Economic efficiency in a free market occurs when the sum of consumer surplus and producer surplus is maximized.
In order to serve each person or entity in the best possible manner while minimizing waste and inefficiency, economic efficiency implies an economic state. Any adjustments made to benefit one entity would hurt another in an economically effective economy. The cost of production is kept as low as feasible for both the fixed and variable inputs of production.
Allocative, productive, distributive, and Pareto efficiency are a few words that refer to different stages of economic efficiency. Economic efficiency is essentially an idealized limit that can only ever be approached.
Instead, to determine how effectively an economy operates, economists examine the amount of loss, sometimes known as waste, between pure efficiency and reality.
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john’s friend, michael, just got fired from his job as a server at a local restaurant. after michael is done telling his story about his encounter with an irate customer and his boss, john says, "so, your boss took the customer’s words over yours?" what is john doing here in his response? question 4 options:
In a case whereby john’s friend, Michael, just got fired from his job as a server at a local restaurant and narrated the issue to John, and John says "so, your boss took the customer’s words over yours, then John means that his boss do not trust him.
What is the trust between the employee and employer?The trust between the employee and employer can be seen as one that do make the relationship between the employer as well as the employee to be strong.
It should be noted that the Trust in the workplace implies that there is a culture of honesty as well as psychological safety which exist between the employee as well as the employer, hence in the case whereby the employer is acting against the employee as a result of the comments from the customer without any investigation implies that there is no trust between them which is not adviceable.
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abc company produces high-end electric race cars primarily for the use in the world rally championship. their main focus is on research and development (r
The ABC Company makes premium electric race cars that are mostly used in the world rally championship. their primary emphasis is on differentiation strategy for research and development.
A strategy used to accomplish a long-term or general goal "The skill of organising and controlling all military actions and movements in a conflict or battle" A strategy describes the long-term objectives of a company and how it intends to achieve them. In other words, it demonstrates the route to take in order to realise the stated goal. A tactic is a precise action that is used to accomplish a goal in accordance with a strategy. Development is a process that results in expansion, advancement, constructive change, or the addition of elements that are physical, economic, environmental, social, and demographic. All development must receive approval, however since each development has a varied level of influence, they are divided into 3 categories. Complying, Merit, and Non-Complying are the three categories of developments.
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Government intervention is one possible solution for market failure. What is one possible reason why a government-controlled used car market may not provide an efficient outcome?.
Government actors may have their own incentives that might not align with market efficiency is one possible reason why a government-controlled used car market may not provide an efficient outcome
The efficient-market hypothesis (EMH) is a speculation in monetary economics that states that asset expenses mirror all available facts. A right-away implication is that it's far not possible to "beat the marketplace" continually on a chance-adjusted basis considering the fact that market charges need to handiest react to new statistics. Because the EMH is formulated in terms of danger adjustment, it handiest makes testable predictions while coupled with a particular version of hazard. As a result, research in monetary economics considering at least the Nineties has targeted market anomalies, this is, deviations from particular models of chance. The concept that financial market returns are difficult to are expecting goes lower back to Bachelier, Mandelbrot, and Samuelson, however, is carefully associated with Eugene Fama, in component because of his influential 1970 evaluation of the theoretical and empirical studies.
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when a hotel has a service delivery problem such as a broken air conditioning system on a very hot weekend, one critical element of service recovery is to blank .
When a hotel has a service delivery problem such as a broken air conditioning system on a very hot weekend, one critical element of service recovery is to find a solution that seems fair to all customers.
Service delivery is a very crucial element of all the hotels because customer choose a hotel on the basis of what kind of services they are providing. Every hotel must ensure that they are providing services as mentioned in their website. The guidance given to consumers or visitors before, all through, and then after their stay at your hotel is regarded to as hotel customer service. Visitors may require help in choosing rooms, making online reservations, having to cancel reservations, or trying to make other preparations during their visit.
In case the air conditioning system broke down during a very hot weekend, and in case hotel is unable to properly execute service delivery they should depend on such services which will be beneficial for all.
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Compose a letter to the owner or manager of a business that you believe has a low level of customer service. Describe the reasons for your beliefs and explain how relationship marketing and employee empowerment might help the business
GIVE BRAINLIEST TO BEST LETTER
Your ability to provide excellent customer service will help you increase sales, foster brand awareness, win over consumers' loyalty, and develop trust.
How can managers make sure that their workforce continues to offer consumers high-quality service?
Promote attentive listening Everyone wants to believe that they are being helped and that someone actually cares about their issue. Another suggestion is to have staff members tell customers what they heard when they are addressing a problem. This gives the client the opportunity to elaborate on the topic at hand and makes them feel heard.
Why do you believe a business may need to focus so much on providing exceptional customer service?
The difference between a successful IPO and simply keeping the lights on can be significant. Excellent customer service can lead to increased opportunities for marketing and sales. Therefore, maintaining client happiness is essential to your company's continued success.
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When the government does not use quotas, taxes or other means to restrict what its citizens can buy from or sell to another country, it is called trade.
When the government does not use quotas, taxes or other means to restrict what its citizens can buy from or sell to another country, it is called free trade.
In the field of business, such a kind of trade in between two countries that require low or no taxes at all is referred to as free trade. Free trade is considered beneficial if the status of the market of a country is to be enhanced. Foreign companies will be more interested to sell products in a country where there are no quotas, taxes or other restrictions so that they can benefit to the maximum level from such a trade.
Free trade is a policy by the government of a country to allow import as well as export without any restrictions. The local businessman of a country benefits from such a kind of trade as they do not have to pay taxes.
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if the fomc wished to generate faster economic growth, they could issue a policy directive to the federal reserve board trading desk to purchase u.s. government securities.
True: If the FOMC wished to generate faster economic growth, they could issue a policy instructed to the federal reserve board trading platform to purchase U.S. government security.
What is Economic growth?
A rise in the output of products and services over a given time period is referred to as economic growth. The calculation needs to account for inflation. A country's economy is said to be growing when the value of its goods and services rises, generating more revenue for companies. Consequently, stock prices increase. This provides businesses with money to expand and recruit more workers. The number of jobs added increases income. More purchases are made because consumers have more money to spend on more goods and services. All nations seek healthy economic growth for this reason.
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a data analyst is using data from a short time period to solve a problem related to someone’s day-to-day decisions. they are most likely working with small data.
TRUE, A data analyst is using data from a short time period to solve a problem related to someone’s day-to-day decisions.
In order to answer a problem involving a person's daily decisions, a data analyst uses data from a brief time period. Most likely, they are dealing with tiny data.
A choice that you make about something after thinking about several possibilities: She has had to make some very difficult decisions. The company will reach/come to/make a decision shortly.
An analyst is someone who collects data, examines it, and then draws conclusions based on what they discover. They search for patterns in the data and use what they discover to inform important decisions and adjustments. In many different industries, analysts seek to increase productivity and aid in strategic decision-making.
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employees who receive high performance evaluations for their one year accomplishments are awarded a fixed cash award. this is an example of tying evaluations to what element of the pay mix?
Employees who receive high performance evaluations for their one year accomplishments are awarded a fixed cash award. this is an example of Short Term Incentives.
The term "short term incentive administration" describes rewards that are delivered over a period of up to one year. Short-term incentives, also known as annual incentives, are frequently linked to actions that have the biggest influence on business performance and are intended to motivate target achievement. Sep 21, 2020 For each period, "Fixed Cash Amount" refers to the sum shown in the table below across from that time. The Obligors shall not, during the periods set forth in the tables below, permit the Available Cash Amount to be less than the lesser of (x) the Fixed Cash Amount (as defined below) for such period and (y) the Variable Cash Amount at such time, at the close of business on the last Business Day in any calendar week.
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What most accurately describes the difference between diminishing returns and diseconomies of scale?.
Diseconomies - As the use of a factor increases in production while other factors remain constant, a declining return on that factor implies a declining marginal product.
What is diseconomies?
Diseconomies of scale are the financial disadvantages which economic actors experience as a result of growing their organisational size or their output, which leads to higher production costs per unit of goods and services. Economies of scale are opposed by the idea of diseconomies of scale. Diseconomies of scale are the characteristics of a business that cause average costs to rise as it expands past a certain size. All workers at a company should ideally communicate directly with one another so that they are fully aware of what the other employees are doing. There is no need for inter-employee communication in a company with just one employee. A two-person business needs a single line of communication that runs between the two employees.
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What decision support strategy uses a technique based on searching based on logical proximity by identifying other data with characteristics that are common to a new item being analyzed?.
Data mining is a decision support strategy uses a technique based on searching based on logical proximity by identifying other data with characteristics that are common to a new item being analyzed.
Data mining is the process of predicting outcomes by identifying anomalies, patterns, and correlations in large data sets. Users can use this data to boost revenues, reduce expenses, enhance customer relationships, reduce risks, and do other things. Companies can learn more about their clients by using software to search for patterns in large amounts of data. This allows them to develop more successful marketing strategies, increase sales, and reduce costs.
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a circus’s goal of redesigning the circus experience is being completed through the coordination of many marketing activities, such as value pricing, a product that includes exciting performances, tent venue locations, and promotion. these activities make up the for the circuses. a. value of marketing b. marketing environment c. target market d. marketing mix
Given the information provided above, the business operations described make up the "marketing mix" of the circuses. (Option D).
What is Marketing Mix?The word "marketing mix" refers to a business foundation model that has historically been built on product, price, place, and promotion. The marketing mix is defined as "the set of marketing instruments used by the organization to pursue its marketing objectives in the target market."
The marketing mix is a method for examining the many aspects of promoting a brand and its products. It provides general rules for putting the right things in the right place, at the right time, and at the appropriate price.
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why is separating the impact of analytics from that of other computerized systems a difficult task? the trend is toward integrating systems. it is not an organizational priority. businesses do not typically track the sources of successful projects. software tools are not sophisticated enough.
Separating the impact of analytics from that of other computerized systems is a difficult task because the trend is toward integrating systems.
Computerized system validation can be described as the process of testing or qualifying or validating a regulated computerized system to ensure that it does exactly what it is designed to do in a consistent and reproducible manner that is as safe, reliable as paper records, and secure.
Computerized systems are includes software, hardware, operating system software, application software, supporting documentation, e.g. automated laboratory systems, control systems, manufacturing, clinical, or compliance monitoring database systems, etc.
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Alex purchases a computer from dell to be delivered via fed ex. Dell delivers the computer to fed ex to be shipped to alex. During the delivery, the fed ex driver is having a bad day and just throws the boxes out the window of the delivery truck rather than setting the box by the front door as is standard practice. While throwing the computer it is damaged. Would dell be responsible for the damage to the computer?.
No, dell will not be responsible for the damage to the computer because the title transfers to the buyer once the good is delivered to a common carrier.
The parent company of Dell Technologies, which owns Dell, is an American technology firm that creates, markets, fixes and supports computers and related goods and services. A person or business that delivers people or things for a fee and declares that their service is accessible to the general public is known as a common carrier. Common carriers include, for instance, shipowners, railroads, airlines, taxi services, etc.
Since common carriers offer vital public services, they may be subject to stricter state and federal laws as well as increased government oversight. In general, a common carrier is one that, absent compelling reasons to the contrary, must offer its services to anybody willing to pay its rates.
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total fixed costs on a super-variable costing income statement will be blank than total fixed costs on a traditional variable costing income statement. multiple choice question. the same as higher than lower than
The right answer is an option (b). Total fixed costs on an income statement using super-variable costing will be higher than total fixed costs on an income statement using regular variable costing.
Give an example of the difference between fixed and variable costs.Over a predetermined time period, fixed costs are constant. Depending on how well the business is doing, variable costs may go up or down. Rent, taxes, and insurance are a few examples of fixed costs. Credit card fees, direct labor, and commission are a few examples of variable costs.
On an income statement, how are fixed and variable costs determined?Add up all of your production costs first. Be certain to understand which costs are fixed and which are changeable. Add up your variable costs and divide by the quantity of units you generated to get your total cost of production. You will then be given your overall fixed cost.
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the following best describes the global supply chain cycle from beginning to end: warehouses to distribution centers to suppliers to transporters to customers.
No, warehouses to distribution centers to suppliers to transporters to customers do not best describes global supply chain from beginning to end therefore it is false.
A supply chain is a collection of individuals and companies held to account for creating a product and gaining it to the end user. The input materials production companies are the initial links inside this chain, and the final link is the van which provides the finally completed product to the client.
The significance of supply chain can be seen in the lowered costs and enhanced productive capacity that arrive from an optimization distribution chain. Companies are working to augment their supply chains in order to decrease expenses and maintain competitive advantage. Effective supply chain helps the companies to compete better and create good customer and also help in overall reduction of cost.
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a portfolio consists of $2200 in a mmmf and $7800 in a risky stock that has an expected return of 11.3%. the riskfree rate is 4.1%. what is the expected return on the portfolio? (report your answer to the nearest hundredth and report the percent as 10.32 rather than .1032)
The expected return on the stock portfolio is 9.518 %.
A stock market portfolio is an investor's collection of shares, price range, and other marketplace-traded securities. In widespread, investment portfolios often consist of some coins and bond investments. A varied portfolio holds a selection of various property, varied in length, enterprise, and other factors.
For years, many financial advisors endorsed building a 60/forty portfolio, allocating 60% of capital to stocks and 40% to constant-income investments along with bonds.
An investment portfolio is a collection of assets and can include investments like stocks, bonds, mutual budget and change-traded funds.
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Why was the federal reserve system set up with twelve regional federal reserve banks rather than one central bank, as in other countries?.
The Federal Reserve machine changed into installation with 12 local banks because of conventional American hostility to centralized authority and crucial bank, this sort of machine changed into setup to diffuse the energy and distribute it a whole lot extra evenly.
The required details for Federal Reserve System in given paragraph
The Federal Reserve System is the crucial banking machine of the United States of America. It changed into created on December 23, 1913, with the enactment of the Federal Reserve Act, after a chain of monetary panics brought about the preference for crucial manage of the financial machine with a purpose to alleviate monetary crises. Over the years, activities which includes the Great Depression within side the Thirties and the Great Recession at some stage in the 2000s have brought about the growth of the jobs and duties of the Federal Reserve System.
Congress hooked up 3 key targets for financial policy within side the Federal Reserve Act: maximizing employment, stabilizing prices, and moderating long-time period hobby rates. The first targets are now and again called the Federal Reserve's twin mandate.
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Match the examples to the stages of the buying and decision-making process.
The customer decides which product to buy. - Making a purchase decision.
The customer looks for information on products and services. - Searching for information.
The customer compares various options. - Looking at options.
The customer pays for a product. - Buying the product or service
The customer reflects on what he or she has bought. - Purchase reflection.
The customer realizes that something is needed. - Problem recognition.
What is a buying decision process?In marketing, this decision-making process are used by the consumers regarding the market transactions before, during and after the purchase of a good or service. Such process can be seen as a form of a cost-benefit analysis in the presence of multiple alternatives.
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often presented visually on an executive dashboard, what type of report focuses attention on business processes whose performance falls outside of the tolerance ranges defined a kpi metric? question 41 options: 1) annual 2) exception 3) batch 4) drill-down 5) ad hoc
The exception report focuses attention on business processes whose performance falls outside of the tolerance ranges defined by a KPI metric.
The answer is option 2.
Financial KPIs (key performance indicators) are metrics companies use to the song, measure, and analyze the economic health of the company. Those economic KPIs fall below a spread of categories, consisting of profitability, liquidity, solvency, performance, and valuation.
Types of KPIs include Quantitative signs that can be presented with a variety of. Qualitative signs that can't be offered as a variety of. main signs that could predict the final results of a system.
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Alex purchases a computer from dell to be delivered via fed ex. Dell delivers the computer to fed ex to be shipped to alex. During the delivery, the fed ex driver is having a bad day and just throws the boxes out the window of the delivery truck rather than setting the box by the front door as is standard practice. While throwing the computer it is damaged. Would dell be responsible for the damage to the computer?.
Dell is not responsible for the damage to the computer because title transfers to the buyer once the good is delivered to a common carrier.
As of FY20, FedEx Corp. (FDX) sent packages to more than 220 nations and territories worldwide every working day.
The two businesses have each identified a distinct market niche for their own business models, with FedEx specializing in time-sensitive express service and UPS focused on small package delivery.Regarding retail, FedEx Offices are corporate-owned and typically occupy sizable spaces that closely resemble huge offices. FedEx Office offers high-end tools like laser printers, digital picture kiosks, and PC access with an image scanner and Adobe design software. FedEx primarily draws corporate and retail clients who value and can afford the kind of express services provided.Learn more about FedEx, here
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Suppose you put $350 into a bank account today. Interest is paid annually and the annual interest rate is 6 percent. The future value of the $350 after 4 years is.
If you deposit $350 into a bank account now, its future value after four years is $441.87. The interest rate is 6% per year, and it is paid annually.
FV=PV*(1+i)^n
PV=present value=$350
FV=future value=?
i=interest rate=6%=0.06
n=periods=4 years
FV=350*(1+0.06)^4
=441.866936
The future value of $350 after 4 year is $441.87
Future value (FV) is the value of an asset now based on an anticipated rate of increase in the future. Investors and financial planners use the future value to project how much an investment made now will be worth in the future.
Investors can choose wisely based on their anticipated demands when they have knowledge of the future value. External economic forces, such as inflation, can hurt the asset's future worth by depreciating it, though.
The future value of $350 after 4 year is $441.87 if you put $350 into a bank account today. Interest is paid annually and the annual interest rate is 6 percent.
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Your credit report is the equivalent of your financial what?
A: Goals and dreams
B: Family budget
C: Report Card
D: Car payments
Answer:
financial nothingness is equivalent to space time travel
got em
__________ _________ compare alternatives by determing the qualitative factors that should be included as part of the decision, assigning weights related to their importance, and then ranking different alternatives to allow comparisons.
Quantitative factors compare alternatives by determining the qualitative factors that should be included as part of the decision, assigning weights related to their importance, and then ranking different alternatives to allow comparisons.
Qualitative factors can be considered as results that cannot be quantified or measured and depend on subjective knowledge.
On the other hand, Quantitative factors can be considered as numerical outcomes that can be easily quantified or measured. They may involve generic empirical information or monetary values that represent the magnitude of the financial effect on the reporting company or organization. It expresses a certain amount or range. Generally, there is a unit of measurement associated with this type of data. Hence, it makes sense to assign bounds to this data, and also arithmetic operations can be applied to this data to allow comparisons.
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industry, forestry and energy production are top sources of greenhouse gases. of the remaining sources listed below, which produces the greatest amount of greenhouse gases? transportation agriculture residential and commercial buildings water and wastewater
Due to automation and reliance on vehicles like cars, trucks, aeroplanes, and ships, transportation alone is responsible for the greatest amount of greenhouse gas emissions.
What is greenhouse gas?
Any gas that has the ability to absorb infrared radiation emitted from the Earth's surface and reradiate it to the surface is a greenhouse gas and contributes to the greenhouse effect. As far as greenhouse gases go, carbon dioxide, methane, as well as water vapour are the most significant. (Surface-level ozone, nitrous oxides, as well as fluorinated gases trap infrared radiation to a lesser extent.) Even though they make up a small portion of all atmospheric gases, greenhouse gases have a significant impact on the energy budget of Earth system. Throughout Earth's history, greenhouse gas concentrations have varied significantly, and these variations have resulted in significant climate changes over a wide range of timescales. In general, the levels of greenhouse gases have been highest during warm seasons and lowest during cold ones.
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Answer:
Industry, forestry and energy production are top sources of greenhouse gases.
Of the remaining sources listed below, which produces the greatest amount of greenhouse gases?
Agriculture
Water and wastewater
Transportation
Residential and commercial buildings
Explanation:
Correct Answer:
Agriculture
suppose that a cpi basket includes avocadoes, pineapples and oranges. avocadoes become very expensive, and consumers substitute away from avocadoes and buy hummus instead. if the cpi basket does not change to reflect the move away from avocados, the result is:
If CPI basket does not change to reflect the move away from avocados, the result is substitution bias.
When prices for items change in relationship to each other, substitution bias occurs. Think about the way a consumer price index represents private consumption. Customers will often buy more of the item whose price has dropped and less of the product whose price has risen slightly. The long-standing market basket used to create a consumer price index may not take into consideration this change in demand. If a specific good is purchased by consumers and therefore included within the Consumer price index (CPI), but its price hikes, customers may choose to pick a less expensive version, the CPI basket may still not instantly indicate this shift.
The complete question is here:
Suppose that a CPI basket includes avocadoes, pineapples and oranges. Avocadoes become very expensive, and consumers substitute away from avocadoes and buy hummus instead. If the CPI basket does not change to reflect the move away from avocados, the result is:
A) substitution bias.
B) understated inflation.
C) the failure to capture real variables versus nominal variables.
D) quality bias.
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at the beginning of the year, a company estimates total overhead costs of $1,120,000. the company applies overhead using machine hours and estimates that it will use 2,800 machine hours during the year. what amount of overhead should be applied to a job that uses 25 machine hours that year?
A project that requires 25 machine hours in a year should have overhead of $10,000 added to it.
Machine hrs rate = Total overhead cost/ total Machine hrs
= $1,120,000/2,800 hrs
= 400 per hr
Overhead applied for Job = Machine hrs rate* Machine hrs used
= 400*25
=$10,000
The recurring costs of a firm that aren't specifically related to providing a machine hours good or service are referred to as overhead. The amount that a business needs charge for its goods or services in order to turn a profit is crucial overhead information for planning as well as pricing considerations. In a nutshell, overhead is any expense that is machine hours incurred to maintain the business but is not directly connected to a particular good or service.
Regardless of how much or how little a firm sells, overhead must be paid on a regular basis. For instance, a service-based company overhead with an office overhead has overhead costs in addition to direct expenditures (like labor and supplies) for providing its service, such as rent, utilities, and insurance.
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define telecommuting. give two advantages for the employer and two advantages for the employee. give two problems associated with telecommuting. 2. what does the electronic communications privacy act (ecpa) cover? why does it make specific exceptions for business systems? 3. give two arguments for and two arguments against electronic employee monitoring.
Employee morale ultimately improves as a result of telecommuting's flexibility, healthy work-life balance, and other advantages.
What are the benefits and drawbacks of working remotely for an employee?
Communication is hampered because the employee interacts less personally with bosses and coworkers. Managers may find it more challenging to oversee a remote worker. The employee might have more distractions at home, which would lower productivity. Working with colleagues had a social component that you could miss.
What are the drawbacks of working remotely for employees?
professional isolation. Employee exclusion may result from a poor or absent working environment. Employees may experience emotional isolation if they are unable to interact with coworkers or share a common area.
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myca corporation has a project with the following cash flows. what is the value of the cash flows today assuming an annual interest rate of 10.1 percent? year cash flow 1 $ 1,840 2 2,330 3 2,675 4 2,685
Assuming a 10.1% annual interest rate, the present value of the cash flows is $4148.85. (approx).
When the benefits of compounding over time are taken into account, an effective annual interest rate represents the true return on a savings account or any other investment that pays interest. It also cash flows displays the actual percentage rate of interest paid on any other debt, including loans and credit card debt.
The term "annual interest rate" refers to the actual interest rate on a loan or investment. The fact that the effective yearly cash flows interest rate accounts for the reality that higher effective interest rates will result from more frequent compounding periods is its most significant feature.
Given data,
Annual interest rate, r = 10.1 % ~ 0.101
The present value of the cash flows is calculated as follows:
PV1 = FV (1+r)
where FV= future value
r = annual rate of interest
n = time period
PV1 = 1640/ (1+0.101)1
= 1840/ 1.101
= 1671.20
PV2= 2330/ ( 1+0.101) 2
= 2330/ 2.202
= 1058.12
PV3 = 2675/ (1+0.101)3
= 2675/3.303
= 809.86
PV4= 2335/ (1+0.091)4
= 2685/ 4.404
= 609.67
NPV = \sum PV1+ PV2+ .....+ PVn
= 1671.20 + 1058.12 + 809.86 + 609.67
= 4148.85(approx)
Therefore, the value of the cash flows today assuming an annual interest rate of 9.1% is $4148.85 (approx).
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as an alternative, lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing and the balance with short-term financing. the same interest rates apply as in part a. earnings before interest and taxes will be $200,000. what will be lear’s earnings after taxes? the tax rate is 30 percent.
The value of earning after tax of Lear will be $35,875, considering value of current asset, fixed asset and value of earnings before interest and taxes.
The following information is provided:
Temporary current assets =$450,000
Permanent current assets =$350,000
Fixed assets =$600,000
Total assets =$14,00,000
Tax rate = 30%
Calculation of interest expense in the alternative financing plan
Long-term interest expense = asset to be financed*interest rate
= (600,000+350,000+1/2* 450,000)*10%
= $1,17,500
Long-term interest expense = asset to be financed*interest rate
= [$450,000 + ½ ($350,000)]*5%
= $31,250
Total interest expense = $1,17,500+$31,250 = $148,750
Calculation of earnings after tax:
Earnings after taxes= Earnings before interest and taxes-interest expenses- tax
= $200,000-$ 148,750-$15,375
= $35,875
The complete question is here:
Lear inc has 800,000 in current assets, 350,000 of which are considered permanent current assets. In addition, the firm has600,000 invested in fixed assets.
a) Lear wishes to finance all fixed assets and half of its permanent current assets with long term financing costing 10percent. Short term financing currently costs 5 percent. Lear’s earnings before interest and taxes are 200,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30 percent.
b) As an alternative, Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be 200,000. What will be Lear’s earnings after taxes? The tax rate is 30 percent.
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