When someone borrows money, the lender typically charges interest on the principle, which is the amount owed on the loan. The principle may also be reduced through payments made by the brrower.
Each payment typically includes both interest and a portion of the principle, with more of the payment going towards the interest at the beginning of the loan and more going towards the principle as the loan is paid down.
The principle of a loan repayment is important because it affects the amount of interest charged on the loan, the length of the repayment period, and the total amount of money that the borrower will pay over the life of the loan.
Typically, loans with higher principles will have higher monthly payments and longer repayment periods, while loans with lower principles will have lower payments and shorter repayment periods.
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You are managing a portfolio of $1.8 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each currently yielding 10%.
a. How much of each bond will you hold in your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. How will these fractions change next year if target duration is now nine years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The fraction of the portfolio invested in the zero-coupon bond is approximately 0.6702, and the fraction invested in the perpetuity is approximately 0.3298.
a. Let x be the fraction of the portfolio invested in the zero-coupon bond, then (1-x) is the fraction invested in the perpetuity. Let P be the price of the zero-coupon bond. Since the bond matures in 5 years, its price must be such that:
P = 1 / (1 + r)⁵
where r is the yield to maturity. Solving for r, we get:
\(r = (1 / P)^{(1/5)} - 1\)
Using the given yield of 10%, we get:
r = 0.10
Thus, we have:
(1-x) * 0.10 + x * r = 0.10 * 1.8 million
Solving for x, we get:
x = (0.10 * 1.8 million - 0.10) / (r - 0.10 * P)
Substituting the values of r and P, we get:
\(x = (0.10 * 1.8 million - 0.10) / (0.10 - 1.8^{(-1/5)})\)
x ≈ 0.6702
b. Let r' be the new yield to maturity for the zero-coupon bond. Then, the new price of the bond must be such that:
P' = 1 / (1 + r')⁵
Using the target duration of nine years, we have:
(1-x) * 0.10 + x * r' = 0.10 * 1.8 million / (1 + 0.10 * 9)
Solving for x, we get:
x = (0.10 * 1.8 million / (1 + 0.10 * 9) - 0.10) / (r' - 0.10 * P')
Substituting the value of P', we get:
x = (0.10 * 1.8 million / (1 + 0.10 * 9) - 0.10) / (r' - 0.10 * (1 / (1 + r')⁵))
Multiplying both sides by r' - 0.10 * (1 / (1 + r')⁵), we get:
x * (r' - 0.10 * (1 / (1 + r')⁵)) = 0.10 * 1.8 million / (1 + 0.10 * 9) - 0.10
Simplifying and rearranging, we get:
x = (0.10 * 1.8 million / (1 + 0.10 * 9) - 0.10) / (r' - 0.10 * (1 / (1 + r')⁵))
Solving for x numerically, we get:
x ≈ 0.6338
Therefore, the fraction of the portfolio invested in the zero-coupon bond will decrease to approximately 0.6338, and the fraction invested in the perpetuity will increase to approximately 0.3662.
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If the economy is at a point on the short-run Phillips Curve such as point c3, firms and workers will ____, allowing the economy to move toward the long-run Phillips Curve
The firms and workers will adjust their inflation expectations upward at at a point on the short-run Phillips Curve and thus. allowing the economy to move toward the long-run Phillips Curve.
What is the short-run Phillips Curve?As the Phillips curve is a graphic representation that depict the relationship between the rate of unemployment and rate of change of money wages, the short-run graph will show that in the short-term, there is a tradeoff between inflation and unemployment.
However, when the economy is a point on the short-run Phillips Curve, decision may be made by firms and workers to adjust their inflation expectations upward and this will allow the economy to move toward the long-run Phillips Curve.
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Led by their chief scientist mark weiser, what organization was one of the first groups to explore ubiquitous computing?.
Weiser is widely considered to be the father of ubiquitous computing, a term he coined in 1988. Within Silicon Valley, Weiser was broadly viewed as a visionary and computer pioneer, and his ideas have influenced many of the world's leading computer scientists.
Describe the operation of ubiquitous computing?In the concept of computing known as ubiquitous computing, every action or object is connected to information processing. As well as integrating microprocessors for data exchange, it requires tying electronic devices together. The availability and connectivity of devices that use ubiquitous computing are constant.
What characteristics distinguish ubiquitous computing?Consideration of the human element and setting the paradigm in a human environment rather than a computational environment are two important characteristics of ubiquitous computing. Using less expensive CPUs will result in a reduction in the amount of memory and storage needed. real-time attributes are being captured.
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Expliquen la siguiente frase:
El mero crecimiento económico no es suficiente para terminar con la pobreza y preservar el medio ambiente
Answer:
Efectivamente, el mero crecimiento económico no es suficiente para terminar con la pobreza y preservar el medio ambiente, sino que dicho crecimiento debe ir acompañado de un desarrollo estructural que contemple el acceso igualitario a los distintos servicios por parte de la sociedad, así como también el establecimiento de controles sanitarios y medioambientales que preserven el bienestar de los individuos en el marco del desarrollo de las actividades económicas.
When you plan a presentation, how should you make sure you stay on track as you talk?
A. Make a list of general topics and points you want to cover.
B. Write out every word of the presentation on notecards.
C. Memorize every word of the presentation in your head.
D. Have the audience tell you what else you need to talk about.
Answer:
A make a list
Explanation:
Answer:
It's A. Make a list of general topics and points you want to cover.
Explanation: hope it helps ^w^
What use is the High-Low method in cost estimation? (2 marks)
ANSWER b):
b) Refer to the following data:
Advertising ` $ 8 000
Direct material used $150 000
Head office administration staff salaries $ 155 000
Indirect labour $ 6 000
Depreciation on factory equipment $ 50 000
Wages of assembly line workers $ 80 000
Factory cleaners’ wages $ 25 000
Indirect material (labels and packaging) $ 4 000
Required:
Determine each of the following costs: (list the costs under each cost category when calculating the answer).
i) Product costs (1.5 marks)
ii) Period costs (0.5 mark)
SHOW YOUR WORKINGS
ANSWER c):
The product costs amount to $290,000, and the period costs amount to $188,000 based on the given data.
c) The product costs for the given data are as follows:
- Direct material used: $150,000
- Direct labor (Wages of assembly line workers): $80,000
- Factory overhead costs:
- Indirect labor: $6,000
- Depreciation on factory equipment: $50,000
- Indirect material (labels and packaging): $4,000
Total product costs = Direct material + Direct labor + Factory overhead costs
Total product costs = $150,000 + $80,000 + ($6,000 + $50,000 + $4,000) = $290,000
The period costs for the given data are as follows:
- Advertising: $8,000
- Head office administration staff salaries: $155,000
- Factory cleaners’ wages: $25,000
Total period costs = Advertising + Head office administration staff salaries + Factory cleaners’ wages
Total period costs = $8,000 + $155,000 + $25,000 = $188,000
Therefore, the product costs amount to $290,000, and the period costs amount to $188,000 based on the given data.
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Under federal income tax law, the "sale price" for a personal property is which of the following?
A) Final sales price
B) Asking Price
C) Sales price, minus depreciation
D) Sales price, minus any sales expenses
Under federal income tax law, the "sale price" for personal property is typically the final sales price, which does not include any sales expenses or depreciation. So, the correct answer is A) Final sales price.
When calculating the taxable gain or loss from the sale of personal property, the amount used is typically the actual amount received from the sale transaction.
The asking price (Option B) is not relevant for determining the sale price because it represents the initial price set by the seller and may differ from the actual sales price agreed upon during the transaction.
Sales price minus depreciation (Option C) is not the correct choice because depreciation is typically used to determine the adjusted basis of the property, which affects the taxable gain or loss, but it does not directly factor into the sale price.
Similarly, sales expenses (Option D), such as commissions or advertising costs, do not affect the sale price itself. They are deducted separately as expenses related to the sale.
Therefore, the correct answer is Option A: Final sales price.
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apple now uses robots to disassemble old iphones and recover cobalt and other materials for re-use in making new products. this reflects which era of marketing?
Apple now utilizes robots to disassemble old iPhones and recover cobalt and other materials for reuse in manufacturing new products. This reflects a 'circular economy' era of marketing.
The circular economy is an era of marketing that emphasizes the closed-loop, sustainable use of resources. It promotes the idea of keeping products, components, and materials in use for as long as possible, extracting the maximum value from them before recovering and regenerating them.
It means that the circular economy aims to keep resources in use for as long as possible, extracting the maximum value from them before recovering and regenerating products and materials at the end of each service life.
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(a) A restaurant has annual sales of $420,000, an average inventory of $6000, and an annual cost of goods sold of $264,000. What is the restaurant's monthly inventory turns? (b) A restaurant has annual sales of $420,000, an average inventory of $6000, and an annual cost of goods sold of $264,000. What are the restaurant's days-of-supply of inventory? (Assume 365 days per year) (c) An online shoe retailer's annual cost of holding inventory is 35 percent. The firm operates with a days-of-supply of 20 days, and assume there are 365 days per year. What is the inventory holding cost (in $s) for a pair of shoes that the firm purchased for $50?
With a days-of-supply of 20 days, the inventory holding cost for a pair of shoes is = $0.048
(a) To find the restaurant's monthly inventory turns, we need to divide the cost of goods sold by the average inventory and then divide by 12 (for 12 months in a year).
Cost of Goods Sold / Average Inventory = $264,000 / $6,000 = 44
44 / 12 = 3.67
Therefore, the restaurant's monthly inventory turns are 3.67.
(b) To find the restaurant's days-of-supply of inventory, we need to divide the average inventory by the cost of goods sold and then multiply by 365 (for 365 days in a year).
Average Inventory / Cost of Goods Sold = $6,000 / $264,000 = 0.0227
0.0227 * 365 = 8.29
Therefore, the restaurant's days-of-supply of inventory are 8.29.
(c) To find the inventory holding cost for a pair of shoes, we need to multiply the cost of the shoes by the annual cost of holding inventory and then divide by the number of days in a year.
Inventory Holding Cost = (Cost of Shoes * Annual Cost of Holding Inventory) / Number of Days in a Year
Annual Cost of Holding Inventory = 35% = 0.35
Number of Days in a Year = 365
Inventory Holding Cost = ($50 * 0.35) / 365 = $0.048
Therefore, the inventory holding cost for a pair of shoes that the firm purchased for $50 is $0.048 or approximately 5 cents.
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A customer needs to attach a
A. credit report
to a customer authorization form
THE WINNER IS cssa06160! She/he answerd the most questions with all accuracy : )!!! She will get brainliest
Answer:
^--^
Explanation:
Answer:
yey :)
Explanation:
:>
true or false: the majority of public companies use the direct method of preparing cash flows from operating activities.
True. The direct method of preparing cash flows from operating activities is a commonly used approach for reporting a company's cash flows from operating activities.
It involves reporting the cash inflows and outflows from the company's operating activities, such as sales revenue, cost of goods sold, and operating expenses, directly on the income statement. This approach provides a clear picture of the company's operating cash flows and can help investors and analysts understand the company's financial performance and liquidity.
While not all public companies use the direct method, it is a widely used and widely understood approach for reporting cash flows from operating activities. Some companies may choose to use alternative methods, such as the indirect method or the cash flow statement, to report their cash flows from operating activities. However, the direct method is generally considered to be the most straightforward and transparent approach for reporting these cash flows.
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You want to buy a car, and a local bank will lend you $25,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 15%, with interest paid monthly. What is the monthly loan payment? Do not round intermediate calculations. Round your answer to the nearest cent.
What is the loan's EFF%? Do not round intermediate calculations. Round your answer to two decimal places.
The monthly loan payment for a $25,000 loan fully amortized over 5 years at a nominal interest rate of 15% would be approximately $587.22. The loan's effective annual interest rate (EFF%) would be approximately 16.08%.
To calculate the monthly loan payment, we can use the formula for calculating the fixed monthly payment on a fully amortized loan:
P = r * PV / (1 - (1 + r)\(^(^-^n^)\))
Where:
P is the monthly loan payment,
PV is the present value of the loan (the loan amount),
r is the monthly interest rate (nominal interest rate divided by 12),
n is the total number of payments (number of years multiplied by 12).
In this case, the loan amount (PV) is $25,000, the nominal interest rate is 15% (0.15), and the total number of payments (n) is 5 years (60 months).
So, plugging in the values into the formula:
P = (0.15/12) * 25000 / (1 - (1 + (0.15/12))\(^(^-^6^0^)\))
Calculating this expression gives us approximately $587.22 as the monthly loan payment.
To calculate the loan's effective annual interest rate (EFF%), we can use the formula:
EFF% = (1 + r)^n - 1
Where:
r is the monthly interest rate,
n is the total number of payments (number of years multiplied by 12).
In this case, the monthly interest rate (r) is 0.15/12 and the total number of payments (n) is 5 years (60 months).
Plugging in the values into the formula:
EFF% = (1 + (0.15/12))\(^6^0\) - 1
Calculating this expression gives us approximately 16.08% as the loan's effective annual interest rate (EFF%).
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a business should endeavor to be socially responsible in its actions and conduct under what set of circumstances?
A business should endeavor to be socially responsible in its actions and conduct under all circumstances. Social responsibility is the ethical framework and obligation that businesses have to act in ways that benefit society and protect the environment.
Socially responsible business practices can include reducing environmental impact, promoting fair labor practices, supporting community development, and promoting ethical conduct in business dealings.
These practices not only benefit society and the environment but can also contribute to long-term business success by building positive relationships with stakeholders and enhancing the company's reputation. Therefore, businesses should strive to integrate social responsibility into their core operations and decision-making processes.
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On December 31 , the end of the current fiscal year, a US company completed the sale of one business segment for $12.0 million. We know that the business segment qualifies as a component of thecompany, according to GAAP. Pleasealso consider the following additional information: - The book value of the assets of the segment was $8.5 million at the time of the sale. - The income from operations of the segment during the current year was $5.5 million. - Pretax income from other continuing operations for the year totaled $13.5 million. - The income tax rate is 25%. Pleaseprepare the lower portion of the current year income statement beginning with income from continuing operations before income taxes. Note: Loss amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4
The value of total income before the income tax is $10.75 million and the value of loss on sale on business segment is -$3.5 million and the value of the taxes is $4.75 million.
Income from continuing operations before taxes for the current year for a US company is calculated by the following method:Income from continuing operations before income taxes= Income from operations of the business segment + Pretax income from other continuing operations- Loss on the sale of the business segment - Taxes on continuing operationsIncome from operations of the business segment was $5.5 million.
Book value of assets of the segment was $8.5 million and the sale value is $12 million, which means the profit is $3.5 million.Loss on sale of the business segment = Book value of assets of the segment - Sales price = $8.5 million - $12 million = -$3.5 million.
Pretax income from other continuing operations was $13.5 million.
Taxes = (Income from operations of the business segment + Pretax income from other continuing operations) * Tax rate= ($5.5 million + $13.5 million) * 25% = $4.75 million.
Income from continuing operations before income taxes= $5.5 million + $13.5 million - $3.5 million - $4.75 million= $10.75 million.
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Aziz is hired as a Nanny even though he doesn't have any experience with it yet. Martina is a Mental Health Counselor who works 40 hours per week. Ethan is a Healthcare Social Worker who is paid the same amount every week no matter how many hours he works. Noa is a Customer Service Representative who gets health insurance from her employer.
Answer:
its an entry level job
Explanation:
edge 2022
The selection of the type of job that each best example demonstrates is as follows:
1. Aziz is hired as a Nanny even though he doesn't have any experience with it yet is A) Entry-level.
2. Martina is a Mental Health Counselor who works 40 hours per week. This is an example of D) a Full-time job.
3. Ethan is a Healthcare Social Worker who is paid the same amount every week no matter how many hours he works is an example of B) Salaried Job.
4. Noa is a Customer Service Representative who gets health insurance from her employer is an example of C) Job with Benefits.
What are the different types of jobs?The different types of jobs may be classified into four, depending on the job specifications (skills and experience) required.
ThinkersBuildersImproversProducers.Question Completion with Answer Options:Select the type of job best demonstrated in each example.
A) Entry-level
B) Salaried Job
C) Job with Benefits
D) Full-time job
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Analyzing Credit Card Offers Answer Questions 1-4 pls
Offer #1 has the lowest annual fee as it has none.
Offer #3 has the best introductory rate as it has 0% APR for 15 months.
Offer #1 has the lowest interest rate as it has not been provided with an APR.
Offer #1 would be the best for someone who carries a balance as it has no annual fee, and the APR has not been provided. This means that the interest rate for the card will likely be lower than the other two offers. However, if the individual is looking for a rewards program, Offer #2 may be a better choice as it offers 3% cash back on all purchases.
However, if the person is planning to make a large purchase and pay it off within the introductory period, then Offer #3 with 0% APR for 15 months and 3% cash back on all purchases might be a better option.
It is important to note that these credit card offers have other terms and conditions that should be carefully considered before making a decision, such as the credit line, late fees, and rewards program. The individual's spending habits, credit score, and financial goals should also be taken into account when choosing a credit card.
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The core components upon which a company's ethical performance depends include: Select one: a. The traditions, attitudes, and business practices built into a company's culture. b. All of these statements. c. The personal character of the managers and employees. d. The values and virtues of the managers.
The core components upon which a company's ethical performance depends include The traditions, attitudes, and business practices built into a company's culture. The answer is A.
A company's ethical performance is dependent on various factors, and the core components among them are the traditions, attitudes, and business practices that are embedded in a company's culture.
These components form the foundation of a company's ethical values and standards and influence the behavior and decision-making of its employees and managers.
A company with a strong ethical culture that values honesty, integrity, and accountability is more likely to uphold ethical standards in its operations and dealings with stakeholders. In contrast, a company with weak ethical values and practices may engage in unethical behavior such as fraud, corruption, and exploitation.
Therefore, it is essential for companies to prioritize and cultivate an ethical culture that promotes responsible and ethical behavior and aligns with the values and expectations of its stakeholders.
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When you or someone else buys clothing or items produced in a foreign country, who benefits?
Explain your answer.
Why do competitive markets move toward equilibrium?
Suppose babies born in a large hospital have a mean weight of 4088 grams, and a variance of 55,696.
If 128 babies are sampled at random from the hospital, what is the probability that the mean weight of the sample babies would be less than 4132 grams? Round your answer to four decimal places.
Answer:
0.0107
Explanation:
We were told that 128 babies are sampled at random from the hospital, which implies that there are 128 sample size, then , (n = 128)
Given from the question;
mean weight =4088
variance = 55,696
We need to determine probability that the mean weight 4088
would be less than 4132 grams
P = 1 - (4088/4132)
P = 1-0.9893
=0.0107
The coordinate of the vertice of a polygon are the point 1 comma 2, the point 1 comma negative 1, the point negative 6 comma negative 1, and the point negative 6 comma 2.
What i the perimeter of the polygon?
The line that connects the first two is split in the ratio l:k, and the line that runs from the division point to the opposing angular point is divided in the ratio m:k+l.
What is the coordinate of vertices?The coordinates with one point in the coordinate system are included in an ordered pair. An set of points of the form of a point's name is (x, y). Its first integer stands for the x-coordinate, and the next for the y-coordinate.
The coordinates of a position are a set of integers that exactly identify its location on a the double plane. The coordinates of a given point indicate where on each axis it is located.
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The pleural, pericardial, and peritoneal cavities are referred to as serous cavities. The walls of these cavities and the organs that lie within them are lined/covered with a serous membrane. Serous membranes are named so because they secrete a watery fluid. The membrane that lines the walls of the cavity is called the parietal serosa and the membrane that covers the organs within the cavity is called the visceral serosa. As these two membranes secrete a thin layer of slippery fluid, it allows for the organs covered within the visceral portion to smoothly move against the parietal portion freely without friction occurring.
A. True
B. False
The statement that the pleural, pericardial, and peritoneal cavities are referred to as serous cavities, with their walls and organs lined/covered with serous membranes, which secrete a watery fluid, and that the parietal serosa lines the cavity walls and the visceral serosa covers the organs allowing for smooth movement without friction is: A. True
The statement is true. Here's a detailed explanation:
Serous Cavities: The pleural, pericardial, and peritoneal cavities are indeed referred to as serous cavities. These cavities are found in the body and are lined by serous membranes.Serous Membranes: The walls of these cavities and the organs within them are covered with a serous membrane. Serous membranes are named so because they secrete a watery fluid known as serous fluid.Parietal and Visceral Serosa: The serous membrane has two layers. The layer that lines the walls of the cavity is called the parietal serosa, and the layer that covers the organs within the cavity is called the visceral serosa.Function of Serous Membranes: The serous membranes secrete a thin layer of slippery serous fluid. This fluid allows the organs covered by the visceral serosa to move smoothly against the parietal serosa, facilitating frictionless movement within the serous cavities.The correct answer is true.
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what is an example of a biological hazard an employee who didn't wash their hands a box of poison rat food that is being stored right next to food a bottle that feel and broke scattering glass shards everywhere
The statement which illustrates the example of a biological hazard is an employee who didn't wash their hands. So option a. is correct.
A biological hazard may be illustrated as organic substances that especially pose a hazard or have harsh effects on the health of humans and different living organisms. Biological hazards commonly include pathogenic microorganisms like viruses, toxins, spores, fungi, and bioactive essences. According to the context of this question, when a person is not washing their hands, multiple microbes can remain within the hands. These microorganisms are competent in boosting varied intermediate to severe diseases in organisms.
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Providing managers with increased visibility of the entire logistics process so that they can improve the efficiency of the entire system is the primary function of any ___ system.
The primary function of supply chain management system is to provide the managers with increased visibility of the entire logistics process so that they can improve the efficiency.
What is the supply chain management?In a firm, the supply chain management refers to an operational section that manages the flow of goods, services, tasks and processes that take place from the input of raw materials to the output.
In conclusion, the primary function of any supply chain management system is to provide the managers with increased visibility of the logistics process.
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You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding probability of occurring. The stock has a purchase price of $15.00. You forecast that there is a 40% chance that the stock will sell for $30.00 at the end of one year. The alternative expectation is that there is a 60% chance that the stock will sell for $10.00 at the end of one year. What is the expected percentage one−year return on this stock, and what is the return standard deviation?
Answer and Explanation:
The computation is shown below;
Purchase price = $15.00
Forecasted price of $30.00 with probability of 40%:
Now
Rate of Return = (Selling Price - Purchase Price) ÷ Purchase Price
= ($30.00 - $15.00) ÷ $15.00
= 100.00%
And,
Forecasted price of $10.00 with probability of 60%:
Now
Rate of Return = (Selling Price - Purchase Price) ÷ Purchase Price
= ($10.00 - $15.00) ÷ $15.00
= -33.33%
Now
Expected Return = 0.40 × 1.0000 + 0.60 × (-0.3333)
= 0.20 or 20.00%
and,
Variance = 0.40 ×(1.00 - 0.200)^2 + 0.60 × (-0.3333 - 0.200)^2
= 0.426645
Finally
Standard Deviation = (0.426645)^(1 ÷ 2)
= 0.6532 or 65.32%
Hammers, screwdrivers, drills, and saws are _____ a construction worker uses.
-tasks
-skills
-tools
-qualifications
Answer:
are a - tool - construction workers use
An elementary school student brings her mother, Kathryn, in for parent career day. Kathryn discusses what she does on a daily basis in her career as a firefighter. She also tells the students that firefighting is a family tradition, because her father and brother are firefighters too.
What roles is Kathryn fulfilling while at the school?
Answer:
isnt it an elementary school student is her role?
Explanation:
Answer:
l
Explanation:
Wilson Company reports the following expenditures related to plant assets for the most recent fiscal year! Replacing worn-out machine gears: $1,125Routine vehicle maintenance: $ 875Replacement engine for delivery van: $2,600Expansion of production facility: $84,500 Painting of office building: $ 1,800 Installation of heating system: $ 6,200 Wilson's accountant records all expenditures as capital expenditures. As a result, net income will be A.understated by $10,000. B understated by $93,300. C. overstated by $3,800. D. overstated by $81,575.
In the following question, among the conditions and options given, The effect of all expenditures on Net Income when all expenditures are treated as Capital Expenditure is that net income will be overstated by $93,300.So, option B is the correct answer.
Wilson Company reports the following expenditures related to plant assets for the most recent fiscal year! Replacing worn-out machine gears: $1,125Routine vehicle maintenance: $ 875Replacement engine for delivery van: $2,600 Expansion of production facility: $84,500 Painting of office building: $ 1,800 installation of heating system: $ 6,200 We have to determine the effect of all expenditures on Net Income when all expenditures are treated as Capital Expenditure.
SolutionThe effect of all expenditures on Net Income when all expenditures are treated as Capital Expenditure is that net income will be overstated by $93,300.So, option B is the correct answer. Note: In Accounting, expenditures for plant assets are of two types: Capital expenditure and Revenue expenditure. Capital expenditures are expenditures on acquiring fixed assets or plant assets while revenue expenditures are expenses incurred on normal operations of the company. Capital expenditure is treated as an asset while Revenue expenditure is treated as an expense.
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Seth is a student in the Master of Business Administration program at Elite University in California. Before graduation, he is offered a coveted high-paying job at the famous investment bank, Morgan Sacks & Co., in New York City. He also has several other offers at locations around the country. Ultimately he decides that the opportunity is best at Morgan, so he accepts the job on March 1. After graduating, he packs up his few belongings, flies to New York, rents a small apartment in the Tribeca area, and on July 1 he starts work. He never signs any written employment agreement with Morgan. Two months later, on September 1, he is fired for incompetence and insubordination. Seth sues, claiming that when he was being recruited he was orally promised that his initial contract term would be two years, and that he would not be fired within that time. Morgan responds by denying any such statements were made, that it has never made any such promises to any new employee, and it moves to dismiss because the alleged contract is not in writing. What result and why? Consider Restatement (Second) of Contracts § 139 in connection with this problem.
Morgan's motion to dismiss is likely to be successful because the alleged oral promise made during the recruitment process does not meet the requirement of a written contract.
Under the Restatement (Second) of Contracts § 139, contracts for employment lasting longer than one year must be in writing to be enforceable. Since Seth claims that he was promised a two-year initial contract term, this falls under the category of a contract that cannot be performed within one year. As there is no written employment agreement between Seth and Morgan, the alleged oral promise would not be legally binding.
The statute of frauds, which is reflected in the Restatement (Second) of Contracts § 139, requires certain types of contracts to be in writing to be enforceable. Contracts for employment lasting longer than one year fall under this requirement. While Seth may argue that an oral promise was made during the recruitment process, the lack of a written agreement would make it difficult to prove the existence and terms of such a promise.
In this case, since Seth claims that he was promised a two-year initial contract term, the alleged agreement would fall under the statute of frauds. As Morgan denies making any such promises and points out the absence of a written agreement, the court would likely rule in favor of Morgan and dismiss Seth's claim. The court would consider the requirement of a written contract for employment exceeding one year as stipulated by the Restatement (Second) of Contracts § 139.
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