, helping with cooking, buying the ingredients for the dinner, and party set up, and staying after, to help with clean up after. The next day, Edward promises Tony that Edward will pay Tony $100 because of all the help Tony provided the day before at the dinner party. Is Edward's promise enforceable? Why or why not?
Answer:
Edward's promise is not enforceable. Tony had already performed the act. He did not perform based on Edward's promise. He performed because of their fraternal brotherhood.
Explanation:
This situation looks like a unilateral contract whereby Edward makes a promise to Tony to pay him $100. However, we observe that Tony did not perform his actions in consideration of this reward. He performed because they were fraternity brothers. Therefore, Tony cannot enforce Edward's promise in any court. It is only left for Edward to fulfill his promise as a gentleman, not because he is legally obliged to.
. AT&T's decision to move its corporate headquarters meant that about 700
of the company's best-paid executives were moving to the Dallas area.
What did that probably do to the demand curve for expensive homes in the
Dallas area?
A. Shift to the left B. Shift to the right
Answer:
nn
Explanation:
d
Why are the incentives of a supplier the opposite of the incentives of a demander
Answer:
The incentives of a supplier are the opposite of the incentives of a demander because it is a relationship whose nature makes supply and demand inversely proportional to each other: the higher the supply, the lower the demand for each product and the lower its price; While the lower the supply, the greater the demand for each product and the higher its price. Thus, in many cases, suppliers seek to restrict supply to maximize profits, while demanders seek to lower prices through a greater quantity of goods offered.
The aggregate demand aggregate supply mode is quite useful tool for us to understand the economy. So far, we saw only one change at a time, however, in reality, there can be multiple shocks at the same time. The economy was in long run equilibrium. Assuming all else equal, world scientists collaborated to invent a vaccine for everyone to be safe from deadly virus, raising productivity. This makes consumers and businesses optimist about the economy. At the same time, commodity market, namely oil market is calm, maintaining a stable supply.
1. Given above scenario, what do you think will happen to the LRAS, SRAS and AD curves in each in short run?
2. And what would happen to price level and output in the economy?
3. What about in long run?
Answer:
Explained below
Explanation:
1) From the question, we can deduce that in the short run, there will likely be news of the discovery/invention of a super vaccine which will make the consumers and the businesses to be optimistic about the future of the economy. Therefore, this will in turn lead to an increase in consumption by consumers and thus also lead to an producers making an increase in investment.
2) From answer 1 above, since there is an increase in consumption as well as investment, this will in turn also lead to an increase in the aggregate demand of the economy. Whereas, we are told that the oil market is calm and therefore we can say it does not have an effect on the supply curve.
From the first image attached, increase in the aggregate demand led to an increase in price level from point P to P1 on the y-axis while output output level increased from point Y to point Y1 on the x-axis.
3) In the long run, due to the increase in demand in the short run that makes the supply curve shift to its right, it means the producers will have more of the goods produced. This will in turn reduce the price to its initial level and also increase the output level. From the second diagram, this will lead to a shift long run aggregate supply from LRAS to LRAS1 on the x-axis.
Bruce is a nonexempt employee at Grissom Industries, where he works in both the manufacturing and design departments. He is married with three withholding allowances and is paid biweekly. He earns $25 per hour in the manufacturing department and $31.50 per hour in the design department. During the most recent biweekly pay period, he worked a total of 92 hours, 20 of which were in the design department. All overtime was in the manufacturing department. What is his gross pay?
A) $2,580.00.
B) $2,638.50.
C) $2,697.00.
D) $3,147.00.
Answer:
A) $2,580.00.
Explanation:
The computation of the gross pay is shown below:
Here Bruce is paid every two weeks = 80 hours
Here 92 hours worked represents that 12 were overtime.
For Manufacturing Department:
Regular Pay:
= $25 × 60
= $1500
Overtime Pay:
= ($25 × 1.5) × 12
= $450
For Design Department:
Regular Pay:
= $31.50 × 20
= $630
Now
= Total Design + Manufacturing Departments:
= $1500 + $450 + $630
= $2,580
Umatilla Bank and Trust is considering giving Splish Brothers Inc. a loan. Before doing so, it decides that further discussions with Splish Brothers Inc.’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $247,680. Discussions with the accountant reveal the following.
1. Splish Brothers Inc. sold goods costing $50,590 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2. The physical count of the inventory did not include goods costing $100,920 that were shipped to Splish Brothers Inc. FOB destination on December 27 and were still in transit at year-end.
3. Splish Brothers Inc. received goods costing $25,880 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4. Splish Brothers Inc. sold goods costing $54,220 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Splish Brothers Inc. physical inventory.
5. Splish Brothers Inc. received goods costing $43,380 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $247,680.
Determine the correct inventory amount on December 31.
Answer:
the correct inventory amount is $284,400
Explanation:
The computation of the correct inventory amount is shown below:
= End year balance + FOB shipping point + fob destination - fob destination
= $247,680 + $25,880 + $54,220 - $43,380
= $284,400
Hence, the correct inventory amount is $284,400
Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost
On April 1, Sangvikar Company had the following balances in its inventory accounts:
Materials Inventory $12,750
Work-in-Process Inventory 21,060
Finished Goods Inventory 8,500
Work-in-process inventory is made up of three jobs with the following costs:
Job 114 Job 115 Job 116
Direct materials $2,384 $2,603 $3,085
Direct labor 1,800 1,420 4,420
Applied overhead 1,260 994 3,094
During April, Sangvikar experienced the transactions listed below.
Materials purchased on account, $28,920.
Materials requisitioned: Job 114, $16,800; Job 115, $12,460; and Job 116, $5,410.
Job tickets were collected and summarized: Job 114, 170 hours at $11 per hour; Job 115, 200 hours at $14 per hour; and Job 116, 100 hours at $19 per hour.
Overhead is applied on the basis of direct labor cost.
Actual overhead was $4,535.
Job 115 was completed and transferred to the finished goods warehouse.
Job 115 was shipped, and the customer was billed for 125 percent of the cost.
Required:
1. Calculate the predetermined overhead rate based on direct labor cost.
% of direct labor cost
2. Calculate the ending balance for each job as of April 30. When required, round your answers to the nearest dollar. Use your rounded answers in subsequent computations, if necessary.
Ending Balance
Job 114 $
Job 115 $
Job 116 $
3. Calculate the ending balance of Work in Process as of April 30. When required, round your answer to the nearest dollar.
$
4. Calculate the cost of goods sold for April. When required, round your answer to the nearest dollar.
$
5. Assuming that Sangvikar prices its jobs at cost plus -25 percent, calculate the price of the one job that was sold during April. Round to the nearest dollar.
$
Answer:
See below
Explanation:
1. Predetermined overhead rates
= Applied overhead / Direct labor
Job 114
Applied overhead / direct labor
= $1,260/1,800
= 70%
Job 115
Applied overhead / direct labor
= $994/1,420
= 70%
Job 116
Applied overhead / direct labor
= $3,094/4,420
= 70%
2 and 3 Ending balance of each job and work in process as of April 30th.
Job 114. Job116
Opening. $2,384. $3,085
Materials
Purchases $16,800. $5,410
Direct labor
($1,800+$1,800) $3,600. $5,740
Actual $2,520 $4,018
Overhead
at 59.36%
Balance $25,304. $18,253
• Note
The whole of job 115 has been sold out.
• Actual overhead = Actual overhead / direct labor
= $4,535/7,640
= 59.36%
4 Cost of goods sold in April
Job 115
Opening materials. $2,603
Purchases. $12,460
Direct labor
($1,420 + $3,080). $4,500
Actual overhead. $3,150
at 59.36%
Cost of goods sold $22,713
5. Selling price of job
Cost of job 115 = $22,713
Selling price = 1.25% × $22,713 = $28,391
Fusion has already been demonstrated as an energy source, albeit on a limited scale. Engineers hope to transform the scale to provide energy at commercial levels. A loan for development of a niche application has been taken out by an engineering research firm, borrowing $900,000. The loan will be paid back over 5 years with uniform quarterly payments and an interest rate of 10 percent compounded quarterly.
What is the equal quarterly amount to be paid?
Answer:
$37,332.77
Explanation:
The computation of the equal quarterly amount that need to be paid is shown below:
= $900,000 × 2.5% ÷ (1 - 2.5%)^20
= $900,000 × 0.041480855
= $37,332.77
The rate of interest is
= 10% ÷ 4
= 2.5%
And, the time period is
= 5 × 4
= 20 years
You have two choices for how you are going to spend Saturday evening. You can go to the pub with your friends, which will cost you £30 for the evening. The pleasure you anticipate from this experience is worth £50 to you. Or you can go to the theatre The ticket will cost you £50, but you value the experience at £60. Based on this information, which of the following statements is correct?
a. Based on economic rent alone, you would definitely choose to go to the theatre.
b. The economic cost of going to the pub is £40.
c. The economic rent of going to the pub is £0.
d. The opportunity cost of an evening at the pub is £60.
Answer:
b. The economic cost of going to the pub is £40.
Explanation:
The correct option is - b. The economic cost of going to the pub is £40.
Reason -
Economic cost = Cost actually incurred to choose an option + opportunity cost
Now,
We know that
Opportunity cost is the value of next best alternative forgone.
Now,
Net benefits while the person going to Pub = 50 - 30 = £20
Net benefits while the person going to Theatre = 60 - 50 = £10
So,
The opportunity cost = £20 - £10 = £10
∴ we get
Economic cost of going to the Pub= £30 + £10 = £40
The answer to this question is option B. The economic cost of going to the pub is £40.
In order to get the economic cost, we use this formula to calculate it:
Economic cost = cost of account + opportunity cost - benefit of the pub
The cost of account = 30 this is the price for the pub
The opportunity cost = 60 is the benefit that would have been enjoyed for visiting the theatre
The benefit = 50 is the worth of the pub
This would give us 30+60-50
= £40
Therefore the economic cost of going to the pub is £40.
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Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. Pluto Corporation owns 65% of Saturn's voting shares. On Jan 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star for $118,020. On the date Pluto purchased the bonds, the bonds' carrying value on Saturn's book was $126,019. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidating entry:
Based on the information given above, what amount of gain or loss on bond retirement is included in the 20X7 consolidated income statement?
a. $8,000 gain
b. $5,200 gain
c. $8,000 loss
d. $5,200 loss
Answer:
a. $8,000 gain
Explanation:
The face value of the bonds purchased by Pluto Corporation are $120,000. The bonds are purchased at discount of $1,980. The bonds have carrying value of $126,019 at the time of purchase. The net gain or loss is calculated by the difference between two values.
$120,000 - $126,019 - $6,019
The discount amount of the bond was $1,980.
Total gain on the bonds approximately ($6,019 + $1,980) = $8,000
Abby and Jason are building a new house. They obtained a construction loan of $100,000, which will be rolled over into a conventional 20-year mortgage when the house is complete in 14 months. Simple interest rate of 0.5% per month will be charged on the construction loan. The 20-year mortgage will carry a 6% interest rate with monthly payments (so, it is compounded monthly). What is the monthly payment that Abby and Jason will make
Answer:
Abby and Jason
The monthly mortgage payment that Abby and Jason will make is:
= $766.58.
Explanation:
a) Data and Calculations:
Construction loan = $100,000
Period of construction = 14 months
Simple interest rate = 0.5% per month
Principal amount after 14 months = $ 107,000 ($100,000 * 0.5% * 14)
Mortgage loan = $107,000
Mortgage period = 20 years
Interest rate = 6% compounded monthly
Terms of payment = monthly
From an online financial calculator, the monthly payment for the mortgage will be:
Monthly Pay = $766.58
Monthly Total
Mortgage Payment $766.58 $183,979.50
Total of 240 Mortgage Payments = $183,979.50
Total Interest = $76,979.50
Mortgage Payoff Date Mar. 2041 if the mortgage commenced on March 1, 2021.
Please help!
Note that common skills are listed toward the top and less common skills are listed toward the bottom. According to O*NET, what are some common skills needed by Personal Financial Advisors? Select four options.
critical thinking
judgment and decision making
active listening
reading comprehension
operation and control
quality-control analysis
Answer:
critical thinking
judgment and decision making
reading comprehension
operation and control
critical thinking, judgment and decision making, reading comprehension and operation and control are some common skills needed by Personal Financial Advisors. Hence, options A, B, D and E are correct.
What is Personal Financial Advisors?Personal financial advisors assess the needs of their clients' finances and offer advice on choices for investments, tax laws, and insurance. Advisors help their clients create both short- and long-term goals, including investing for retirement and saving for children's education.
An expert who provides expertise for customers' financial, investment, and personal decision-making is a financial advisor. Financial advisors may be employed or hired as independent contractors by a larger financial institution.
Both "advisor" and "adviser" are valid spellings for someone who gives counsel, such a financial advisor. The vast majority—if not all—of the things we provide here are provided by partners who give us money. This might have an impact on the subjects, venues, and methods of our writing.
Thus, options A, B, D and E are correct.
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Hoag Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below: Original Budget Actual Costs Fixed overhead costs: Supervision $ 9,880 $ 9,970 Utilities 4,160 4,440 Factory depreciation 21,320 21,190 Total fixed manufacturing overhead cost $ 35,360 $ 35,600 The company based its original budget on 2,600 machine-hours. The company actually worked 2,280 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 2,080 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month
Answer: $7,072 Unfavorable
Explanation:
Find fixed manufacturing overhead rate:
= Total budgeted fixed manufacturing overhead cost / Budgeted machine hours
= 35,360 / 2,600
= $13.60
Variance Favorable (Unfavorable) = (Standard hours allowed - Budgeted machine hours) * fixed manufacturing overhead rate
= (2,080 - 2,600) * 13.60
= -$7,072
In the business world, people are often measured by their:
Answer:
Technical Skills
Explanation:
The total of the accounts receivable subsidiary ledger must equal?
Kenwood Homes, Inc., allows employees to purchase, at cost, manufacturing materials, such as metal and lumber, for personal use. To purchase materials for personal use, an employee must complete a materials requisition form, which must then be approved by the employee's immediate supervisor. Cheryl Long, an assistant cost accountant, charges the employee an amount based on Kenwood's net purchase cost. Cheryl Long is in the process of replacing a deck on her home and has requisitioned lumber for personal use, which has been approved in accordance with company policy. In computing the cost of the lumber, Long reviewed all the purchase invoices for the past year. She then used the lowest price to compute the amount due the company for the lumber. Discuss whether Long behaved in an appropriate manner.
Answer:
Cheryl did not act ethically because she used the lowest possible cost in order to calculate her own purchase cost. She should probably use an average cost or any other inventory management system (e.g. FIFO or LIFO). instead, she used the lowest possible price for her own personal benefit.
Explanation:
Economically, the government divides its earning marks into ______, each of which lasts three months.
Answer:
quarters
Explanation:
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $433,200; materials of $418,000 and direct labor of $228,000. During the year Adams incurred $457,200 in materials costs, $451,600 in overhead costs and $232,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.
a. $10,800 overapplied.
b. $18,400 overapplied.
c. $10,800 underapplied.
d. $18,400 underapplied.
Answer:
see below
Explanation:
Given that cost incurred = $457,200
Overhead
= $457,200 - $433,200
akashi plans to save $30,000 per year until he retires. His first savings contribution to his retirement account is expected in 1 year from today. Takashi plans to retire in 6 years from today, immediately after making his last $30,000 contribution to his retirement account. He then plans to be retired for 6 years. Takashi expects to earn 8.0 percent per year in his retirement account, both before and during his retirement. If Takashi receives equal annual payments from his retirement account during his retirement with the first of these annual retirement payments received in 1 year after he retires and the last of these annual retirement payments received in 6 years after he retires, then how much can Takashi expect each of his annual retirement payments to be
Answer:
$47,605.83
Explanation:
future value of Takashi's savings = $30,000 x 7.3359 (FVIFA, 8%, 6 periods) = $220,077
the value of each distribution payment = $220,077 / 4.6229 (PVIFA, 8%, 6 periods) = $47,605.83
These are ordinary annuities, therefore, so we can find their annuity factors using a table.
The Sisyphean Company's common stock is currently trading for $25.50 per share. The stock is expected to pay a $2.80 dividend at the end of the year and the Sisyphean Company's equity cost of capital is 10%. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Sisyphean Company's earnings is closest to
Answer:
0.98%
Explanation:
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
the growth rate can be determined from the above equation
$25.50 = $2.8 / ( 0.1 -g)
Multiply both sides of the equation by 0.1 - g
$25.50( 0.1 -g) = $2.8
Divide both sides by $25.50
0.1 - g = 0.1098
g = 0.1 - 0.1098
g = - 0.0098
g = -0.98%
Suppose that the supply function for honey is p=S(q)=0.4q+2.8, where p is the price in dollars for an 8-oz container and q is the quantity in barrels. Suppose also that the equilibrium price is $4.80 and the demand is 4 barrels when the price is $6.90. Find an equation for the demand function, assuming it is linear.
Answer:
The demand function is p= (-2.1)*q + 15.3
Explanation:
The supply function for honey is p=S(q)=0.4*q+2.8, where p is the price in dollars for an 8-oz container and q is the quantity in barrels. The equilibrium price is $4.80. So, the equilibrium quantity is:
4.80=0.4*q+2.8
Solving:
4.80 - 2.8=0.4*q
2=0.4*q
2÷0.4= q
5=q
The demand function, assuming it is linear, is p=m*q+b
The equilibrium quantity is 5 barrels and the equilibrium price is $4.80; and the demand is 4 barrels when the price is $6.90. So:
[tex]\left \{ {{4.80=m*5+b} \atop {6.90=m*4+b}} \right.[/tex]
Isolating the variable "b" from the first equation, you get:
4.80 - m*5= b
Replacing the previous expression in the second equation you get:
6.90=m*4 + 4.80 - m*5
6.90 - 4.80=m*4 - m*5
2.1= (-1)*m
2.1÷(-1)= m
-2.1=m
Replacing the value of "m" in the expression 4.80 - m*5= b you get:
4.80 - (-2.1)*5= b
Solving you get:
15.3= b
So, the demand function is p= (-2.1)*q + 15.3