Answer:
hehe
Explanation:
hehe
what is acknowledgement
Answer: it means to accept something or recognition
he Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 11,900 10,900 12,900 13,900 Each unit requires 0.20 direct labor-hours and direct laborers are paid $15.00 per hour. In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $99,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $39,000 per quarter. Required: 1. Calculate the company’s total estimated direct labor cost for each quarter of the the upcoming fiscal year and for the year as a whole. 2&3. Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole.
Answer:
1. Total estimated direct labor cost = $148,800
2. Total estimated manufacturing overhead cost = $410,880
3. Total Cash disbursement for the fiscal year = $254,880
Explanation:
Please see attached detailed explanation of the above questions and answers.
is the price of a movie ticket likely to go up or down why?
Answer:
Down
Explanation:
Because they want more people to watch
Ramon had AGI of $165,000 in 2020. He is considering making a charitable contribution this year to the American Heart Association, a qualified charitable organization. Determine the current allowable charitable contribution deduction in each of the following independent situations, and indicate the treatment for any amount that is not deductible currently. Identify any planning ideas to minimize Ramon's tax liability.
Answer:
the situations are missing, so I looked for similar questions:
a. A cash gift of $68,500.
In the current year, Ramon may deduct $68,500 since his charitable contribution is limited to $165,000.
b. A gift of OakCo stock worth $68,500 on the contribution date. Ramon had acquired the stock as an investment two years ago at a cost of $61,650.
The stock's value for determining the contribution is $68,500 (fair market value). The deduction for 2020 is $49,500 (30% of AGI). The remaining $19,000 for years.
c. A gift of a painting worth $68,500 that Ramon purchased three years ago for $61,650. The charity has indicated that it would sell the painting to generate cash to fund medical research.
The contribution is valued at $61,650 (the charity will sell the painting immediately). The amount deductible in the current year is $61,650.
Explanation:
The charitable contribution limit was increased to 100% of AGI for 2020 by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).
g Question 3 (ASC Required - 20 points): After graduation, you work for a few years at a major accounting firm and advance to Senior. However, as part of this role, you start working on a client that is different from your other background: specifically, a major bank located in San Francisco. This bank primarily takes deposits from retail and business customers and lends money out to others. The accounting seems to be completely different from what you are used to and so you go to the Codification to find out what the accounting standards for this industry consist of. Describe the major classes of transactions undertaken by this sort of entity and how they should be accounted for.
Answer with Explanation:
The major transactions that a bank will be involved in are listed below:
Deposits of accounts holders: These deposits are basically the liability of the bank which it will pay them back in near future. Hence it must be recorded as a Current or Non-current liability depending upon the type of account and agreement between the parties to contract. Money lendings to borrowers: This money must be accounted for as a current or non-current asset depending upon the type of account and agreement made.Interest on the money lendings: It is interest income and must be accounted for as revenue.ATM and other Transaction processing charges: These fee charges are also part of income and thus must be accounted for as income.Park competes with World by providing a variety of rides. sells tickets at $110 per person as a one-day entrance fee. Variable costs are $44 per person, and fixed costs $412,500 are per month. Under these conditions, the breakeven point in tickets is 6,250 and the breakeven point in sales dollars is $687,500.
Requirement
1. Suppose Park cuts its ticket price from to to increase the number of tickets sold. Compute the new breakeven point in tickets and in sales dollars. 2. Begin by selecting the formula labels and then entering the amounts to compute the number of tickets must sell to break even under this scenario
Answer:
Instructions are below.
Explanation:
Giving the following information:
Variable costs are $44 per person
Fixed costs $412,500
Let's suppose that the new selling price is $100.
To calculate the break-even point in units and dollars, we need to use the following formulas:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 412,500 / (100 - 44)
Break-even point in units= 7,366 units
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 412,500 / (56/100)
Break-even point (dollars)= $736,607
8.Kline and Salomon form the KS Partnership as 50/50 partners. Kline contributes equipment that has a fair market value of $60,000 and an adjusted basis of $45,000. In addition, the equipment is subject to a $10,000 loan that KS Partnership is assuming. What amount represents Kline's initial basis in the partnership
Answer: $40,000
Explanation:
Kline brings in equipment that is worth $60,000 but has a basis of $45,000.
The equipment however is subject to a loan of $10,000.
This loan will have to be deducted from the basis. The partnership however is assuming the loan and Kline is only 50% liable in the partnership so Kline's basis will only be affected by half of the loan.
Basis = 45,000 - 5,000
= $40,000
The following transactions occurred at the Daisy King Ice Cream Company.
1. Started business by issuing 10,000 shares of capital stock for $23,000.
2. Signed a franchise agreement to pay royalties of 5% of sales.
3. Leased a building for three years at $530 per month and paid six months' rent in advance.
4. Purchased equipment for $5,700, paying $2,000 down and signing a two-year, 10% note for the balance.
5. Purchased $2,100 of supplies on account.
6. Recorded cash sales of $1,100 for the first week.
7. Paid weekly salaries and wages, $470.
8. Paid for supplies purchased in item (5).
9. Paid royalties due on first week's sales.
10. Recorded depreciation on equipment, $70.
Required:
Prepare journal entries to record each of the transactions listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Journal Entries Needed as followed:
1. Started business by issuing 10,000 shares if capitol stock for $23,000
2. Signed a franchise agreement to pay royalties of 5% of sales
3. Leased a building for 3yrs st $530 per month and paid 6 months rent in advance
4. Purchased equipment for $5700, paying $2000 down and signing a 2yr 10% note for the balance.
5. Purchased $2100 of supplies on account
6. Recorded cash sales of $1100 for the 1st week
7. Paid weekly salareies and wages $4700
8. Paid for suplies purchased in item (5)
9. Paid royalites due on 1st weeks sales
10. Recorded depreciation on equipment $70
Answer:
Daisy King Ice Cream Company
General Journal
1. Debit Cash Account $23,000
Credit Capital Stock $23,000
To record the issue of 10,000 shares for cash.
2. No journal entry required.
3. Debit Prepaid Rent $3,180
Credit Cash Account $3,180
To record the payment in advance of six months' rent.
4. Debit Equipment $5,700
Credit Cash $2,000
Credit Notes Payable $3,700
To record the purchase of equipment for cash and 10% two-year notes.
5. Debit Supplies $2,100
Credit Accounts Payable $2,1000
To record the purchase of supplies on account.
6. Debit Cash Account $1,100
Credit Sales Revenue $1,100
To record the sale of goods for cash.
Debit Royalties Expense $55
Credit Royalties Payable $55
To record 5% royalties payable on sales.
7. Debit Salaries and Wages Expense $470
Credit Cash Account $470
To record the payment of weekly salaries and wages.
8. Debit Accounts Payable $2,100
Credit Cash Account $2,100
To record the payment for supplies purchase on account.
9. Debit Royalties Payable $55
Credit Cash Account $55
To record the payment of royalties due.
10. Debit Depreciation Expense $70
Credit Accumulated Depreciation $70
To record the depreciation expense for the period.
Explanation:
For Daisy King Ice Cream Company, the recording of business transactions in the journal is the first step of maintaining the double-entry system of book-keeping. In it, the accounts to be debited and credited are identified and recorded for onward posting to the general ledger.
Which scenario holds true when a tariff is applied to an imported item? A. both domestic and foreign consumers pay the same price B. domestic consumers of the imported item pay a higher price C. foreign consumers of the imported item pay a higher price D domestic consumers of the imported itern pay a lower price
Answer:
i would say b, the domestic pay more.
During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: 2019 understated by $ 124,000 2020 overstated by 154,000 WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.
Answer:
WMC Corporation
Misstatement of Ending Inventories:
1. Effect of these errors on Retained Earnings at January 1, 2021:
a) The understated amount by $124,000 in 2019 has self-corrected in 2020 with the Beginning Inventory also understated. So, it has no effect on the Retained Earnings at January 1, 2021.
b) The overstated ending inventories by $154,000 will overstate the Retained Earnings at January 1, 2021 by the same amount. Since it has not self-corrected like (a), the correction will be to reduce the Retained Earnings and reduce the Beginning Inventories by $154,000.
2. Journal Entry:
Debit Retained Earnings $154,000
Credit Beginning Inventories $154,000
To reverse the overstated inventories.
Explanation:
a) Data:
2019 understated by $ 124,000
2020 overstated by 154,000
Inventory system = periodic
Inventory method = FIFO
Roose, Inc. reported revenue of $92 million and incurred total expenses of $84 million. The total expenses included cost of goods sold of $50 million, salaries and other administrative expenses of $9 million, $11 million of interest paid on a building's mortgage, and $14 million of depreciation. Assuming Roose is subject to the interest expense limitation, what amount of interest expense can the business deduct in the current year
Answer:
Roose, Inc.
The business can deduct $9.5 million in the current year.
Explanation:
Revenue = $92 million
Expenses allowed = 73 million ( $84 - $11 million for interest expense)
Adjusted taxable income before interest = $19 million
50% of adjusted taxable income = $9.5 million
Disallowed interest expense in the current year = $1.5 million
The interest expense allowed (deductible) is 50% for 2019 and 2020, as amended by the CARES Act) of the taxpayer's adjusted taxable income.
At a sales volume of 44,000 units, Thoma Corporation's sales commissions (a cost that is variable with respect to sales volume) total $585,200. To the nearest whole cent, what should be the total sales commission per unit at a sales volume of 46,300 units
Answer: $13.30 per unit
Explanation:
Thoma Corporation Sales Commission per unit;
= Total Sales commission/ Sales volume
= 585,200/44,000
= $13.30
For a sales volume of 46,300 units, the commission per unit will be the same $13.30 per unit as this cost is variable with respect to sales volume.
The process of taking cash flow that is received or paid in the future and stating that cash flow in present value terms is called discounting. A. True B. False
Answer:
A. True
Explanation:
The process of taking cash flow that is received or paid in the future and stating that cash flow in present value terms is called discounting.
Discounting is the opposite of Compounding because discounting measures what the value of future cash flow is worth in the present while compounding takes the present value into the future. Discounting generally points to a method of knowing the present value of cash flow. Discounting is an important tool due to how a business could know the present value of what the business spends and gains by comparing it to the future value of what is to be received.
The cash flow that is received or paid in the future is less than the present value of the cash flow and that depicts the time value of money.
Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon.
Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding.
Statement Price Control Binding or Not
The government prohibits gas stations from selling gasoline for more than $2.50 per gallon.
The government has instituted a legal minimum price of $3.40 per gallon for gasoline.
There are many teenagers who would like to work at gas stations, but they are not hired due to minimum-wage laws.
Answer:
Price ceiling binding
price floor binding
Price floor binding
Explanation:
A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.
Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price.
The maximum price ($2.50) is less than the equilibrium price($3) . So it is a binding price ceiling
The minimum price ($3.40) is greater than the equilibrium price($3) . So it is a binding price floor
Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is ________ and the new unemployment rate is ________.
Answer:
Results are below.
Explanation:
First, we need to calculate the currently employed people and the unemployment rate:
Employed people= 100,000,000 - 6,000,000= 94,000,000
Unemployment rate= unemployed people / labor force
Unemployment rate= 6,000,000 / 100,000,000
Unemployment rate= 0.06= 6%
Now, the newly employed people and the unemployment rate:
Employed people= 94,000,000 + 300,000 - 200,000
Employed people= 94,100,000
Unemployment rate= 5,900,000 / 100,000,000
Unemployment rate= 0.059 = 5.9%
Companies, the military, the government, and nonprofit organizations can operate because they have determined the levels of authority and reporting structure for their organizations. What is the name given to this line of authority
Answer:
Chain of command.
Explanation:
Chain of command is been used in the description of operation flow pattern in companies, government, universities and in many organisations which aid in a better reporting relationship. This report is said to set records straight and also puts every individual in a category in this chart organization. Also a chain of command is established so that everyone knows whom they should report to and what responsibilities are expected at their level. A chain of command enforces responsibility and accountability.
Last year Janet purchased a $1,000 face value corporate bond with an 11% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 12.21%. If Janet sold the bond today for $993.14, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
Answer:
20.10%
Explanation:
The first task is to compute the bond's purchase price last year which is found using the bond price formula below:
bond price=face value/(1+r)^n+ annual coupon*(1-(1+r)^-n/r
face value=$1000
r=yield to maturity=12.21%
n=number of annual coupons in 15 years=15
annual coupon=face value*coupon rate=$1000*11%=$110
bond price=1000/(1+12.21%)^15+110*(1-(1+12.21%)^-15/12.21%
bond price=1000/(1+12.21%)^15+110*(1-0.177634192 )/12.21%
bond price=$918.50
Rate of return=(price today-initial price+coupon received)/initial price
price today= $993.14
initial price=$918.50
coupon received(for 1 year)=$110
Rate of return=($993.14-$918.50+$110)/$918.50=20.10%
Suppose that real GDP grew more in Country A than in Country B last year.
a. Country A must have a higher standard of living than country B.
b. Country A's worker productivity must have grown faster than country B's.
c. Both of the above are correct.
d. None of the above are correct.
Answer:
D
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
Nominal GDP is GDP calculated using current year prices while Real GDP is GDP calculated using base year prices. Real GDP has been adjusted for inflation.
The standard of living is calculated as real GDP / population. Even though the real GDP of country A grew faster than country B, country A's population might be higher than country B's making its standard of living lower.
To make a conclusion that the growth of country A's worker productivity grew faster, it must be assumed that population grew at the same rate in both countries
Jen Rogers withdrew a total of $15,000 from her business during the current year. The entry needed to close the withdrawals account is:_________
A. Debit Income Summary and credit Cash for $31,000.
B. Debit Jen Rogers, Withdrawals and credit Cash for $31,000 Debit Income Summary and credit Jen Rogers, Withdrawals for $31,000.
C. Debit Jen Rogers, Capital and credit Jen Rogers, Withdrawals for $31,000.
D. Debit Jen Rogers, Withdrawals and credit Jen Rogers, Capital for $31,000.
Answer: C. Debit Jen Rogers, Capital and credit Jen Rogers, Withdrawals for $15,000
Explanation:
The options do not match the question. Correct answer is posted.
When closing the Withdrawal account at the end of the period, the withdrawals need to be accounted for from the capital invested by the investor because the withdrawals would reduce the capital balance.
To do this the Capital account should be debited to signify that it is reducing. The opposing entry therefore will be to credit the Withdrawals account.
Situation 2
A customer walks into your department and asks if anyone can help her. She complains that she's
been waiting for the salesperson in the shoe department for the last 10 minutes. She says, "Just
when I think he's finally going to help me, he takes another phone call. I'm so upset. I just want to
tell his manager how rude he's been."
Policy: Employees should try to handle all customer complaints. If the customer demands to see a
manager, call the departmental manager immediately.
19
sty
Answer:
The lady would need to remain patience and make note of the fact that there may be a crowd and not enough employees so it may take a while. Yes the lady has a right to assistance but she should only be given it if she is being respectful of the people around her and nice to the employees.
Not sure what you wanted me to answer but I hope this helps.
Explanation:
A share of Lash Inc.'s common stock just paid a dividend of $2.10. If the expected long-run growth rate for this stock is 5%, and if investors' required rate of return is 18.5%, what is the stock price
Answer:
P0 = $16.333333333 rounded off to $16.33
Explanation:
Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
D0 * (1+g) is dividend expected for the next period g is the growth rate r is the required rate of return
P0 = 2.1 * (1+0.05) / (0.185 - 0.05)
P0 = $16.333333333 rounded off to $16.33
None of the following would be an advantage of self-administered surveys:
A) Reduced cost
B) Respondent control
C) Reduced interview evaluation apprehension
A. True
B. False
Answer:
B. False
Explanation:
A self-administered survey is one where there is the collection of the necessary data for the survey is carried out through a questionnaire of questions to be answered by the interviewee. Questionnaires can be sent via mail, e-mail, personal interception, hand delivery etc.
The advantages of self-administered surveys are cost reduction, since questionnaires can be sent via email at no cost to both, greater control of the interviewee, since the questions can be developed according to the information you want to collect, greater quick feedback, which reduces the apprehension of the interview evaluation.
False, the self-administered surveys would not be advantageous in terms of reduced interview evaluation apprehension. The Option B.
Would self-administered surveys be advantageous?Self-administered surveys eliminate the need for face-to-face interactions and direct interviewer involvement which can indeed reduce interview evaluation apprehension. When individuals complete surveys on their own, they may feel less pressured and more comfortable expressing their opinions.
But this advantage does not hold true for self-administered surveys as they are completed by the respondents themselves without the presence of an interviewer. Consequently, the absence of an interviewer does not contribute to a reduction in interview evaluation apprehension. Therefore, the Option B is correct.
Read more about surveys
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Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $470,000. Shipping costs totaled $14,100. Foundation work to house the centrifuge cost $7,700. An additional water line had to be run to the equipment at a cost of $2,600. Labor and testing costs totaled $7,000. Materials used up in testing cost $3,700. (Leave no cells blank. Enter 0 where needed.) a. What is the total cost of the equipment
Answer:Total Cost of equipment=$502,500
Explanation:
Total Cost of equipment= This is gotten by addition of Cost of Purchase +Shipping costs +Foundation work+ Testing expense
=$470,000+$14,100+$7,700+($7,000+$3,700.)
=$502,500
Lawn Master Company, a manufacturer of riding lawn mowers, has a projected income for the coming year as follows: Sales $ 44,000,000 Operating expenses: Variable expenses $ 28,600,000 Fixed expenses 7,700,000 Total expenses 36,300,000 Operating profit $ 7,700,000 Required: 1. Determine the breakeven point in sales dollars. 2. Determine the required sales in dollars to earn a before-tax profit of $9,152,500. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) 3. What is the breakeven point in sales dollars if the variable expenses increases by 9%
Answer:
Please see attached
Explanation:
• Break even point in sales dollars $22,000,000
• Required sales in dollars $48,150,000
• Break even point in sales dollars $34,010,600
See as attached, detailed solution to the questions above.
Answer:
Results are below.
Explanation:
Giving the following information:
Sales $44,000,000
Variable expenses $ 28,600,000
Fixed expenses 7,700,000
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 7,700,000 / [(44,000,000 - 28,600,000)/44,000,000]
Break-even point (dollars)= $22,000,000
Now, we incorporate the desired profit of $9,152,500
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (7,700,000 + 9,152,500) /0.35
Break-even point (dollars)= $48,150,000
Finally, the new break-even point in dollars:
Total variable cost= 28,600,000*1.09= 31,174,000
Break-even point (dollars)= 7,700,000 / [(44,000,000 - 31,174,000) / 44,000,000]
Break-even point (dollars)= 7,700,000 / 0.2915
Break-even point (dollars)= $26,415,094.34
How are productive resources
allocated among people and
businesses in the United States?
Answer:
see below
Explanation:
America is a good example of a free-market economy. In this type of market, productive resources are allocated through the interaction of a willing buyer and a willing seller. In a market economy, Mutual beneficial exchange of resources through trade is relied upon to solve economic problems. An Individual's self-interest is viewed as a benefit to society.
In a free-market economy like in America, purchasing power determines who owns resources. Resource owners are motivated by profits and other self-interest to engage in production. The forces of supply and demand control activities in a Free Market. Consumers decide what will be produced. In market economies, operation and acquisition of resources is by the freely and self-directed interaction between consumers and producers.
Receivables are valued based on their ________.
a. fair value
b. estimated amount collectible
c. lower-of-cost-or-market value
d. historical cost
Answer:
b. estimated amount collectible
Explanation:
In Financial accounting, Receivables are also known as Account Receivable. Receivables are considered to be a current asset because it is the payment a business firm would receive from its customers for goods purchased or services taken on credit. Also, accounts receivable are recorded in the current assets section of the balance sheet because they add value to a business firm.
Generally, current assets are considered to be liquid because they are listed on the balance sheet in the order (descending) in which they are expected to turn or be converted to cash within a relatively short term period.
Hence, receivables are valued based on their estimated amount collectible from customers for the goods and services taken.
$50 an hour is a
A salary
B commission
C wage
D pension
Answer: C.) Wage
Explanation: A salary is a set cost that is due to you over an agreed amount of time. A commission is a percentage that you get from the original cost. A wage is the income one makes daily, or per hour. A pension is the gradual amount of money being added up during the years one works. Therefore, $50 an hour is a wage.
I hope this helped!
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Lincoln’s landlord has included a clause in the rental contract that makes it possible for him to increase Lincoln’s monthly rent if taxes on the property go up. Which clause was included in the contract?
a. tariffs clause.
b. variable costs clause.
c. escalator clause.
d. elastic demand clause.
e. elevator clause.
Answer:
The appropriate answer is Option c (Escalator clause).
Explanation:
The landlord of Lincoln also put a disclaimer throughout the rental lease which allows him to raise the mortgage payment of Lincoln if property wages increase. The deal had an escalator clause.An Escalator clause would be a clause inside a leasing contract as well as rent disclosure that ensures the improvement in rent sum regardless of the reasons which were not under influence of all the participants. Throughout this situation the taxation on land is raised by that of the government therefore adjustment in taxes wasn't in the jurisdiction of all entities.The other options given aren't connected to just the given case. In such a way that the response above is right.
Follows a summary of Gold Corp.'s cash flows ($ in millions) for the year ended Dec. 31, 2020: Cash received from: Customers $ 3,150 Interest on investments 290 Sale of land 190 Sale of Rowdy's common stock 780 Issuance of debt securities 2,900 Cash paid for: Interest on debt $ 390 Income tax 170 Debt principal reduction 2,400 Purchase of equipment 5,800 Purchase of inventory 1,900 Dividends on common stock 470 Operating expenses 680 Gold Corp would report net cash inflows (outflows) from investing activities for the period of:
Answer:
Only two of the listed activities classify as investing activities. The cash flow form investing activities = cash received form the sale of land + cash paid for the purchase of equipment = $190 - $5,800 = -$5,610
Explanation:
Customers $ 3,150 ⇒ operating activity
Interest on investments 290 ⇒ operating activity
Sale of land 190 ⇒ investing activity
Sale of Rowdy's common stock 780 ⇒ financing activity
Issuance of debt securities 2,900 ⇒ financing activity
Interest on debt $ 390 ⇒ operating activity
Income tax 170 ⇒ operating activity
Debt principal reduction 2,400 ⇒ financing activity
Purchase of equipment 5,800 ⇒ investing activity
Purchase of inventory 1,900 ⇒ operating activity
Dividends on common stock 470 ⇒ financing activity
Operating expenses 680 ⇒ operating activity
A perpetuity pays $170 per year and interest rates are 8.2 percent. How much would its value change if interest rates increased to 9.7 percent
Answer:
$320.59 decrease
Explanation:
The computation of the change in the value is shown below:
As we know that
The Value of perpetuity is
= Annual inflows ÷ interest rate
Current value is
= $170 ÷ 0.082
= $2,073.17
And,
New value is
= $170 ÷ 0.097
= $1,752.58
Now change in value is
= $2,073.17 - $1,752.58
= $320.59 decrease
We simply applied the above formula