Answer:
$4
$1
$3
False
Explanation:
Tax is a compulsory sum levied by the government or an agency of the government on goods and services.
Taxes increases the price of products
Total amount of tax = new price of a case of beer - amount producers receive
$8 - $4 = $4
Burden of tax on consumers = new price of a case of beer - initial price
$8 - $7 = $1
Burden of tax on producers = Total amount of tax - Burden of tax on consumers
$4 - $1 = $3
the statement is false because if the tax has been imposed on producers, producers would not be able to share the burden of the tax with consumers. Thus, the whole burden of tax would have been borne by producers and the effect would be higher
evaluate the pricing strategy of Vinmart retail system
Answer:i think vinsmart is ok
Explanation:
When constructing a demand function, it is necessary to hold many other factors constant, so that a relationship between price and output can be established.
a. True
b. False
Answer:
True
Explanation:
The given statement is true because there are other factors that impact the demand for a commodity for example if the income of a person rises then the person will consume more commodity and the demand curve will shift.
Therefore, other factors should be constant while constructing the demand function because keeping other factors constant will not impact the price and output relationship.
The following information pertains to Cullumber Company. 1. Cash balance per bank, July 31, $11,310. 2. July bank service charge not recorded by the depositor $65. 3. Cash balance per books, July 31, $11,440. 4. Deposits in transit, July 31, $4,615. 5. $2,600 collected for Cullumber Company in July by the bank through electronic funds transfer. The accounts receivable collection has not been recorded by Cullumber Company. 6. Outstanding checks, July 31, $1,950. (a) Prepare a bank reconciliation at July 31, 2022.
Answer:
See below
Explanation:
Cullumber Company
Bank Reconciliation
July 31, 2022
Cash balance as per bank
$11,310
Add:
Deposits in transit
$4,615
Less:
Outstanding checks
($1,950)
Adjusted bank balance
$13,975
Cash balance per books
$11,440
Add:
Electronic fund transfer received
$2,600
Less:
Bank service charges
($65)
Adjusted cash balance
$13,975
Andrews Co. can purchase 20,000 units of Part XYZ from a supplier for $18 per part. Andrews' per unit manufacturing costs for 20,000 units is as follows: Cost Per Unit Total Variable manufacturing cost $12 $240,000 Supervisor salary $3 $60,000 Depreciation $1 $20,000 Allocated fixed overhead $7 $140,000 If the part is purchased, the supervisor position will be eliminated. The special equipment has no other use and no salvage value. Total allocated fixed overhead would be unaffected by the decision. The company should ______.
Answer:
Andrews Co.
The company should ______.
should make the part.
Explanation:
a) Data and Calculations:
Costs to make Part XYZ:
Cost Per Unit Total
Variable manufacturing cost $12 $240,000
Supervisor salary $3 $60,000
Depreciation $1 $20,000
Allocated fixed overhead $7 $140,000
Units to be made or bought = 20,000 units
Cost to buy Part XYZ = $18 per part.
Relevant costs:
Make Buy Difference
Variable manufacturing cost $12
Supervisor salary $3
Total relevant cost per unit $15 $18 $3
Total costs $300,000 $360,000 $60,000
b) There is a cost-saving of $60,000 when Part XYZ is made internally. The cost of depreciation is not relevant in the decision since the equipment has no salvage value or any other use. Similarly, the fixed overhead will still be incurred, no matter the alternative chosen by the company.
Ferric Chemicals, Inc. has fixed costs of $34,000 per month. The highest production volume during the year was in January when 100,000 units were produced, 71,000 units were sold, and total costs of $640,000 were incurred. In June, the company produced only 60,000 units. What was the total cost incurred in June? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)
Answer:
hhhhh welcome bro im pig frien
JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,245,000. JRE2 recognizes revenue upon contract completion.
Cost incurred Estimated Cost to Complete
2020 $ 256,000 $ 1,580,000
2021 1,630,000 533,000
2022 480,000 0
In 2022, JRE2 would report gross profit (loss) of:
Answer:
Explanation:
In 2022,
Contract Price 2,245,000
Less: Cost incurred
2020 (256,000)
2021 (1,580,000)
2022 (630,000)
Gross Margin (145,000)
Last year Burch Corporation's cash account decreased by $29,000. Net cash provided by (used in) investing activities was $8,400. Net cash provided by (used in) financing activities was $(26,500). On the statement of cash flows, the net cash provided by (used in) operating activities was:
Answer:
The answer is "-10,900"
Explanation:[tex]\text{Cash from operating activities} + \text{cash from investing activities + cash from financing activities} = -29,000[/tex]
[tex]\text{cash from operating activities}[/tex] [tex]+ 8,400 - 26,500 = -29,000[/tex]
[tex]= -29,000 + 26,500 - 8,400\\\\= -10,900[/tex]
Refer to the In the News below:
ATTACHMENT IS GIVEN BELOW
Instructions: Round your response to two decimal places.
a. How much more are U.S. consumers paying for the 12 billion tons of sugar they consume each year as a result of the quotas on sugar imports?
$ ______ more per pound of sugar
b. How much sales revenue are foreign sugar producers losing as a result of those same quotas?
a) Quantity of decreased sales multiplied by the price of sugar
b) Quantity of decreased sales adding the price of sugar
c) Quantity of decreased sales subtracting the price of sugar
d) Quantity of decreased sales divided by the price of sugar
Answer:
Explanation:
B-Quantity of decreased sales day the price of sugar
Select the correct term for each of the following definitions. Definition Term An interest-earning deposit with a specified maturity date Any good that is widely accepted for purposes of exchange and in the repayment of debt Coins and paper money Which of the following statements about the history of banks are true? Check all that apply. Warehouse receipts, issued by goldsmiths were often used instead of gold itself to make payments. The amount of gold represented by warehouse receipts was less than the actual amount of gold on deposit. Goldsmiths held deposited gold and issued receipts to their customers.
Question Completion with Options:
Money, Currency, Time Deposit
Answer:
1. Terms Definitions
Time Deposit An interest-earning deposit with a specified maturity date
Money Any good that is widely accepted for purposes of exchange
and in the repayment of debt
Currency Coins and paper money
2. The statements about the history of banks that are true:
Warehouse receipts, issued by goldsmiths were often used instead of gold itself to make payments.
Goldsmiths held deposited gold and issued receipts to their customers.
Explanation:
Banking evolved with the activities of goldsmiths who warehoused gold brought by customers for safeguarding by issuing them with warehouse receipts. Before long, the warehouse receipts were used as a means of payment (or exchange). That is, the warehouse receipts were used as currency, which is the modern-day equivalent of coins and paper money.
Under absorption costing , a company had the following per unit costs when 10,000 units were produced Direct labor Direct materials Variable overhead Total variable cost Fixed overhead ( / Total product cost per unit $ 2.80 3.80 4.80 11.40 6.00 $ 17.40 Required : 1. Compute the company's total product cost per unit under absorption costing if 12,500 units had been produced 2. Fill in the blank with increase or decrease
Answer:
Total unitary cost= $16.2
Explanation:
First, we need to compute the total fixed overhead:
Total fixed overhead= 10,000*6= 60,000
Now, the unitary absorption cost for 12,500 units:
Direct labor= 2.8
Direct materials= 3.8
Variable overhead= 4.8
Total variable cost= $11.4
Fixed overhead= (60,000/12,500)= 4.8
Total unitary cost= $16.2
The unitary cost is lower.
During its inception, Devon Company purchased land for $100,000 and a building for $180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal revealed that the building has a fair value of $200,000. 5) Based on the information provided, at the time of the transfer, Regan Company should record: A) Building at $180,000 and no accumulated depreciation. B) Building at $162,000 and no accumulated depreciation. C) Building at $200,000 and accumulated depreciation of $24,000. D) Building at $180,000 and accumulated depreciation of $18,000.
Answer:
The answer is "Option D".
Explanation:
R Company must register a [tex]\$180,000[/tex] building, as well as, an accumulated [tex]\$18,000[/tex] depreciation.
It makes the design the right decision with [tex]\$180,000[/tex] as well as the accrued [tex]\$18,000[/tex] depreciation.
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period.
P0 Q0 P1 Q1 P2 Q2
A 99 100 104 100 104 100
B 59 200 54 200 54 200
C 118 20 128 200 64 400
Calculate the first-period rates of return on the following indexes of the three stocks:
a. A market value–weighted index
b. An equally weighted index.
Answer:
a. Rate of return = 94.51%
b. Rate of return = 1.68%
Explanation:
a. A market value–weighted index
Total market value at time 0 = Market value of Stock A at time 0 + Market value of Stock B at time 0 + Market value of Stock C at time 0 = ($99 * 100) + ($59 * 200) + ($118 * 20) = $24,060
Total market value at time 1 = Market value of Stock A at time 1 + Market value of Stock B at time 1 + Market value of Stock C at time 1 = ($104 * 100) + ($54 * 200) + ($128 * 200) = $46,800
Rate of return = (Total market value at time 1 / Total market value at time 0) – 1 = ($46,800 / $24,060) - 1 = 0.9451, or 94.51%
b. An equally weighted index
Return on a Stock for the first period = (P1 / P0) - 1 …………. (1)
Therefore, we have:
Return on Stock A for the first period = ($104 / $99) - 1 = 0.0505, or 5.05%
Return on Stock B for the first period = ($54 / $59) - 1 = - 0.0847, or - 8.47%
Return on Stock C for the first period = ($128 / $118) - 1 = 0.0847, or 8.47%
Therefore, we have:
Return of return = (Return on Stock A for the first period + Return on Stock B for the first period + Return on Stock C for the first period) / 3 = (5.05% - 8.47% + 8.47%) / 3 = 1.68%
Dermody Snow Removal's cost formula for its vehicle operating cost is $3,080 per month plus $338 per snow-day. For the month of December, the company planned for activity of 20 snow-days, but the actual level of activity was 22 snow-days. The actual vehicle operating cost for the month was $10,130. The spending variance for vehicle operating cost in December would be closest to:
Answer:
$386 U
Explanation:
Calculation to determine what The spending variance for vehicle operating cost in December would be closest to:
Actual results $10,130
Less Flexible budget $10,516
($3,080+($338 per*22 snow-days)
Spending variance $386 Unfavorable
Therefore The spending variance for vehicle operating cost in December would be closest to:
$386 Unfavorable
On January 1, 2012, Fei Corp. issued a 3-year, 5% coupon, $100,000 face value bond. The bond was priced at an effective interest rate of 8%, yielding proceeds of $92,137. This is the first and only bond that Fei has ever issued.
Fei’s Statement of Cash Flows for fiscal year 2012 had the following line items:
2012 2011
Net Income $11,500 $10,350
Depreciation $25,478 $23,675
Amortization of Bond Discount $2,418 $0
What was Fei’s Interest Expense on the bond during fiscal year 2012?
a. $2,418
b. $7,371
c. $7,418
d. $8,000
e. $5,000
Answer:
c. $7,418
Explanation:
Calculation to determine What was Fei’s Interest Expense on the bond during fiscal year 2012
Using this formula
Interest Expense =Interest payable+Amortization of bonds discount interest expense
Let plug in the morning
Interest Expense=(5%*100,000)+$2,418
Interest Expense=$5,000+$2,418
Interest Expense=$7,418
Therefore Fei’s Interest Expense on the bond during fiscal year 2012 is $7,418
Suppose that a company has successfully used architectural innovation to reconfigure a product and is now the market leader. In order to improve its product offering, extend the time that it can extract profits from its products, and maintain high entry barriers for new rivals, itwill most likely engage in __________ innovation next.A. radical.B. architectural.C. incremental.D. either radical or architectural.E. disruptive.
Preferred stock issued in exchange for land would be reported in the statement of cash flows in Group of answer choices the cash flows from financing activities section the cash flows from investing activities section a separate schedule the cash flows from operating activities section
Answer: a separate schedule
Explanation:
Preferred stock, are referred to as the shares of the stock of a company whereby the dividends are paid out to the preference shareholders before the common stock dividends are issued.
It should be noted that the preferred stock which is issued in exchange for the land will be reported in the statement of cash flows in a separate schedule.
If an employee always stays on-task and
typically finishes work in a timely
manner, what type of control is required?
A. Flexible
B. Close
C. Limited
D. Open
the answer is c because hes limited to what he can controll
Clark's Chemical Company received refundable deposits on returnable
containers in the amount of $100,000 during 2018. Twelve percent of the
containers were not returned. The deposits are based on the container cost
marked up 20%. What is cost of goods sold relative to this forfeiture?
a. $0.
b. $2,000.
c. $10,000.
d. $14,400.
Answer: $10000
Explanation:
The cost of goods sold relative to this forfeiture will be calculated thus:
= (Refundable deposit × percent of not returned) / (1 + Markup percentage on cost)
= ($100000 × 12%) / ( 1 + 20%)
= ($100000 × 0.12) / ( 1 + 0.2)
= $12000 / 1.20
= $10000
The cost of goods sold is $10000
On June 30, 2021, Moran Corporation issued $12.5 million of its 12% bonds for $11.4 million. The bonds were priced to yield 14%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021
Answer:
the reduction in the bond discount is $48,000
Explanation:
The computation of the reduction in the bond discount is as follow;
= ($11,400,000 × 14% × 1 ÷ 2) - ($12,500,000 × 12% × 1 ÷ 2)
= $798,000 - $750,000
= $48,000
Hence, the reduction in the bond discount is $48,000
Here we considered half as the interest is payable on semi-annual basis
Consider the following time series data. Week 1 2 3 4 5 6 Value 19 13 15 12 17 15 Using the average of all the historical data as a forecast for the next period, compute the following. (Round your answers to two decimal places.)
measures of forecast accuracy:Mean absolute error (MAE)Mean squared error (MSE)Mean absolute percentage error (MAPE)Round your answers to two decimal places.MAE =MSE =MAPE =Using the average of all the historical data as a forecast for the next period, compute the same three values. Round your answers to two decimal places.MAE =MSE =MAPE =Which method appears to provide the more accurate forecasts for the historical data?
Answer:
1. We have:
MAE = 3.60
MSE = 15.60
MAPE = 25.45
2. We have:
MAE = 2.62
MSE = 11.11
MAPE = 19.59
3. The average of all the historical data provides the more accurate forecasts for the historical data.
Explanation:
Note: This question is not correct as the average of all the historical data is asked to be used as a forecast for the next period in requirements 1 and 2 instead of the naïve method (most recent value) for the first requirement. The correct question is therefore presented before answering the question as follows:
Consider the following time series data.
Week 1 2 3 4 5 6
Value 19 13 15 12 17 15
1. Using the naïve method (most recent value) as the forecast for the next period, compute the following (Round your answers to two decimal places.) measures of forecast accuracy:
a. Mean absolute error (MAE)
b. Mean squared error (MSE)
c. Mean absolute percentage error (MAPE).
2. Using the average of all the historical data as a forecast for the next period, compute the same three values. Round your answers to two decimal places.
3. Which method appears to provide the more accurate forecasts for the historical data?
The explanation of the answer is now provided as follows:
The following formulae are to be used:
MAE = Total of Error / Number of observations
MSE = Total of Error^2 / Number of observations
MAPE = Total of Error % / Number of observations
1. Using the naïve method (most recent value) as the forecast for the next period, compute the following (Round your answers to two decimal places.) measures of forecast accuracy:
Note: See part 1 of the attached excel file for the determination of Naïve and Calculations of Error, Error^2 and Error % using the naïve method as the forecast for the next period.
From the attached excel file, we have:
MAE = 18.00 / 5 = 3.60
MSE = 78.00 / 5 = 15.60
MAPE = 127.23 / 5 = 25.45
2. Using the average of all the historical data as a forecast for the next period, compute the same three values. Round your answers to two decimal places.
Note: See part 2 of the attached excel file for the determination of Naïve and Calculations of Error, Error^2 and Error % using the average of all the historical data as a forecast for the next period.
From the attached excel file, we have:
MAE = 13.12 / 5 = 2.62
MSE = 55.55 / 5 = 11.11
MAPE = 97.94 / 5 = 19.59
3. Which method appears to provide the more accurate forecasts for the historical data?
The average of all the historical data provides the more accurate forecasts for the historical data comparing the values of its MAE, MSE and MAPE to the values of MAE, MSE and MAPE of Naive method. This is because the error values of the average of all the historical data are much lowest and more closest to the actual data.
Turner Enterprises is analyzing a project that is expected to have annual cash flows of $77,400, $21,300 and -$6,200 for Years 1 to 3, respectively. The initial cash outlay is $84,900 and the discount rate is 11 percent. What is the modified IRR
Answer:
8.26%
Explanation:
Calculation to determine the modified IRR
First step is to calculate the Modified Year 2 cash flow
Modified Year 2 cash flow = $21,300 + (-$6,200)/1.11
Modified Year 2 cash flow= $15,714.41
Now let determine the Modified IRR
Modified IRR:$0 = -$84,900 + $77,400/(1 + IRR) + $15,714.41/(1+ IRR)^2
Modified IRR= 8.26%
Therefore the modified IRR is 8.26%
Answer each of the following independent questions.
1. Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuity of $13,000 beginning one year from today. Assuming an interest rate of 6%, which option should Alex choose?
2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2025. Weimer will make annual deposits of $100,000 into a special bank account at the end of each of 10 years beginning December 31, 2016. Assuming that the bank account pays 7% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2025?
Answer:
option 1
$1,381,644.80
Explanation:
Alex would choose the option that has the highest present value
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
pv of option 2
Cash flow in year 0 = 20,000
Cash flow in year 1 - 6 = $8,000
i = 6%
PV = 59,338.60
OPTION 3
Cash flow in year 1 - 6 = 13,000
i - 6%
pv = 63,925.22
option 1 has the highest present value and should be chosen
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
2.
future value of an annuity = Annual payment x annuity factor
Annuity factor = {[(1+r)^n] - 1} / r
(1.07^10 - 1 ) / 0.07 = 13.816448
13.816448 x 100,000 = $1,381,644.80
Complete each statement with the term that correctly defines each platform strategy advantage.
Platform businesses tend to frequently ____________ pipeline businesses.
Platforms scale more efficiently than pipelines by eliminating __________
Platform businesses _________ digital technology can grow much faster
Answer:
Note See full and organized question in the attached picture below
1. Platform businesses tend to frequently outperform pipeline businesses.
2. Platforms scale more efficiently than pipelines by eliminating gatekeepers.
3. Platform businesses leveraging digital technology can grow much faster.
4. Platforms unlock new sources of value creation and supply.
5. Feedback loops from consumers to the producers allow platforms to fine-tune their offerings and to benefit from big data analytics.
Assume the economy of country G produces hotdogs and buns in the following quantities and prices in 2017 and 2018. Assume also that 2017 is the base year and the real GDP will be calculated using 2017 prices. What is the real yearly growth (between 2017 and 2018)
Answer:
73.70%
Explanation:
Note: The full question is attached as picture below
Real GDP in 2017 = ($3*5) + ($2*2)
Real GDP in 2017 = $15 + $4
Real GDP in 2017 = $19 million
Real GDP in 2018 = ($3*7) + ($2*6)
Real GDP in 2018 = $21 + $12
Real GDP in 2018 = $33 million
Real Growth rate between 2017 and 2018 = [(33 - 19) / 19] * 100 = [14/19] * 100 = 0.73684211 * 100 = 73.684211% = 73.70%
Jeff, a local traffic engineer, has designed a new pedestrian foot bridge that is capable of handling the current traffic rate of 300 pedestrians daily. Once the traffic rate reaches 2 comma 000 pedestrians daily, however, the bridge will require a new bracing system. Jeff has estimated that traffic will increase annually at 3 %. How long will the current bridge system work before a new bracing system is required? What if the annual traffic rate increases at 8 % annually? At what traffic increase rate will the current system last only 12 years?
Answer:
a. How long will the current bridge system work before a new bracing system is required?: 64.18 years or 64 years and 2 months.
b. What if the annual traffic rate increases at 8 % annually: The bracing system will last for 24.65 years or 24 years and 7 months.
c. At what traffic increase rate will the current system last only 12 years: 17.13%
Explanation:
a. Denote x is the time taken for the number of pedestrian to grow from 300 to 2000. The current pedestrian is 300, the grow rate per year is 3% or 1.03 times a year. Thus, to reach 2,000, we have the equation: 300 x 1.03^x = 2000. Show the equate, we have 1.03^x = 6.67 <=> x = 64.18
b. Denote x is the time taken for the number of pedestrian to grow from 300 to 2000. The current pedestrian is 300, the grow rate per year is 8% or 1.08 times a year. Thus, to reach 2,000, we have the equation: 300 x 1.08^x = 2000. Show the equate, we have 1.08^x = 6.67 <=> x = 24.65.
c. Denote x as traffic increase rate. The current pedestrian is 300, the grow rate per year is (1+x) times a year. Thus, to reach 2,000 after 12 years and thus a new bracing system to be in place, we have the equation: 300 x (1+x)^12 = 2000. Show the equate, we have (1+x)^12 = 6.67 <=> 1+x = 1.1713 <=> x = 17.13%.
Capital budgeting analysis not only requires the evaluation of cash flows but also requires the understanding of the origin of those cash flows. Based on your understanding of cash flows in a firm, complete and answer the following questions The present value of ___________ can be used to determine the basis of a firm's value. Ideally, capital budgeting analysis should take cash flows into account ___________
Understanding the nature of projects
Capital budgeting analysis often involves decisions related to expansion projects and/or replacement projects. Based on your understanding of expansion and replacement projects, complete the following:
If a clothing store opens a second retal location on the other side of town, this project would be considered__________ project.
What are sunk costs?
Acme Manufacturing owns a warehouse that it is not currently using. It could sell the warehouse for $300,000 or use the warehouse in a new project. Should Acme Manufacturing include the value of the warehouse as part of the in investment in the new project or treat the value of the warehouse as a sunk cost?
Yes, include the value of the warehouse as part of the initial investment in the new project
No, treat the value of the warehouse as a sunk cost
The role of externalities
A paper manufacturer has built a plant that meets all government-mandated environmental regulations, but the pl sant odor when it is being operated. Many residents in the area dislike the paper mill because of these unpleasant odors. This is an example of ________externality.
Answer:
Present Value of Cash Flows
Exactly when they occur
Expansion Project
Sunk cost is the cost which is already incurred and it is not affected by the decision to accept or reject the project.
Include the value of the warehouse as part of the initial investment in the new project.
Negative Externality
Explanation:
Present value of Cash flows is the discounted cash flows which shows the real worth of the money now which is to be received in future. Sunk costs are not part of the project as they are already incurred. These cost are not included in the calculations of the project cash flows. Negative externality is the undesirable impact due to production and manufacturing plants operations on the environment.
us suppose that you open a savings account at the campus credit union. Into this savings account, you place $100 in savings. The interest rate is 5 percent. The future value of this account in two years is
Answer:
the future value in two years is $110.25
Explanation:
The computation of the future value in two years is shown below:
As we know that
Future value = Present value × (1 + rate of interest)^number of years
= $100 × (1 + .05)^2
= $100 × (1.1025)
= $110.25
Hence, the future value in two years is $110.25
The same should be considered and relevant
Suppose independent truckers operate in a perfectly competitive constant cost industry. If these firms are earning positive economic profits, what happens in the long run to the following: The price of trucking services
Answer:
The price of trucking services would fall until equilibrium prices are reached. Only normal profit would be earned in the long run
Explanation:
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
Compare and contrast different ways in which a taxpayer triggers a realization event by disposing of an asset.
Answer:
There are many ways a taxpayer can trigger a realization event. She can trigger it through a sale or trade by receiving a value greater than the disposed asset. She can also trigger a realization event by making a gift to charity. Other ways include disposal, for example, to a landfill and destruction through natural disaster. In the latter cases, there is a loss to the taxpayer. With a natural disaster, the taxpayer can only obtain a realization gain if reimbursed by the insurance company.
Explanation:
A realization event happens when there is a sale or a disposal of an asset or a discharge from a liability. There is usually an increase in the value realized from the disposal, which is greater than the asset's value before disposal. It also happens when the taxpayer receives a relief from a liability or completes a profitable transaction.
Suppose the annual inflation rate in the US is expected to be 2.5 %, while it is expected to be 18.00 % in Mexico. The current spot rate (on 1/1/X0) for the Mexican Peso (MXN) is $0.1000. If the spot rate of MXN turns out to be $0.085 on 1/1/X1, the net cash flow of a US importer from Mexico will: Group of answer choices Increase Decrease
Answer:
Increase
Explanation:
In putting the question into a better perspective let us assume that the US importer buys goods from Mexico every year to the Tune of 1,000,000 Mexican Pesos.
The expected exchange rate on 1/1/X1=$0.1000*(1+2.5%)/(1+18%)
The expected exchange rate on 1/1/X1=$0.086864407
Amount paid based on expected exchange rate=1,000,000*$0.086864407
Amount paid based on expected exchange rate=$86,864.41
Amount paid based on actual exchange=1,000,000*$0.085
Amount paid based on actual exchange=$85,000
The above means that the US importer paid a lesser amount($85000) than it should have paid, hence, its net cash flow would increase due to a reduction in payment