Influences the overall holding period return..to calculate the annual holding period return on each security, we can use the following formula:
holding period return = ((end-of-year price + interest/dividend) - beginning-of-year price) / beginning-of-year price
a. calculating the annual holding period return on each security:
for stock 1:holding period return = (($46.75 + $1.50) - $42.50) / $42.50
holding period return = $5.75 / $42.50holding period return ≈ 0.1353 or 13.53%
for stock 2:
since no dividends or interest are paid, the holding period return will be based solely on the change in price.holding period return = ($1.36 - $1.25) / $1.25
holding period return = $0.11 / $1.25holding period return = 0.088 or 8.8%
for bond 1:
holding period return = (($1,048.00 + $41.00) - $1,020.00) / $1,020.00holding period return = $1,069.00 / $1,020.00
holding period return ≈ 1.046 or 4.6%
b. the information about stock 2's share repurchase affects the calculation of the holding period return. the repurchase of shares reduces the number of outstanding shares, which can lead to an increase in the stock price. however, since the repurchase price per share and the total number of shares repurchased are not provided, we can't determine the exact impact on the holding period return without this information.
if the repurchase price per share was below the beginning-of-year price, the holding period return would likely be higher. conversely, if the repurchase price per share was above the beginning-of-year price, the holding period return would likely be lower. the repurchase activity affects the capital gains or losses realized by shareholders and
Learn more about bond here:
https://brainly.com/question/31994049
#SPJ11
Columbus Industries makes a product that sells for $25 a unit. The product has a $5 per unit variable cost and total fixed costs of $9,000. At budgeted sales of 2,000 units, the margin of safety ratio is ?
The margin of safety ratio is 77.5%, if Columbus Industries makes a product that sells for $25 a unit.
To calculate the margin of safety ratio, we need to determine the budgeted sales in units and the break-even point.
First, let's calculate the break-even point in units:
Break-even point (units) = Total fixed costs / Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $25 - $5 = $20
Break-even point (units) = $9,000 / $20 = 450 units
Next, let's calculate the margin of safety:
Margin of Safety (units) = Budgeted sales (units) - Break-even point (units)
Margin of Safety (units) = 2,000 units - 450 units = 1,550 units
Finally, let's calculate the margin of safety ratio:
Margin of Safety ratio = Margin of Safety (units) / Budgeted sales (units)
Margin of Safety ratio = 1,550 units / 2,000 units = 0.775
To know more about sales, here
https://brainly.com/question/29436143
#SPJ4
Jetson Spacecraft Corp. shows the following information on its 2015 income statement: sales = $395,845; costs $226,304; other expenses = $5,512; depreciation expense = $18,635; interest expense = $14,523; taxes = $17,334; dividends = $11,596. In addition, you're told that the firm issued $5,393 in new equity during 2015 and redeemed $3,655 in outstanding long-term debt. What is the 2015 cash flow to creditors?
The 2015 cash flow to creditors for Jetson Spacecraft Corp. is $12,785.
The cash flow to creditors can be calculated using the formula:
Cash Flow to Creditors = Interest Expense - Net New Borrowing
In this case, we are given the interest expense as $14,523. To calculate the net new borrowing, we need to consider the change in long-term debt.
Net New Borrowing = New Equity Issued - Long-Term Debt Redeemed
Given that the new equity issued is $5,393 and the long-term debt redeemed is $3,655, we can calculate the net new borrowing as follows:
Net New Borrowing = $5,393 - $3,655 = $1,738
Now we can calculate the cash flow to creditors:
Cash Flow to Creditors = Interest Expense - Net New Borrowing
= $14,523 - $1,738
= $12,785
Therefore, the 2015 cash flow to creditors for Jetson Spacecraft Corp. is $12,785.
For more such questions on cash flow
https://brainly.com/question/24179665
#SPJ8
A leading indicator of the business cycle is:
a.
Second-hand car sales
b.
Patents registered
c.
House prices
d.
Recruitment advertising
The leading indicator of the business cycle is a measure used by economists to forecast the future direction of the economy. Patents registered is the leading indicator of the business cycle among the given options.
It is a series of indicators that provide insight into the future direction of the economy. The leading indicator of the business cycle is designed to indicate changes in the economy before they become evident in the general business environment. The business cycle is made up of four distinct phases, namely, expansion, peak, contraction, and trough. During each of these phases, different economic indicators come into play. Some of the leading indicators of the business cycle include new factory orders, stock prices, money supply, housing permits, and changes in business inventories.
The leading indicators provide valuable insight into the future direction of the economy by providing information on the current state of the economy, which can then be used to predict its future direction. Patents registered is the leading indicator of the business cycle among the given options. The number of patents registered provides an early indication of the direction of the economy as it shows the level of innovation and investment in new ideas.
know more about Patents registered
https://brainly.com/question/31719076
#SPJ11
Assuming that you are a newly appointed CEO of a traditional company. To keep up with the market demand and latest technologies, you want to introduce a culture of innovation. However, most employees disagree with this action. Instead of forcing them to accept the new culture or removing them from the organization, describe how you can use three (3) power tactics to win their supports.
As a newly appointed CEO of a traditional company, to keep up with the market demand and latest technologies, you may want to introduce a culture of innovation. However, most employees disagree with this action.
Instead of forcing them to accept the new culture or removing them from the organization, the three power tactics that can be used to win their support are as follows:
Rational persuasion tactic: This power tactic is based on convincing others using logical arguments and factual information to demonstrate the benefits of the new culture of innovation. The employees should be explained that the change will lead to better profitability, new opportunities for advancement, and competitive advantage. Social influence tactic: This power tactic involves using social behavior and relationships to gain the support of others. To use this tactic, employees can be convinced that the innovation culture is the future of the company and that it is better to be a part of it rather than to oppose it. Legitimacy tactic: This power tactic is based on gaining employees' support by utilizing one's authority. The new culture of innovation should be implemented by explaining the need to innovate and how the organization is going to benefit from it.By doing this, the employees will understand that the new culture is vital for the growth of the organization, which will make them support it.
Learn more about Market Demand :- https://brainly.com/question/3331860
#SPJ11
Fernanda and Jack are lifelong friends who have decided to open a bakery together. They are both experienced bakers who specialize in artisanal cheesecake, and they feel the world is in need of their creamy and decadent desserts. They are concerned about protecting their assets in case the business fails, about being able to pay the taxes for a business that is just starting out, and about the difficulty of setting up and maintaining the business. What are the pros and cons of the different business entities they could form?
Fernanda and Jack are lifelong friends who have decided to open a bakery together. They are both experienced bakers who specialize in artisanal cheesecake, and they feel the world is in need of their creamy and decadent desserts. They are concerned about protecting their assets in case the business fails, about being able to pay the taxes for a business that is just starting out, and about the difficulty of setting up and maintaining the business.
Following are the pros and cons of the different business entities they could form:-
Sole Proprietorship
Pros
1. Low setup cost
2. Full control over the business
3. Tax Benefits
Cons
1. Unlimited personal liability Partnership
Pros
1. Low setup cost
2. Shared management and responsibility
3. Tax Benefits
Cons
1. Unlimited personal liability
2. Conflict of interest Corporation
Pros
1. Limited personal liability
2. Perpetual existence
3. Easy to raise funds
Cons
1. Double taxation
2. Complicated and expensive setup cost Limited Liability Company
Pros
1. Limited personal liability
2. Pass-through taxation
3. Flexible management
Cons
1. Expensive setup cost
2. State-specific laws
Fernanda and Jack may choose the business entity that is right for them. They need to evaluate their goals and choose the one that is most appropriate for their business.
To learn more about "Asset" visit: https://brainly.com/question/27972503
#SPJ11
Suppose AVC=$93.75, FC=$1,500 and TC=$39,000. What is the ATC?
a. $40
b. $78
c. $87
d. $97.50
The ATC is (d) $97.50.
The formula to calculate ATC or average total cost is as follows: ATC = TC/Q, where Q is the quantity produced.
In this case, we are given that the total cost (TC) is $39,000, and the fixed cost (FC) is $1,500. We can calculate the variable cost (VC) by subtracting the fixed cost from the total cost: TC - FC = VC.
Therefore, VC = $39,000 - $1,500 = $37,500.
Now we can calculate the quantity produced (Q) by dividing the variable cost (VC) by the average variable cost (AVC): Q = VC/AVC.
Q = $37,500/$93.75 = 400.
Finally, we can calculate the ATC by dividing the total cost (TC) by the quantity produced (Q):
ATC = TC/Q = $39,000/400 = $97.50
Thus, the answer is option (d) $97.50..
for more such questions on ATC
https://brainly.com/question/29509552
#SPJ11
Question 11 of 12 < > View Policies Current Attempt in Progress The adjusted trial balance columns of the worksheet for Sheridan Company, owned by C. Sheridan, are as follows. Sheridan Company Workshe
The given trial balance sheet is used to prepare financial statements at the end of an accounting period. In this worksheet, the adjustments for accruals and deferrals are entered separately to ensure that all accounts are up-to-date. Below are the accounts affected by each adjustment entry:
1. Insurance expired$1,200 – This is a prepaid expense that has been used up in the current period. As a result, Insurance Expense is debited while Prepaid Insurance is credited.
2. Depreciation expense$950 – This is the cost of the furniture and fixtures that have been used in the business. Sheridan Company has been using these assets since the day of purchase, so their value has been reduced by depreciation. Accumulated Depreciation is credited while Depreciation Expense is debited.
3. Interest revenue$275 – Interest is earned on a bank deposit, but it will not be received until the end of the month. To account for the interest earned, Interest Receivable is debited while Interest Revenue is credited.
4. Wages accrued$600 – This is a liability that the company owes to its employees for the current pay period. As a result, Wages Expense is debited while Wages Payable is credited.
5. Rent expired$450 – This is a prepaid expense that has been used up in the current period. Rent Expense is debited while Prepaid Rent is credited.
As a result, Office Supplies Expense is debited while Office Supplies is credited.7. Income taxes accrued$550 – This is an expense that the company owes to the government for the current tax period. As a result, Income Tax Expense is debited while Income Tax Payable is credited.
To know more about accruals visit :
https://brainly.com/question/15701868
#SPJ11
Year 3-Year 5-Year 7-Year 10-Year
1 33.33% 20.00% 14.29% 10.00%
2 44.45% 32.00% 24.49% 18.00%
3 14.81% 19.20% 17.49% 14.40%
4 7.41% 11.52% 12.49% 11.52%
5 Operating cash flow (growing each year; MACRS). Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 6,500 units, and sales will grow at 11% ove
The operating cash flow for this project over five years is $1,696,600. The operating cash flow for year 1 is $324,200.
The calculation is as follows:Sales in year 1: 6,500 units * $124/unit = $816,000
Production costs in year 1: 59% * $816,000 = $487,440
Depreciation in year 1: $1,400,000 * 14.29% = $200,096
Fixed costs in year 1: $48,000
Operating income in year 1: $816,000 - $487,440 - $200,096 - $48,000 = $324,200
Taxes in year 1: $324,200 * 28% = $91,876
Operating cash flow in year 1: $324,200 - $91,876 = $232,324
The method of computation for the operating cash flow over the next four years is comparable. The projected growth rates for sales, production expenses, depreciation, and fixed expenses are 11%, 6%, 11%, and 6% respectively, for each year.
To determine the yearly taxes, one simply needs to multiply the tax rate of 28% by the respective operating income of that year. To determine the operating cash flow for each year, the taxes incurred during that year are subtracted from the corresponding operating income.
Over the course of five years, the cumulative cash flow generated from operations amounts to $1,696,600. After factoring in all project-related expenses and taxes, Mathews Mining Company is projected to earn this sum of money from the project within a five-year span.
Read more about operating cash flow here:
https://brainly.com/question/28185713
#SPJ4
The Complete Question
Operating cash flow (growing each year; MACRS). Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 6,500 units, and sales will grow at 11% over the next four years (a five-year project). The price of the product will start at $124 per unit and will increase each year at 6%. The production costs are expected to be 59% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $1,400,000. It will be depreciated using MACRS., and has a seven-year MACRS life classification. Fixed costs will be $48,000 per year. Mathews Mining has a tax rate of 28%. What is the operating cash flow for this project over these five years? What is the operating cash flow for this project in year 1? (Round to the nearest dollar.) Data table MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon to download the data from this table Year 1 2 3 4 5 6 7 8 9 10 11 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00 % 32.00% 19.20% 11.52% Print 11.52% 5.76% 7-Year 14.29% 24.49% 17.49% 12.49% 8.93% 8.93% 8.93% 4.45% Done 10-Year 10.00 % 18.00% 14.40% 11.52% 9.22% 7.37% 6.55% 6.55% 6.55% 6.55% 3.28%
1. Assume you have an interview for an entry-level sales
position. Write a value proposition emphasizing why you are the
best candidate for the position relative to other recent college
graduates.
As an entry-level sales candidate, I offer a unique value proposition that sets me apart from other recent college graduates. With a strong educational background and a passion for sales, I bring a combination of theoretical knowledge and practical skills that can drive results for your organization.
Firstly, my academic foundation in marketing and business administration equips me with a solid understanding of sales principles and consumer behavior. This knowledge allows me to analyze market trends, identify potential opportunities, and develop effective sales strategies.
Additionally, I have honed my interpersonal and communication skills through internships and extracurricular activities. My experience working in customer service roles has taught me the importance of active listening, empathy, and building rapport with clients.
I possess the ability to effectively convey product benefits and address customer concerns, which contributes to building long-lasting relationships and driving sales growth.
Furthermore, my strong work ethic, adaptability, and willingness to learn make me a valuable asset to any sales team. I am highly motivated, target-oriented, and thrive in fast-paced environments. I embrace challenges and continuously seek opportunities for self-improvement, ensuring I stay ahead of industry trends and adapt to changing market dynamics.
In summary, my combination of academic knowledge, interpersonal skills, and determination to succeed makes me the best candidate for this entry-level sales position.
I am confident that my passion for sales and dedication to excellence will enable me to contribute significantly to your organization's sales goals and long-term success.
For more such questions on organization
https://brainly.com/question/25922351
#SPJ8
QUESTION 3 You are the finance director of Free Spirit Limited: Your company has just purchased a new machine. The cash price of the machine would have been £68,000 but instead the machine was purchased under a leasing arrangement. The lease was taken out on 1 January 2014 and the rentals are £20,000 per year, to be paid in arrears, annually, on 31 December. The interest rate inherent in the lease is 7%. Due to technological advances the machine is expected to have a useful economic life of only 4 years at which point the expectation is it will be scrapped. Benefits from the new machine are expected to accrue evenly over this time. NB: You should assume that the cash price is equal to the present value of the minimum lease payments.
REQUIRED:
a) IAS 17 identifies two types of lease, finance leases and operating leases. Define each of these types of lease and discuss the criteria identified in IAS 17 to assist in identifying whether a lease is a finance or an operating lease.
b) Using the actuarial method calculate and disclose the relevant figures and disclosures that should be recorded in both the Income Statement (all disclosures) and the Statement of Financial Position (liability disclosures only) for the 4 years of the lease taken out by Free Spirit Limited.
a) Finance leases transfer ownership risks and rewards, while operating leases do not; criteria include ownership transfer, purchase option, lease term, present value of payments, and asset's alternative use.
b) Figures cannot be provided without specific timing and lease terms, but the Income Statement includes rental, interest, and depreciation expenses, while the Statement of Financial Position discloses the lease liability, current and non-current portions.
How to classify leases and disclose lease-related figures?a) Finance leases and operating leases are two types of leases defined by IAS 17 (International Accounting Standard 17). The criteria identified in IAS 17 to distinguish between these two types of leases are as follows:
1. Finance Lease: A finance lease transfers substantially all the risks and rewards associated with ownership of the leased asset to the lessee. The criteria to classify a lease as a finance lease are:
- The lease transfers ownership of the asset to the lessee by the end of the lease term.
- The lessee has the option to purchase the asset at a price lower than its fair value.
- The lease term covers a major part of the economic life of the asset (typically 75% or more).
- The present value of the lease payments equals or exceeds substantially the fair value of the leased asset.
- The leased asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
2. Operating Lease: An operating lease does not transfer substantially all the risks and rewards associated with ownership of the leased asset to the lessee. The criteria to classify a lease as an operating lease are:
- The lease term is for a relatively short period compared to the economic life of the asset.
- The lessor retains ownership of the asset during and after the lease term.
- The present value of the lease payments does not equal or exceed substantially the fair value of the leased asset.
- There are no provisions for the lessee to purchase the asset at a price lower than its fair value.
b) To calculate and disclose the relevant figures and disclosures for the lease taken out by Free Spirit Limited, using the actuarial method, the following information is required:
1. Income Statement (for each year of the lease):
- Rental expense: £20,000
- Interest expense: Calculated based on the outstanding liability and the interest rate of 7%.
- Depreciation expense: Calculated based on the cost of the asset (£68,000) divided by the useful economic life (4 years).
2. Statement of Financial Position (liability disclosures only):
- Lease liability: Calculated as the present value of the minimum lease payments.
- Current portion of lease liability: The portion of the lease liability due within one year.
- Non-current portion of lease liability: The portion of the lease liability due after one year.
The specific calculations for the income statement and statement of financial position would require more information about the timing of payments and the exact terms of the lease.
Learn more about operating leases
brainly.com/question/28097092
#SPJ11
Which is a likely effect of providing a well-designed table of contents?
A likely effect of providing a well-designed table of contents is: that it creates the impression that you are organized.
What is a table of contents?A table of contents is a document section that contains the headers, headings, or chapters and their corresponding page numbers. The table of contents helps the reader quickly navigate through the document and easily locate the information they are looking for.
Additionally, the following are the advantages of having a well-designed table of contents: It helps establish the purpose and value of the report. It creates the impression that you are organized. It allows decision-makers to judge the quality of your data.
To know more about table of contents, refer here:
https://brainly.com/question/28471399#
#SPJ11
Complete question:
What is a likely effect of providing a well-designed table of contents?
Multiple Choice
It allows decision makers to judge the quality of your data.
It helps you focus more on positivity rather than objectivity.
It helps you demonstrate that your facts are unbiased and precise.
It creates the impression that you are organized.
It helps establish the purpose and value of the report.
You have just been hired by a company new to Scrum. Your management has assigned you to be the Scrum Master of six new Scrum Teams. These teams willbuild one product. Select two conditions you should strive for in this scenario. (Choose two.)A.There should be six Product Owners, one for each Scrum Team.B.There should be six Product Owners, reporting to a chief Product Owner.C.The product has one Product Backlog.D.Each Scrum Team should have a separate Product Backlog.E.There should be only one Product Owner
The two conditions to strive for in this scenario are:
C. The product has one Product Backlog.
E. There should be only one Product Owner.
In Scrum, it is important to have a unified and cohesive approach to product development. Having one Product Backlog for the entire product ensures that all the Scrum Teams are working towards a common goal and have a clear understanding of the product's requirements and priorities. This promotes collaboration, alignment, and efficient use of resources.
Similarly, having only one Product Owner provides a single point of accountability and decision-making authority for the product. This avoids potential conflicts and ensures consistent decision-making across the Scrum Teams. It allows the Product Owner to have a holistic view of the product, make informed decisions, and effectively communicate with stakeholders.
By having one Product Backlog and one Product Owner, the teams can work together more effectively, minimize duplication of effort, and maintain a shared understanding of the product vision and priorities. This facilitates better coordination, transparency, and ultimately improves the chances of successful product delivery.
In the scenario of managing six new Scrum Teams building one product, striving for a single Product Backlog and a single Product Owner is crucial to promote collaboration, alignment, and effective decision-making. These conditions help to ensure a unified approach to product development, improve coordination among teams, and increase the chances of delivering a successful product.
To know more about Product, visit :
https://brainly.com/question/31812224
#SPJ11
- In March 2021, the Biden administration implemented a $1.9 trillion economic stimulus package.
- In December 2021, the inflation rate was 7%.
Some economists, including economists from the Fed, were surprised about the recent high inflation rate. For example, Jason Furman wrote Why Did Almost Nobody See Inflation Coming?. Use the IS-MP + Phillips model to explain why or why not economists should have predicted the recent surge in inflation. - You must provide graphs of the relevant movements of the IS, MP, and Phillips curve to support your answer. - What types of shocks (changes in parameters) explain such movements of the curves? - Provide intuition: Give a written explanation of why are curves moving and whether we should have been able to predict the surge in inflation.
The IS-MP + Phillips model provides an effective way of examining how changes in monetary and fiscal policies impact the economy and inflation. Economists from the Fed were surprised about the recent high inflation rate, despite the Biden administration implementing a $1.9 trillion economic stimulus package in March 2021.
The graph below illustrates the movements of the IS, MP, and Phillips curve:The Phillips curve depicts the relationship between inflation and unemployment, and the higher the unemployment rate, the lower the inflation rate. The MP curve shows how monetary policy impacts the interest rate and the output of the economy. The IS curve illustrates the relationship between output and interest rates and depicts the level of output that corresponds to the given interest rate.In the short run, an increase in government spending (as seen in the $1.9 trillion economic stimulus package) results in higher output and a higher interest rate (through the IS curve). Higher output leads to lower unemployment and higher inflation (through the Phillips curve). The effect of monetary policy (through the MP curve) is determined by the interest rate, and if the interest rate increases, there is a decrease in the level of outputOverall, the high inflation rate is due to supply and demand shocks, including supply chain disruptions and a surge in demand as the economy reopens from the pandemic. These shocks impact the short-run Phillips curve, causing inflation to rise. Economists should have predicted the surge in inflation due to these shocks and the impact of the stimulus package on output and the interest rate. However, the magnitude of the increase was higher than expected, possibly due to the persistence of the shocks and their interaction with each other.For such more question on monetary
https://brainly.com/question/13926715
#SPJ11
6. Discuss challenges faced by state governments to keep their fiscal houses in order
State governments face various challenges in maintaining their fiscal stability and ensuring their financial affairs are in order. These challenges arise due to factors such as revenue volatility, rising healthcare, etc.
Revenue volatility is one of the main issues that state governments deal with. Tax revenue is a major source of funding for state budgets, and changes in the economy can have a big impact on how much money is collected. Budget deficits can result from economic downturns like recessions or sector-specific decreases since they can lower tax revenues. On the other hand, unexpected earnings spikes brought on by windfalls like rising oil prices or a booming economy may give people a false sense of security and lead to uncontrollable spending levels. To account for revenue fluctuation and accumulate enough reserves to withstand economic risks, state governments must use sensible fiscal management methods.
The rising expense of healthcare and pension responsibilities is another important issue. Health care services and pension funds for state personnel, including teachers, public employees, and retirees, are the responsibility of the states. State budgets are under pressure as a result of the rising expenses of these responsibilities. Healthcare costs can significantly deplete state budgets, leaving less money available for other crucial sectors due to factors like rising medical costs and an aging population. In addition, if pension liabilities are not adequately funded, they may become a long-term burden, necessitating state government reforms like raising employee contributions or altering retirement ages.
Furthermore, due to statutory or constitutional restrictions, state governments frequently have limited fiscal flexibility. Some states have laws requiring a balanced budget that forbid spending to exceed income. This assures budgetary accountability but may also restrict the ability to spend in deficit during recessions. Furthermore, limitations on tax hikes or borrowing may make it more difficult for states to raise additional funds or obtain financing for crucial infrastructure projects. State governments face a problem in balancing these limits with the need to pay for critical services and invest in long-term development, necessitating careful prioritization and resource allocation.
To know more about revenue volatility here https://brainly.com/question/31379894
#SPJ4
which of the following is not considered to be a resource for a firm? part 2 a. labor b. accounts payable c. machinery d. time
The concept mentioned is about Resources. Accounts payable is not considered to be a resource for a firm. It is choice B.
Like land, air, and water, an actual material that people need and value is an asset. Resources fall into two categories: inexhaustible and nonrenewable. While a non-renewable resource has a finite supply, a renewable resource can replenish itself at the rate of use.
On a company's balance sheet, accounts payable (AP) is a short-term debt and a liability where a company owes money to suppliers and vendors who have provided the company with goods or services on credit.
A resource is anything that can be used to meet our needs in some way. People are significant assets on the grounds that their thoughts, information and abilities lead to the formation of new assets.
To know more about Resources,
brainly.com/question/12748073
#SPJ4
The balance of Retained Earning at the end of the year represents: Select one: A. Total earnings over the life of the company. B. Current year's profits less payments to owners. C. Total earnings less payments to owners over the life of the company. D. Total contributions from owners less withdrawals over the life of the company.
The balance of Retained Earnings at the end of the year represents C. Total earnings less payments to owners over the life of the company.
Retained Earnings is an important component of the shareholders' equity section on a company's balance sheet. It represents the cumulative earnings or profits that have been retained in the company since its inception, after accounting for dividends or payments to owners.
The Retained Earnings balance is derived from the accumulated net income of the company over time, minus any dividends or distributions made to shareholders. It reflects the portion of earnings that has been retained within the company for reinvestment or other uses.
Therefore, the balance of Retained Earnings at the end of the year represents the total earnings generated by the company throughout its existence, reduced by any payments made to owners (such as dividends or distributions). It is an important measure of the company's accumulated profits and retained capital.
Learn more about Retained Earnings here: brainly.com/question/28580073
#SPJ11
Ringmeup Inc. had net income of $123,600 for the year ended December 31, 2019. At the beginning of the year, 39,000 shares of common stock were outstanding. On May 1, an additional 15,000 shares were issued. On December 1, the company purchased 4,300 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend on the 8,000 shares of 3.05%, $100 par value preferred stock that were outstanding the entire year.
Required:
Calculate basic earnings per share of common stock for the year ended December 31, 2019. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The basic earnings per share of common stock for the year ended December 31, 2019, is $5.78..
To calculate the basic earnings per share of common stock for the year ended December 31, 2019, we need to consider the net income attributable to common shareholders and the weighted average number of common shares outstanding during the year.
First, let's calculate the weighted average number of common shares outstanding:
Beginning shares: 39,000
Additional shares issued on May 1: 15,000
Treasury shares purchased on December 1: 4,300
Weighted average shares = [(Beginning shares × Months) + (Additional shares × Months) - (Treasury shares × Months)] / 12
Months from January 1 to May 1: 4 months
Months from May 1 to December 1: 7 months
Months from December 1 to December 31: 1 month
Weighted average shares = [(39,000 × 4) + (15,000 × 7) - (4,300 × 1)] / 12
= (156,000 + 105,000 - 4,300) / 12
= 256,700 / 12
= 21,391.67 (rounded to 21,392 shares)
Now, we can calculate the basic earnings per share of common stock:
Earnings per share = Net income / Weighted average shares
= $123,600 / 21,392
= $5.78 (rounded to 2 decimal places)
Therefore, the earnings per share of common stock for the year ended December 31, 2019, is $5.78 on a basic basis.
You can learn more about common stock at
https://brainly.com/question/25765493
#SPJ11
If the intellectual property waiver is not an option now or in
near future, what could be the alternatives to make the vaccine
affordable and available globally?
If the intellectual property waiver is not an option now or in the near future, then there are several alternatives to make the vaccine affordable and available globally. The alternatives include voluntary licensing, patent pooling, early stage production, and public funding.
Voluntary licensing: The vaccine manufacturers can enter into voluntary licensing agreements with other companies to manufacture and distribute the vaccine. This can increase the production capacity of the vaccine and make it available in more countries at a lower cost.India and South Africa have proposed this option to the World Trade Organization (WTO) to increase the production of COVID-19 vaccines.Patent pooling: Patent pooling is a mechanism by which patent holders pool their patents and license them to third parties to manufacture the vaccine. This can increase the availability of the vaccine and reduce the price.UNITAID is a global health organization that is working on a COVID-19 Technology Access Pool (C-TAP) to facilitate patent pooling.Early-stage production: The vaccine manufacturers can share their expertise and technology to help other manufacturers produce the vaccine. This can be done through technology transfer, which can help increase the production of the vaccine and make it more affordable.Public funding: Governments and other organizations can provide public funding to the vaccine manufacturers to develop and produce the vaccine. This can help reduce the cost of the vaccine and make it more affordable for people in low- and middle-income countries. The COVAX Facility is an example of such an initiative by the World Health Organization (WHO).In summary, voluntary licensing, patent pooling, early-stage production, and public funding are some alternatives that can help make the vaccine affordable and available globally if the intellectual property waiver is not an option now or in the near future.
To know more about intellectual property, visit https://brainly.com/question/1078532
#SPJ11
Tracking rates of intellectual growth using growth chart norms is based on the assumption that intellectual growth ____. The use of this tracking is ____.
Tracking rates of intellectual growth using growth chart norms is based on the assumption that intellectual growth is continuous.
Intellectual growth is continuous, which implies that children at all levels of ability can achieve their full potential. The use of this tracking is to ensure that children achieve their maximum potential and reach a certain level of development.
A growth chart is a standard tool that is used by health practitioners to monitor a child's physical growth and development. It provides a visual representation of a child's growth trends over time, compared to other children of the same age and sex. The growth chart is divided into percentile ranges, which can be used to monitor growth patterns.
A growth chart's norms or percentiles are a set of standards that indicate how a child should be growing under ideal conditions. For instance, a child whose weight is between the 25th and 50th percentiles is considered to be growing normally. On the other hand, a child who is below the 5th percentile may be experiencing malnutrition or other medical problems.
To learn more about intellectual growth
https://brainly.com/question/17003568
#SPJ11
According to the Fisher equation, the nominal interest rate is equal to the: rate of inflation a. b. real interest rate minus the rate of inflation real interest rate plus the rate of inflation c. rate of unemployment d. real interest rate plus short-run economic fluctuations e.
According to the Fisher equation, the real interest rate is given by option the nominal interest rate minus the rate of inflation. Option E is the correct answer.
The Fisher equation states that the real interest rate is equal to the nominal interest rate minus the expected or actual rate of inflation. This equation helps to distinguish between the nominal interest rate (the rate quoted by banks or lenders) and the real interest rate (the rate adjusted for inflation).
By subtracting the inflation rate from the nominal interest rate, we obtain the real interest rate, which represents the purchasing power of borrowed or invested money.
Learn more about the real interest rate at
https://brainly.com/question/32530068
#SPJ4
The question is -
According to the Fisher equation, the real interest rate is given by:
a.zero
b.the nominal interest rate plus the rate of inflation
c.the nominal interest rate minus the rate of unemployment
d.the rate of economic growth
e.the nominal interest rate minus the rate of inflation
Cigarettes in Australia have long been subject to excise tax – a per cigarette tax levied on the suppliers of cigarettes. (The tax applies to all tobacco products, however for the purposes of this exam assume cigarette and tobacco consumption are the same thing). In 2016 the federal government announced that the excise tax rate for cigarettes would rise by 12.5% a year for the next 4 years. Over this period tax revenue collected from the sale of cigarettes has increased considerably. Legal cigarette consumption has fallen to an all-time low in Australia due to a combination of the tax on cigarettes, and public health initiatives such as plain packaging, health warnings and banning advertisements.
Consider the following two policies aimed at reducing cigarette smoking:
i. A tax on the suppliers of cigarettes, and
ii. The public health campaign initiatives.
(a) Illustrate the implications of both policies separately using a fully labelled and explained demand and supply diagram for each of parts (i) and (ii). Do not use actual numbers; this is intended as a theoretical exercise.
(b) Compare and contrast the impact on equilibrium price and quantity of cigarettes of each of these policies, explaining your answer with reference to the diagrams.
(c) Now assume that the federal government implements both policies at the same time. Consider the impact of both policies on government revenue. Explain your answer with appropriate diagrams and indicate the area on the diagram/s that represents government revenue. What are the key assumptions you have made in analysing government revenue?
(i) Tax on suppliers of cigarettes: The tax increases the cost of production for suppliers, leading to a higher price and lower quantity of cigarettes consumed.
(ii) Public health campaign initiatives: The initiatives decrease consumer demand for cigarettes, resulting in a lower price and lower quantity of cigarettes consumed.
(a) Illustration of the Implications of Policies on Cigarette Smoking:
(i) Tax on the suppliers of cigarettes:
A tax on the suppliers of cigarettes shifts the supply curve upward, as the tax increases the cost of production for cigarette suppliers. The diagram will show the initial supply curve (S1) shifting to a new supply curve (S2). The extent of the shift depends on the magnitude of the tax.
Demand remains relatively unchanged, as the demand for cigarettes is relatively inelastic due to addictive properties. Thus, the demand curve (D) remains the same.
The new equilibrium point (E2) occurs at a higher price and a lower quantity of cigarettes compared to the initial equilibrium (E1). The tax causes the price paid by consumers to increase, reducing their purchasing power. As a result, the quantity demanded decreases, leading to a decrease in legal cigarette consumption.
(ii) Public health campaign initiatives:
Public health campaign initiatives, such as plain packaging, health warnings, and advertising bans, aim to decrease the demand for cigarettes by influencing consumer behavior. The demand curve (D) shifts to the left due to reduced consumer desire and increased awareness of health risks.
Supply remains relatively unchanged, as the initiatives do not directly affect the cost of production or supply-side factors.
The new equilibrium point (E2) occurs at a lower price and a lower quantity of cigarettes compared to the initial equilibrium (E1). The decrease in demand leads to a reduction in legal cigarette consumption.
In both cases, the combined impact of the policies leads to a decrease in legal cigarette consumption. The tax on suppliers directly affects the price paid by consumers, while the public health initiatives affect consumer behavior and preferences.
To learn more about cost of production refer here:
https://brainly.com/question/15235684
#SPJ11
if you were advising someone on "distribution selection", what factors would you address in this selection process?
Factors to consider in distribution selection include target market characteristics, product attributes, cost efficiency, speed, scalability, competition, customer service, risk management, relationships, and technology integration.
When advising someone on distribution selection, several factors should be considered to make an informed decision. These factors include:
1. Target Market: Understanding the target market's demographics, geographic distribution, and preferences is crucial. The distribution method should align with the target market's accessibility and buying habits.
2. Product Characteristics: The nature of the product, including its size, fragility, perishability, and complexity, influences the distribution selection. Some products may require specialized handling or temperature-controlled environments, which impact the choice of distribution channels.
3. Cost Efficiency: Evaluating the costs associated with each distribution option is essential. This includes transportation costs, storage expenses, packaging requirements, and any associated fees or commissions. Balancing cost efficiency with service quality is crucial to maximize profitability.
4. Speed and Timeliness: Consider the urgency of delivering products to customers. Some industries, such as e-commerce, prioritize quick and reliable delivery. Distribution channels that can offer faster shipping or provide expedited services may be more suitable.
5. Scalability and Flexibility: Assessing the ability of distribution channels to accommodate business growth and adapt to changing market demands is vital. Scalability and flexibility in terms of volume handling, geographic reach, and inventory management are crucial considerations.
6. Competitive Landscape: Analyzing the distribution strategies of competitors provides insights into industry norms and customer expectations. Understanding how competitors deliver products and whether there are opportunities for differentiation or innovation can inform the distribution selection process.
7. Customer Service and Experience: Evaluating the level of customer service provided by potential distribution partners is important. The reputation and reliability of distribution channels impact customer satisfaction, order fulfillment, and returns management.
8. Risk Management: Assessing potential risks associated with each distribution option, such as supply chain disruptions, transportation challenges, or regulatory compliance issues, helps mitigate potential drawbacks and ensures a smooth distribution process.
9. Relationships and Partnerships: Building relationships and partnerships with reliable and reputable distributors can provide long-term benefits. Assessing the track record, industry experience, and reputation of potential distribution partners is crucial in selecting the right distribution channel.
10. Technology and Integration: Consideration should be given to the compatibility of distribution channels with existing business systems and technology infrastructure. Integration capabilities, data exchange, and real-time tracking can streamline operations and improve visibility across the supply chain.
By carefully evaluating these factors, businesses can make informed decisions about distribution selection, optimizing the delivery of their products or services to customers while maximizing efficiency and customer satisfaction.
To learn more about distribution selection refer here:
https://brainly.com/question/31465269
#SPJ11
Judith is a baker that specializes in baking vegan cookies. Her annual revenue from selling the vegan cookies is $90,000. The annual explicit costs of the materials used to make the cookies are $54,000.
Judith used $5,000 from her personal savings account to buy baking tools for her business. The savings account paid 1% annual interest. Judith could earn $6,000 per year as a math tutor. What is the annual economic profit of her vegan cookie business?
$30,000
$35,950
$36,000
$29,950
Explicit cost can be defined as a direct payment made by the company to pay for the expenses of the inputs needed for the production of a particular product or service. Therefore, the annual economic profit of her vegan cookie business is $30,950. Hence the correct option is B. $35,950.
In this case, the annual explicit costs of the materials used to make the cookies are $54,000. Hence the explicit costs in this question are $54,000.The formula for calculating economic profit is economic profit=Total revenue - explicit costs - opportunity cost is the cost of a foregone alternative that must be sacrificed to achieve a particular goal. In this case, Judith has two opportunities: to tutor math or to bake cookies. The opportunity cost of her baking cookies is the amount of money she could earn as a math tutor instead. Hence, her opportunity cost is $6,000.In addition, Judith also used $5,000 from her personal savings account to buy baking tools for her business. The savings account paid 1% annual interest.
Therefore, the annual economic profit of her vegan cookie business can be calculated using the formula given above; Economic profit=Total revenue - explicit costs - opportunity costs Economic profit= $90,000 - $54,000 - $6,000 - ($5,000 x 1%)Economic profit= $90,000 - $54,000 - $6,000 - $50Economic profit= $30,950
To learn more about explicit costs, visit here
https://brainly.com/question/13599226
#SPJ11
he C&C Corporation estimates that its demand function is InQ-400-31nP + 4lnM+0.6lnA, where Q is the quantity demanded per month, P is the product's price in dollars, M is per capita disposable income in thousands of dollars, and A is the firm's advertising expenditures in thousands of dollars per month. (You could round up the answer if you have to). a) If C&C Corporation receives revenues of $150,000 per month from product X and $180,000 per month from product Y. The own price elasticity of demand for product Y is -0.75, the cross-price elasticity of demand between product Y and X is -1.1, and the cross-price elasticity of demand between product X and Y is -1.3. Your Boss is concerned about declining revenues from both products X and Y; she would like to increase your firm's price of X by 10 percent or increase your firm's the price of Y by 10 percent. She would like a written recommendation with prove (calculation) on what to do from you clearly explain? (No explanation no credit).
Conversely, increasing the price of Y may further decrease the demand for both products and exacerbate the declining revenues.
To determine the recommended course of action for C&C Corporation in response to declining revenues from products X and Y, we need to analyze the price elasticities of demand and their impact on revenue. Given the own price elasticity of demand for product Y (-0.75) and the cross-price elasticity of demand between Y and X (-1.1), it is evident that product Y is price-sensitive and influenced by changes in the price of both Y and X.
To calculate the percentage change in quantity demanded for product Y in response to a 10% increase in its price, we can use the formula: Price elasticity of demand = (% change in quantity demanded) / (% change in price). Rearranging the formula, we have (% change in quantity demanded) = (Price elasticity of demand) * (% change in price).
Using the given own price elasticity of demand for product Y (-0.75) and a 10% increase in price, the percentage change in quantity demanded for Y is estimated to be -0.75 * 10% = -7.5%.
Given that the cross-price elasticity of demand between X and Y is -1.3, a 10% increase in the price of X would result in a percentage change in quantity demanded for Y of -1.3 * 10% = -13%.
Based on these calculations, it is recommended that C&C Corporation increase the price of product X by 10%. This is because the percentage change in quantity demanded for Y (-13%) is greater than the change for Y when its price is increased by 10% (-7.5%). By raising the price of X, the company can generate higher revenues from X while minimizing the negative impact on the demand for Y.
Know more about Revenues here:
https://brainly.com/question/27325673
#SPJ11
New Century Computer issued $450 million of AA-rated 30-year $1,000 par bonds on this date in 2012 at a 2.5% premium, which have a coupon interest rate of 8 percent and pay interest annually. A decrease in the inflation rate by 3 percent and a decrease in corporate risk, (beta), have caused the required return on these bonds to be only 5 percent. Find the price today of a bond.
The price today of the bond issued by New Century Computer in 2012 can be found by considering the decrease in the inflation rate and the corporate risk.
What is the current price of the New Century Computer bond considering the changes in inflation rate and corporate risk?The decrease in the inflation rate by 3 percent and the decrease in corporate risk have led to a decrease in the required return on these bonds to 5 percent. As the bond pays interest annually, the coupon interest rate of 8 percent is higher than the required return. Therefore, the bond is priced at a premium to its par value. To calculate the price today, we need to discount the future cash flows of the bond using the new required return rate of 5 percent.
Learn more about bond
brainly.com/question/31358643
#SPJ11
6 "I'm not sure we should lay out $345,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $93,000 for so
The minimum dollar value per year that management have to attach to these intangible benefits is given as $72,600
How to solve for the annual net cost savingCompute the annual net cost saving:
Cost saving by replacing the 6 welders: $123,000
Reduced material waste per year: $8,400
Total savings for each year: $131,400
Less: Maintenance cost of equipment: $58,800
Total net cost saving for each year: $72,600
2(a) Cash Flows:
Year 0:
Initial investment: $345,000
Software installation: $93,000
Sale value of present equipment: $21,500
Total cash flows at year 0: $459,500
Year 6:
Yearly savings: $72,600
Sale of new equipment at the end of year 6: $39,000
Total cash flows at year 6: $111,600
Year 3:
Yearly savings: $72,600
Less: Replacement cost at year 3: $56,000
Cash flow of year 3: $16,600
Compute the Net Present Value:
Year Cash Flow Discount 14% Present Value of Cash Flows
0 -$459,500 1 -$459,500
1 $72,600 0.88 $63,684
2 $72,600 0.77 $55,863
3 $16,600 0.67 $11,205
4 $72,600 0.59 $42,985
5 $72,600 0.52 $37,706
6 $111,600 0.46 $50,843
Net Present Value: -$197,213
2(b) No.
As the net present value is negative, it is not advisable to invest in the equipment.
Other than financial considerations, there are intangible benefits such as improved quality of output and faster delivery that cannot be measured in terms of money. These should be considered before rejecting the investment project. Therefore, it is advisable for the management to take these intangible benefits into account.
Read more on annual net cost saving here https://brainly.com/question/16096497
#SPJ4
Question
I'm not sure we should lay out $345,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $93,000 for software and installation, and another $58,800 per year just to maintain the thing. In addition, the manufacturer admits it would cost $56,000 more at the end of three years to replace worn-out parts "I admit it's a lot of money," said Franci Rogers, the controller. "But you know the turnover problem we've had with the welding crew This machine would replace six welders at a cost savings of $123,000 per year. And we would save another $8,400 per year in reduced material waste. When you figure that the automated welder would last for six years, I'm sure the return would be greater than our 14% required rate of return." I'm still not convinced," countered Mr. Alder. "We can only get $21,500 scrap value out of our old welding equipment if we sell it now, and in six years the new machine will only be worth $39,000 for parts. But have your people work up the figures and we'l talk about them at the executive committee meeting tomorrow." Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required 1. Compute the annual net cost savings promised by the automated welding machine 2a. Using the data from (1) above and other data from the problem, compute the automated welding machine's net present value 2b. Would you recommend purchasing the automated welding machine? 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment?
Given a downward-sloping demand curve and an upward-sloping supply curve for a product, an increase in consumer incomes will a. have no effect on equilibrium price and quantity b. increase equilibrium price and quantity if the product is a normal product. c. decrease equilibrium price and quantity if the product is a normal product. d. reduce the quantity demanded, but not shift the demand curve.
An increase in consumer incomes will increase equilibrium price and quantity if the product is a normal product. Therefore, the correct option is b.
An increase in consumer incomes, with a given downward-sloping demand curve and an upward-sloping supply curve for a product, will increase equilibrium price and quantity if the product is a normal product. The increase in consumer income causes an increase in the quantity of goods demanded in the market, resulting in an increase in the equilibrium price and quantity.
The demand curve shifts to the right, as a result of the increase in consumer income, implying that there is an increase in the quantity of goods demanded. This shift in demand causes the equilibrium quantity and price to rise. The supply curve remains the same in the market, which means that the increase in demand puts pressure on the existing supply, leading to an increase in the equilibrium price.
To know more about consumer visit:-
https://brainly.com/question/27773546
#SPJ11
Zhao Co. has fixed costs of $308,000. Its single product sells for $167 per unit, and variable costs are $112 per unit. If the company expects sales of 10,000 units, compute its margin of safety in dollars and as a percent of expected sales. Margin of safety Dollars Percent %
Margin of safety is the difference between actual or expected sales and break-even point sales. In this case, Margin of safety in dollars = $734,800 while Margin of safety as a percent of expected sales = 43.9%.
Margin of safety in dollars is computed as follows: Margin of safety in dollars = (Expected sales - Break-even sales) × Selling price per unitFor Zhao Co.,
Expected sales = 10,000 units
Selling price per unit = $167
Variable cost per unit = $112
Break-even sales = Fixed costs ÷ Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit= $167 - $112= $55
Break-even sales = $308,000 ÷ $55= 5,600 units
Therefore, Margin of safety in dollars = (10,000 units - 5,600 units) × $167= 4,400 units × $167= $734,800
Margin of safety as a percent of expected sales
Margin of safety as a percent of expected sales is computed as follows:
Margin of safety as a percent of expected sales = (Margin of safety in dollars ÷ Expected sales) × 100%
For Zhao Co., Margin of safety as a percent of expected sales = ($734,800 ÷ (10,000 units × $167)) × 100%= 43.9%Therefore,Margin of safety in dollars = $734,800
Margin of safety as a percent of expected sales = 43.9%
Answer: Margin of safety in dollars = $734,800Margin of safety as a percent of expected sales = 43.9%.
More on Margin of safety: https://brainly.com/question/31456825
#SPJ11
For the current year ending October 31, Papadakis Company expects fixed costs of $547,500, a unit variable cost of $50, and a unit selling price of $75.
a. Compute the anticipated break-even sales.
b. Compute the sales (units) required to realize a target profit of $125,000.
Thus, the anticipated break-even sales are 43,800 units, and the sales (units) required to realize a target profit of $125,000 is approximately 13,449 units.
a. Computation of anticipated break-even sales:
Break-even point (in dollars) = Fixed Costs ÷ Contribution Margin Ratio
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin ratio = Contribution margin per unit ÷ Sales price per unit
Break-even point (in units) = Fixed costs ÷ Contribution margin per unit
Break-even point (in dollars) = $547,500 ÷ (75 - 50)
Break-even point (in units) = $1,095,000 ÷ 25
Break-even point (in units) = 43,800 units
b. Computation of sales (units) required to realize a target profit of $125,000:
Contribution margin ratio = Contribution margin per unit ÷ Sales price per unit
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin ratio = Contribution margin per unit ÷ Sales price per unit
Contribution margin ratio = ($75 - $50) ÷ $75
Contribution margin ratio = 0.3333 or 33.33%
Target profit = (Sales - Variable costs - Fixed costs) = Profit
Target profit = ($125,000 + $547,500)
Sales - 33.33%
Sales = $672,50066.67%
Sales = $672,500Sales = $1,008,651.35
Sales (units) = $1,008,651.35 ÷ $75Sales (units) = 13,448.685 units (or approximately 13,449 units).
Thus, the anticipated break-even sales are 43,800 units, and the sales (units) required to realize a target profit of $125,000 is approximately 13,449 units.
To know more about Company visit:
https://brainly.com/question/30532251
#SPJ11
α= 4 and β=7
Suppose MPC is 0.8. If government purchases increase by $10α and cuts taxes by $50β, how much the equilibrium output is changed?
In macroeconomics, equilibrium output refers to the level of total output in an economy that occurs when aggregate demand is equal to aggregate supply. The aggregate demand is the total amount of goods and services demanded in an economy while the aggregate supply is the total amount of goods and services supplied in an economy.
Therefore, to determine how much the equilibrium output is changed when the government purchases increase by $10α and cuts taxes by $50β,
we need to use the formula below;
ΔY = ΔG x (1 / (1 - MPC)) - ΔT x (MPC / (1 - MPC))Where;ΔY = change in equilibrium outputΔG = change in government purchasesΔT = change in taxesMPC = marginal propensity to consume.
Substituting the values into the equation,
we get;ΔY = $10(4) x (1 / (1 - 0.8)) - $50(7) x (0.8 / (1 - 0.8))ΔY = $40 x (1 / 0.2) - $350 x (0.8 / 0.2)ΔY = $200 - $1400ΔY = -$1200.
Therefore, the equilibrium output decreases by $1200 when the government purchases increase by $10α and cuts taxes by $50β.
An increase in government purchases would increase aggregate demand while a cut in taxes would increase disposable income and thus consumption. However, the effect of these two measures would be offset by a reduction in saving. When this occurs, equilibrium output falls.
To know more about aggregate visit :
https://brainly.com/question/29559077
#SPJ11