Extreme Manufacturing Company provides the following ABC costing information: Activities total cost activity – cost drives
Account inquiry $130.000 13.000 hours
Account billing $300,000 6.000.000 lines
Accointing verification accounts $99.000 40.000 accounts
Cerrespondednce letters $23.000 4,000 letters
Total cost $552.000
The above activities are used by Departments A and B as follows:
Department A department B
Account inquiry hours 2,000 hpurs 3.500 hours
Acoount billing lines 900.000 lines 750.000 lines
A. $150,000 B. $37,500
C. $300,000 D. $45,000
Answers
The correct answer is option B.) $37,500. The correct cost allocated to Department B for the account billing activity is $37,500 (option B).
In ABC costing, activities are identified that lead to cost accumulation in a company. The given scenario involves Extreme Manufacturing Company, which provides ABC costing information for various activities. The total cost for each activity and the corresponding cost drivers are as follows:
Account inquiry: Total cost of $130,000 driven by 13,000 hours.
Account billing: Total cost of $300,000 driven by 6,000,000 lines.
Accounting verification accounts: Total cost of $99,000 driven by 40,000 accounts.
Correspondence letters: Total cost of $23,000 driven by 4,000 letters.
The total cost of all activities combined is $552,000.
The activities are utilized by Department A and Department B as indicated:
Department A:
Account inquiry hours: 2,000 hours
Account billing lines: 900,000 lines
Department B:
Account inquiry hours: 3,500 hours
Account billing lines: 750,000 lines
To allocate costs, the following calculations are made:
For the account inquiry activity, the cost allocation rate is determined as $10 per hour ($130,000 / 13,000 hours).
Department A cost: 2,000 hours × $10 per hour = $20,000
Department B cost: 3,500 hours × $10 per hour = $35,000
For the account billing activity, the cost allocation rate is calculated as $0.05 per line ($300,000 / 6,000,000 lines).
Department A cost: 900,000 lines × $0.05 per line = $45,000
Department B cost: 750,000 lines × $0.05 per line = $37,500
Therefore, the total cost allocated to Department A and Department B are as follows:
Department A cost = $20,000 + $45,000 = $65,000
Department B cost = $35,000 + $37,500 = $72,500
Based on the calculations, option B ($37,500) is the correct answer.
Learn more about cost allocation:
https://brainly.com/question/33042929
#SPJ11
The correct answer is option B.) $37,500. The correct cost allocated to Department B for the account billing activity is $37,500.
In ABC costing, activities are identified that lead to cost accumulation in a company. The given scenario involves Extreme Manufacturing Company, which provides ABC costing information for various activities.
The total cost for each activity and the corresponding cost drivers are as follows:
Account inquiry: Total cost of $130,000 driven by 13,000 hours.
Account billing: Total cost of $300,000 driven by 6,000,000 lines.
Accounting verification accounts: Total cost of $99,000 driven by 40,000 accounts.
Correspondence letters: Total cost of $23,000 driven by 4,000 letters.
The total cost of all activities combined is $552,000.
The activities are utilized by Department A and Department B as indicated:
Department A:
Account inquiry hours: 2,000 hours
Account billing lines: 900,000 lines
Department B:
Account inquiry hours: 3,500 hours
Account billing lines: 750,000 lines
To allocate costs, the following calculations are made:
For the account inquiry activity, the cost allocation rate is determined as $10 per hour ($130,000 / 13,000 hours).
Department A cost: 2,000 hours × $10 per hour = $20,000
Department B cost: 3,500 hours × $10 per hour = $35,000
For the account billing activity, the cost allocation rate is calculated as $0.05 per line ($300,000 / 6,000,000 lines).
Department A cost: 900,000 lines × $0.05 per line = $45,000
Department B cost: 750,000 lines × $0.05 per line = $37,500
Therefore, the total cost allocated to Department A and Department B are as follows:
Department A cost = $20,000 + $45,000 = $65,000
Department B cost = $35,000 + $37,500 = $72,500
Based on the calculations, option B ($37,500) is the correct answer.
Learn more about cost allocation:
brainly.com/question/33042929
#SPJ11
Related Questions
Which of the following best describes entrepreneurial personality traits?
a
Risk averse and co-dependent.
Appreciate direction from others and risk averse.
Tolerant of uncertainty and highly energetic.
Prefer to work less hours and prefer to give directions and let others do the foot work
d
estion 5 (1 point
Hetailed written statement that describes the nature of the business, the customer segment, the
Answers
Tolerant of uncertainty and highly energetic.
The two important entrepreneurial personality traits are tolerance of uncertainty and high energy levels. Hence, Option (B) is correct.
Entrepreneurs must be tolerant of uncertainty because starting and running a business involves inherent risks and unpredictable outcomes.
They face numerous challenges, from market fluctuations to competition and unforeseen obstacles.
Tolerating uncertainty means they can handle the stress and pressure associated with these situations, adapt to changing circumstances, and make informed decisions amidst ambiguity.
High energy levels are crucial for entrepreneurs because they often work long hours, face multiple responsibilities, and encounter numerous demands.
Entrepreneurship requires dedication, passion, and a relentless drive to achieve goals.
Thus, these two traits, that are tolerance of uncertainty and high energy levels, are foundational for entrepreneurs.
Learn more about entrepreneurial personality here:
https://brainly.com/question/15336102
#SPJ6
Which of the following best describes entrepreneurial personality traits?
A. Risk-averse and self-nurturing
B. Tolerant of uncertainty and highly energetic
C. Appreciative of direction from others and risk-averse
D. Preference for working fewer hours and letting others do the footwork
1) Inflation represents the rate of increase of the average price of goods. If inflation decreases from 10% to 5%, does the average price of goods decrease? Explain.
Answers
No, the average price of goods does not decrease when inflation decreases from 10% to 5%.
Inflation represents the rate of increase in the average price of goods and services over time. When inflation decreases, it means that the rate of price increase has slowed down, but it does not imply a decrease in the average price itself. Even with a lower inflation rate, prices can still continue to rise, albeit at a slower pace.
The percentage of inflation indicates the extent of price increase compared to the previous period. If the inflation rate decreases from 10% to 5%, it means that prices are still increasing but at a slower rate. For example, if an item was priced at $100 at the beginning of the year, with a 10% inflation rate, its price would increase to $110. However, with a 5% inflation rate, the price would increase to $105. While the rate of increase has decreased, the average price of goods has not decreased.
Therefore, it is important to differentiate between a decrease in the inflation rate (a decrease in the rate of price increase) and an actual decrease in the average price of goods, which would indicate deflation.
Learn more about Inflation
https://brainly.com/question/31108471
#SPJ11
Under what circumstance would a country have a comparative advantage in
the production of a certain good?
A. It has a lower opportunity cost for production of that good.
B. It has a more highly skilled work force.
C. It has well-developed industrial capacities.
D. It uses an assembly line to produce that good.
Ap3x
Answers
Answer: [A] It has a lower opportunity cost for production of that good.
Explanation: It has a lower opportunity cost for production of that good. Comparative advantage comes when a country gives up less than others to engage in a particular type of production.
Answer:
It has a lower opportunity cost for production of that good.
Explanation:
which of the following statements is true? vertical analysis of financial statements is accomplished by preparing common-size statements. in determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.
Answers
The statement provided in question that vertical analysis of financial statements is accomplished by preparing common-size statement is True.
In vertical analysis, each item on the financial statement is expressed as a percentage of a base figure, usually total assets. This provides an easily comparable overview of the financial statement, highlighting any potential trends that may be occurring.
On the other hand, horizontal analysis of financial statement data is a comparison of financial statement amounts over a period of time. This provides an understanding of the company's financial health.
Therefore, when determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.
Know more about vertical analysis here:
https://brainly.com/question/29392869
#SPJ11
If MM's Proposition I holds, minimizing the weighted average cost of capital (WACC) is the same as maximizing the
a. profits of the firm.
b. book value of the firm.
c. market value of the firm.
d. liquidating value of the firm
Answers
If MM's Proposition I holds, minimizing the weighted average cost of capital (WACC) is the same as maximizing the market value of the firm. The Modigliani-Miller Proposition I is a financial theory that states that the value of a company is independent of its capital structure.
The correct option is c .
In other words, the total value of the firm is determined by its earning power and the risk of its underlying assets, which are unaffected by its choice of financing. MM Proposition I implies that the cost of capital of a company is independent of its financing mix, whether it is financed by equity or debt, and therefore there is no optimal capital structure. What is the weighted average cost of capital (WACC)?The weighted average cost of capital (WACC) is the average cost of a company's debt and equity capital, weighted by their respective proportions.
It is the minimum return that investors require to finance a company's operations, and it reflects the riskiness of the company's assets and the cost of borrowing. What is the relationship between WACC and firm value?According to MM Proposition I, the weighted average cost of capital (WACC) is independent of a company's capital structure, and therefore minimizing WACC is the same as maximizing the market value of the firm. This means that the lower a company's WACC, the higher its market value, because a lower WACC means that the company is less risky and more profitable. Therefore, by minimizing WACC, a company can increase its market value, which is the ultimate goal of any firm. Thus, option (c) is the correct answer. To summarize, MM Proposition I states that the value of a company is independent of its capital structure, and minimizing WACC is the same as maximizing the market value of the firm.
To know more about capital visit:
https://brainly.com/question/29946431
#SPJ11
Which is an example of a mandatory deduction on a pay stub?
Answers
Answer:
Some mandatory payroll tax deductions that employers are required by law to withhold from an employee's paycheck include: Federal income tax withholding. Social Security & Medicare taxes – also known as FICA taxes.
~Its srishty~✿
what is a premiun?
asfghjbvm
Answers
mention 5 functions of distribution channels
Answers
Answer:
movement of goods
information provider
negotiation
financing
risk taking
Explanation:
a distribution channel is a chain of businesses through which a good or service passes until it reaches to the final consumer. hope it helps
Movement of goods, information provider, negotiation, financing and risk taking are the five functions of distribution channels.
What is distribution channels?A product or service could travel down a distribution channel to reach the market. A direct distribution channel is defined. A corporation can sell to customers directly through a direct distribution channel, which is typically a website or physical store.
Wholesalers, retailers, distributors, and the Internet are examples of distribution channels. The manufacturer sells directly to the customer through a direct distribution channel. Before the product reaches the customer, indirect routes use a number of middlemen.
Channels of distribution are crucial to organizations because they enable efficient delivery of products or services to clients. Unhappy customers and a subpar service may result from a firm failing to find the best group of businesses for this reason.
Thus, Movement of goods, information provider, negotiation, financing and risk taking.
For more information about distribution channels, click here:
https://brainly.com/question/15774206
#SPJ2
According to the video, which qualities do Lawyers need? Select all that apply.
x mechanical skills
x aggressiveness
intelligence
x physical fitness
determination
moral and ethical integrity
people skills
Answers
Answer:
C E F G
Explanation:
According to the video, The qualities Lawyers need, The first is intelligence, the second one was determination, moral and ethical integrity people skills.
What are skills?A skill is the acquired capacity to move with deliberate intent and good execution, frequently in a pre-determined window of time or energy or both. Domain-general and domain-specific skills are two common categories of skills.
As, The qualities the lawyer needs in the Curveballs will probably be thrown throughout a case session, and they must be able to understand them and react accordingly.
As, The important quality, the lawyer needs is zeal for one's work. Successful attorneys nearly usually have a genuine enthusiasm for what they do as a profession.
Therefore, The right option (C, E, F, G)) is correct.
Learn more about skills here:
https://brainly.com/question/28464758
#SPJ6
A card game is being played and the 5 of spades, 9 of spades, 10 of spades, and 10 of hearts are drawn from a single deck. In order to win, the next card the player draws from the deck must be higher than the highest card already drawn. What is the probability that the next card the player draws is a winning card? (An ace is considered to have a value of 1 and jacks, queens, and kings have a value of 10.) Hint: A deck has 52 cards, 4 suits, and each suit has A, 2, 3, 4, 5, 6, 7, 8, 9, 10, J, Q, K.
Answers
The likelihood that the following card will be higher than the previous highest card (5 of spades, 9 of spades, 10 of spades, and 10 of hearts) is 20/47, or roughly 42.55%.
How likely is it that you'll get a heart and a spade?A standard deck of cards contains 52 cards. There are 13 hearts and 13 spades. Therefore, there is a 50/50 probability of receiving a heart or a spade.
What percentage of a 52-card deck are spades?Each of the four suits—Clubs, Hearts, Diamonds, and Spades—has 13 cards, for a total of four suits. Hearts and diamonds are red; spades and clubs are both black.
To know more about probability visit:-
https://brainly.com/question/29381779
#SPJ1
if markets throughout the global economy all have flexible and continually adjusting prices, then
Answers
If markets throughout the global economy all have flexible and continually adjusting prices, then market forces of supply and demand can efficiently allocate resources.
Flexible and continually adjusting prices allow markets to respond to changes in supply and demand conditions. When prices can freely fluctuate based on market dynamics, it enables the efficient allocation of resources.
For example, if there is an increase in demand for a particular product, the price will rise, signaling to producers to increase production to meet the higher demand. On the other hand, if there is a decrease in demand, the price will fall, indicating to producers to reduce production. This dynamic price mechanism helps ensure that resources are allocated to their most valued and productive uses.
Flexible prices also promote competition by enabling market participants to adjust their production, consumption, and investment decisions based on changing market conditions. This encourages efficiency, innovation, and overall economic growth.
Overall, when markets have flexible and continually adjusting prices, it facilitates the functioning of supply and demand forces, allowing for efficient resource allocation in the global economy.
Learn more about global economy here:
https://brainly.com/question/1311866
#SPJ11
What is the reason for using progressive taxes on income?
A) Lower-income individuals have a lower cost of living and can afford to pay more in taxes.
B) Higher-income individuals are more likely to spend their income on consumption of goods, and paying more taxes discourages spending.
C) Higher-income individuals are more likely to afford their standard of living and can afford to pay more in taxes.
D) Individuals of all incomes pay the same percentage of their income toward the tax, making it a fair tax.
Answers
The reason for the progressive tax is because the Higher-income individuals can afford a good standard of living and can pay more in taxes.
What is a progressive tax?This is a type of tax imposed based on a taxpayer's ability to pay, that is, the higher the income. the higher the taxrate applicable to the taxpayer's income.
The reason for progressive tax is that a tax would be a disproportionate burden for people with low incomes.
Therefpre, the Option C is correct.
Read more about progressive tax
brainly.com/question/1601662
Which company has the comparative advantage in producing large tubes of toothpaste? Sparkling Fresh! Bright White Mmmint.
Answers
"Bright White" Company has the comparative advantage in producing large tubes of toothpaste.
What is the term Comparative advantage about?
Comparative advantage determines the country's specialization by comparing opportunity cost whereas absolute advantage determines country's productivity.
Comparative advantage have some disadvantage also like it can exploit the nation's labor and some economic resources.
Therefore, correct option is B.
Learn more about comparative advantage, refer to the link:
https://brainly.com/question/15217561
Hazmat labels are used to communicate information necessary to protect human health and the environment
Answers
The natural environment or natural world encompasses all living and non-living things occurring naturally, meaning in this case not artificial.
What is the meaning of Environment?An organism's environment is made up of the external conditions, resources, stimuli, etc. that it interacts with.
We are impacted by everything around us. You decide if they are still alive or not. It is made up of organic forces like both physical and chemical ones. Living creatures occur in environments. They are constantly engaging with it and adapting their actions to the situation.
Everything in our immediate surroundings—including both living and nonliving things including air, water, soil, plants, and animals—is considered to be part of our environment. The magnificence of nature sustains life on Earth.
Learn more about the Environment here:
https://brainly.com/question/13107711
#SPJ9
What might be an advantage of using credit
Answers
Lars wants to purchase a gift for a colleague whose home he will be visiting. He decides to bring luxury chocolates, as he knows most people enjoy them. Although he is not sure about specific products, Lars heads directly for a store selling Godiva Chocolates, because he knows this is a high-end brand. Lars can be said to have
Answers
Answer:
Brand Awareness.
Explanation:
Brand Awareness can be defined as the awareness or familiarity that a customer have of a company or a brand. When a customer is able to recognise a brand while making a decision to buy something, this phenomenon is said to be brand awareness.
Being aware of a brand consists of recalling and recognizing of brand.
In the given scenario, Lars can be said to have a brand awareness. Since he wants to buy luxury chocolates for his colleague as a gift, he was aware of a brand named 'Godiva Chocolates' as it is the high-end brand. So, Lars is exemplifying that he is aware of brand or acompany.
Thus the correct answer is brand awareness.
Brand awareness can be defined as having knowledge and familiarity with various companies and their brands. It is the marketing term that shows the power of a person or a consumer to recall and recognize a brand by its name, logo, or symbol.
Lars can be said to have Brand awareness.
In the given case, Lars wants to buy luxurious chocolates for his colleague as a gift. When Lars thinks about luxury chocolates he immediately recalled the brand name "Godiva Chocolates". This is because he knew that it is a high-end brand.
This shows that Godiva Chocolates have good brand awareness amongst the customers that made Lars recall its name immediately when he thought of luxury chocolates.
To know more about brand awareness, refer to the link:
https://brainly.com/question/9450805
5 th question answer please
Answers
Answer:C
Explanation:
Answer:
c
Explanation:
it is not a flexible mode of transport
if the invoice is incorrect, recalculate
20 dresses at $15 each 350.00
Less 10% trade discount 12.00
Add tax at 18% 41.04
Total 360.67
Terms 30 days net
Answers
Answer: $318.60
Explanation:
20 dresses at $15 each will cost:
= 20 × $15 = $300.00
Less: 10% trade discount = 10% × $300 = $30.00
Add tax at 18%: = 18% × ($300 - $30) = 18% × $270 = $48.60
Total = $270 + $48.60 = $318.60
production planning is important because producing too much can lead to (excess, insufficient) inventory.
Answers
Production planning is important because it helps to ensure that the right amount of goods are produced to meet customer demand.
If a company produces too much, it can lead to excess inventory which ties up valuable resources and can result in financial losses. On the other hand, producing too little can lead to insufficient inventory which can result in missed sales opportunities and customer dissatisfaction.
Effective production planning helps to strike the right balance between these two extremes and ensure that the company is producing the right amount of goods to meet demand and maximize profitability.
Production planning is important because producing too much can lead to excess inventory.
Learn more about planning here:
https://brainly.com/question/30522410
#SPJ11
The number of online buyers in Western Europe grew steadily over the past decade. The function P(t) = 28.2 + 14.44 In(t) (1 sts 7) gives the number of online buyers as a percent of the total population, where t is measured in years, with t= 1 corresponding to 2001. (a) What was the percentage of online buyers in 2001 (t = 1)? % How fast (in %/yr) was it changing in 2001? %/yr (b) What was the percentage of online buyers in 2003 (t = 3)? (Round your answer to one decimal place.) How fast (in %/yr) was it changing in 2003? (Round your answer to two decimal places.) %/yr Need Help? Read It
Answers
(a) The percentage of online buyers in 2001 was 28.2%, and it was changing at a rate of 14.44% per year.
(b) The percentage of online buyers in 2003 was approximately 44.1%, and it was changing at a rate of approximately 4.81% per year.
(a) To find the percentage of online buyers in 2001 (t = 1), we substitute t = 1 into the given function P(t):
P(1) = 28.2 + 14.44 * ln(1) = 28.2 + 0 = 28.2%
Therefore, the percentage of online buyers in 2001 was 28.2%.
To determine how fast the percentage was changing in 2001, we need to find the derivative of the function P(t) with respect to t and evaluate it at t = 1:
P'(t) = dP(t)/dt = 14.44 * (1/t) = 14.44/t
P'(1) = 14.44/1 = 14.44%/yr
Hence, the percentage of online buyers was changing at a rate of 14.44% per year in 2001.
(b) To find the percentage of online buyers in 2003 (t = 3), we substitute t = 3 into the given function P(t):
P(3) = 28.2 + 14.44 * ln(3) ≈ 28.2 + 14.44 * 1.0986 ≈ 28.2 + 15.876 ≈ 44.076%
Therefore, the percentage of online buyers in 2003 was approximately 44.1% (rounded to one decimal place).
To determine how fast the percentage was changing in 2003, we find the derivative of the function P(t) and evaluate it at t = 3:
P'(t) = dP(t)/dt = 14.44 * (1/t)
P'(3) = 14.44/3 ≈ 4.8133%
Hence, the percentage of online buyers was changing at a rate of approximately 4.81% per year in 2003 (rounded to two decimal places).
To learn more about online buyers refer here:
https://brainly.com/question/25636882
#SPJ11
When using the marketing strategy planning process, what part of the process should be implemented last?
Answers
Answer:
summary
process should be implemented last
Write a short note on the importance of technical education
Answers
Answer: the importance of technical education. What would happen without technology. We wouldn’t be able to do our homework. We would have to write down our essays, and not be able to store our hard work. Technology is a huge asset to schools. We even use it to send emails to our teachers and submit essays. So without technology our schools would be a lot harder.
Explanation:
Give me branliest please and let’s see how many hearts I can get
Answer/Explanation:
Technical Education plays a vital role in human resource development of the country by creating skilled manpower, enhancing industrial productivity and improving the quality of life. Technical and vocational education and training plays an essential role in improving the wellbeing of youths and communities. It increases productivity, empowers individual to become self reliant and stimulates entrepreneurship. Businesses are more willing to invest in a community with strong human resources. Technical skills are important for your business for a variety of reasons.It's essential to ensure your employees have the technical skills they need to perform their jobs successfully. Giving your employees the skills they need, leads to happier employees, meaning better productivity.
you may have observed that items such as different brands of aspirin, tomato sauce, or gasoline are typically priced the same as each other. this is particularly true when consumers can find these goods in close proximity to each other. for example, prices are often the same at gas stations that are on opposite sides of the street. prices are also generally the same for products next to each other on the same grocery store shelf.
Answers
The aforementioned examples are goods that are likely to be Substitutes. You would expect the value of the cross-price elasticity to be Large because the opportunity cost of getting information on price is low.
What is cross-price?Cross-price elasticity quantifies how sensitive a product's demand is to a change in the price of the related product. Many products on the market have relationships with one another. This could imply that a product's price change could have a positive or negative impact on the demand for another product.
There are three categories of product relationships to look at when describing cross-price elasticity.
First, there are products that are closely related to one another and are occasionally referred to as substitutes. In the market, these products compete for the same consumers.
There are also goods that are consumed in combination. Demand for one product has a direct impact on how much-related products are consumed. They are referred to as complementary products.
Products in the final category are completely unrelated to one another. The consumption of these goods is unaffected by one another.
Business owners can strategically compete in their industry or stock their inventories by clearly understanding the ideas behind product relationships. For instance, lowering the cost of printers might result in more people buying toner and ink. The more printers people purchase, the more money is made by selling related goods.
Thus, cross-price is related to the sensitivity of demand for a product.
For more information on cross price, refer to the given link:
https://brainly.com/question/14469117
#SPJ4
Complete Question:
You may have observed that items such as different brands of aspirin, tomato sauce, or gasoline are typically priced the same as each other. This is particularly true when consumers can find these goods in close proximity to each other. For example, prices are often the same at gas stations that are on opposite sides of the street. Prices are also generally the same for products next to each other on the same grocery store shelf. The aforementioned examples are goods that are likely to be _________ You would expect the value of the cross-price elasticity to be_________ because the opportunity cost of getting information on price is low.
Transcribed image text: Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the (determinants) and the symbols associated with each characteristic: components Characteristic Component Symbol This is the rate for a short-term riskless security when inflation is expected to be zero. It is based on the bond's marketability and trading frequency; the less frequently the security is traded, the higher the premium added, thus increasing the interest rate. It is based on the bond's rating; the higher the rating, the lower the premium added, thus lowering the interest rate. This is the rate on a Treasury bill or a Treasury bond. This is the premium added to the risk-free rate that reflects the average sustained increase in the general level of prices for goods and services expected over the security's entire life. As interest rates rise, bond prices fall, and as interest rates| fall, bond prices rise. Because interest rate changes are uncertain, this premium is added as a compensation for this uncertainty. Flash Player WIN 28,0,0,161
Answers
Determinant: Risk-Free Rate This refers to the rate for a short-term riskless security when inflation is expected to be zero. It is considered the base interest rate for all other interest rates in the market
Symbols:
Short-term riskless security rate when inflation is expected to be zero
Symbol: r*
Rate on a Treasury bill or Treasury bond
Symbol: rRF
Determinant: Marketability and Trading Frequency
Symbol: liquidity premium
Determinant: Bond Rating
Symbol: default risk premium
Determinant: Inflation Premium
Symbol: IP
Determinant: Interest Rate Risk Premium
Symbol: IRRP
Risk-Free Rate: This refers to the rate for a short-term riskless security when inflation is expected to be zero. It is considered the base interest rate for all other interest rates in the market. In finance, it is denoted by the symbol "r*". In practice, the most common examples of the risk-free rate are the rate on U.S. Treasury bills and Treasury bonds, which are considered to have zero default risk.
Marketability and Trading Frequency: This determinant reflects the fact that the more liquid a security is (i.e., the more easily it can be bought and sold in the market), the lower the premium added to its interest rate. This premium is known as the liquidity premium, and it compensates investors for the additional risk they bear when they invest in less liquid securities. The symbol associated with this premium is simply "liquidity premium".
Bond Rating: This determinant reflects the fact that the creditworthiness of the issuer affects the interest rate of a bond. The higher the bond rating (i.e., the lower the probability of default), the lower the premium added to the interest rate. This premium is known as the default risk premium, and it compensates investors for the risk that the issuer may default on the bond. The symbol associated with this premium is "default risk premium".
Inflation Premium: This determinant reflects the fact that investors require compensation for the expected loss in purchasing power due to inflation. The inflation premium is the premium added to the risk-free rate that reflects the average sustained increase in the general level of prices for goods and services expected over the security's entire life. The symbol associated with this premium is "IP".
Interest Rate Risk Premium: This determinant reflects the fact that bond prices and interest rates have an inverse relationship. As interest rates rise, bond prices fall, and as interest rates fall, bond prices rise. Because interest rate changes are uncertain, this premium is added as a compensation for this uncertainty. The symbol associated with this premium is "IRRP".
To know more about determinants :-
brainly.com/question/22312929
#SPJ4
Given the 2020 recession, what should be the goal of monetary policy? Should the Fed enact expansionary or contractionary policy? In other words, should the Fed increase the money supply/credit supply or decrease the money/credit supply. Explain what they might do to achieve their goal.
Answers
Answer:
Expansionary monetary policies
Explanation:
A recession is characterized by reduced economic activities, a high unemployment rate, and low business incomes. The economy experiences a reduced demand for products and services, leading to low production and a slow economic growth rate.
In a recession like in 2020, the Fed should employ measures that will stimulate economic growth. The appropriate measures are the expansionary monetary policies. These policies seek to increase liquidity in the market, thereby increasing the aggregate demand. Expansionary monetary policies increase the money supply in the economy; they include a reduction in the reserve requirement, reduction in the discount rate, and open market purchases.
For each of the following annuities, calculate the annual cash flow. (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
PV: $31,500 Interest Rate: 6% Years: 6
PV: $29,200 Interest Rate: 4% Years: 8
PV: $155,000 Interest Rate: 9% Years: 17
PV: $225,300 Interest Rate: 8% Years: 24
Answers
The annual cash flow for the first, second, third and fourth annuity is as follows :- $6,938.68, $4,314.12, $23,227.55, $21,144.15.
To calculate the annual cash flow for each annuity, we can use the formula for the present value of an annuity:
PV = PMT × (1 - (1 + r)^(-n)) / r
where:
PV = Present Value
PMT = Annual cash flow
r = Interest rate
n = Number of years
1) PV: $31,500, Interest Rate: 6%, Years: 6
PV = $31,500
r = 6% or 0.06
n = 6
PMT = PV × r / (1 - (1 + r)^(-n))
PMT = $31,500 × 0.06 / (1 - (1 + 0.06)^(-6))
PMT = $6,938.68 (rounded to 2 decimal places)
The annual cash flow for the first annuity is $6,938.68.
2) PV: $29,200, Interest Rate: 4%, Years: 8
PV = $29,200
r = 4% or 0.04
n = 8
PMT = PV × r / (1 - (1 + r)^(-n))
PMT = $29,200 × 0.04 / (1 - (1 + 0.04)^(-8))
PMT = $4,314.12 (rounded to 2 decimal places)
The annual cash flow for the second annuity is $4,314.12.
3) PV: $155,000, Interest Rate: 9%, Years: 17
PV = $155,000
r = 9% or 0.09
n = 17
PMT = PV × r / (1 - (1 + r)^(-n))
PMT = $155,000 × 0.09 / (1 - (1 + 0.09)^(-17))
PMT = $23,227.55 (rounded to 2 decimal places)
The annual cash flow for the third annuity is $23,227.55.
4) PV: $225,300, Interest Rate: 8%, Years: 24
PV = $225,300
r = 8% or 0.08
n = 24
PMT = PV × r / (1 - (1 + r)^(-n))
PMT = $225,300 × 0.08 / (1 - (1 + 0.08)^(-24))
PMT = $21,144.15 (rounded to 2 decimal places)
The annual cash flow for the fourth annuity is $21,144.15.
To know more about cash flows refer here :-
https://brainly.com/question/29768594#
#SPJ11
What is a firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company called?
Answers
In return for a share, a venture capitalist (VC) is a private equity investor who provides capital to businesses with significant growth potential. This might entail funding new projects or assisting small business that want to grow and yet due to lack of access to asset prices.
What do you call someone who invests capital in some kind of a business?
An investor is someone who invests money in the hope of making a profit or gaining an advantage down the road (interest).
Who are the three varieties of capital referred to as?
Businesses of various sizes generally prioritize three types of funding when creating a budget: working capital, capital ratio, and bank loans. Trading investment is identified as a determined by the frequency by a financial company.
To know more about investment click here
brainly.com/question/30529793
#SPJ4
for an upcoming team progress meeting, sarah wants to optimize discussion by asking open-ended questions. which of the following is an example of such a question? a. what are some steps we can take to ensure our continued success on the project? b. are we ready to have the marketing team review our progress so far? c. will one additional meeting be sufficient to resolve the remaining few issues? d. is tuesday or thursday best for our next meeting?
Answers
An example of an open-ended question will be What are some steps we can take to ensure our continued success on the project?
Open-ended questions are unstructured and give respondents the freedom to express their full knowledge, emotion, and understanding in an open-text manner. This query does not only have a few possible answers. People prefer open-ended inquiries since they have complete control over their responses and don't feel constrained by the few available answers.
Open-ended questions can never be answered in a single word. Either lists, sentences, or anything lengthier like a speech or paragraph will be used to represent them. From the given options the correct one will be, what are some steps we can take to ensure our continued success on the project? For this question, the respondents will always give a detailed answer.
Read more about open-ended questions on:
https://brainly.com/question/24318910
#SPJ4
which section of title vii states that it is not a violation if an employer refuses to hire or to discharge an employee who is unable to meet the requirements for a national security clearance where federal law or regulations require such a clearance for the job in question?
Answers
703(m) of Title VII section of title vii states that it is not a violation if an employer refuses to hire or to discharge an employee who is unable to meet the requirements for a national security clearance where federal law or regulations require such a clearance for the job in question.
What is title VII religious exemption??In accordance with Title VII of the Civil Rights Act, businesses must make reasonable accommodations for their employees' honestly held religious views, practises, and observances. Employment discrimination based on religion is also prohibited.
What are examples of religious accommodations?Schedule adjustments (arrivals, departures, floating/optional holidays, flexible work breaks, and any other scheduling adjustments); voluntary shift substitutions and/or swaps; job reassignments, such as changes of position tasks and lateral transfers; and modifications are examples of religious accommodations.
What is an example of a religious belief?Examples of religious views are as follows: the conviction of some Christians that wearing a cross as a representation of your faith is appropriate. the notion that a woman should cover her body or head when practising Islam. the acceptance of intelligent design or creationism.
To learn more about title VII visit:
https://brainly.com/question/27992457
#SPJ4
Discuss how an event’s ability to help us escape from everyday life and worries can be advantageous for marketers.
Answers
Answer:
An event's ability to give people a break from everyday life worries is a advantage for marketers because it makes their job easier. An event takes our mind off of things and it relieves their stress. This means that marketers don't need to focus on spreading info.