The ASX200 Share Price Index (SPI) stands at 6,200 and has a volatility (standard deviation) of 25% per annum. The risk-free rate of interest is 3% p.a. and the index provides a dividend yield of 4% p.a. (all rates are continuously compounded). If an option on the SPI is for $25 x SPI, use the appropriate formula to calculate the value of a six-month European call with an exercise price of 6,000. [Show all calculations, explicitly identifying the value of d1 and d2.]
Answers
To calculate the value of a six-month European call option on the ASX200 Share Price Index (SPI), we can use the Black-Scholes formula. After solving we got a European call option with an exercise price of 6,000 on the ASX200 Share Price Index is approximately $218.06.
Given that the SPI stands at 6,200 with a volatility of 25% per annum, a risk-free rate of 3% per annum, and a dividend yield of 4% per annum, we can determine the value of the option.
The Black-Scholes formula for a European call option is:
C = S * e^(-q * T) * N(d1) - X * e^(-r * T) * N(d2)
Where:
C is the value of the call option,
S is the current price of the underlying asset (SPI),
q is the dividend yield,
T is the time to expiration (in years),
X is the exercise price,
r is the risk-free interest rate, and
N(d1) and N(d2) are the cumulative standard normal distribution functions of d1 and d2, respectively.
First, we need to calculate d1 and d2 using the following formulas:
d1 = (ln(S / X) + (r - q + (σ^2)/2) * T) / (σ * sqrt(T))
d2 = d1 - σ * sqrt(T)
Where σ is the volatility (standard deviation) of the SPI.
Substituting the given values into the formulas, we get:
d1 = (ln(6,200 / 6,000) + (0.03 - 0.04 + (0.25^2)/2) * 0.5) / (0.25 * sqrt(0.5)) ≈ 0.1533
d2 = 0.1533 - 0.25 * sqrt(0.5) ≈ -0.0194
Next, we can calculate the values of N(d1) and N(d2) using the cumulative standard normal distribution function. Assuming N(d1) = 0.5596 and N(d2) = 0.4919, we can substitute these values along with the given parameters into the Black-Scholes formula:
C = 6,200 * e^(-0.04 * 0.5) * 0.5596 - 6,000 * e^(-0.03 * 0.5) * 0.4919 ≈ 218.06
Therefore, the value of the six-month European call option with an exercise price of 6,000 on the ASX200 Share Price Index is approximately $218.06.
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Related Questions
why must advertising first be to the employees?a. people who provide the service are often the same people who sell the service.b. a firm's communications may reinforce pre existing ideas.c. some quirk in the advertising execution may attract a customer for which the service is not designed.
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The concept is Advertising ,is the practice and techniques employed to bring attention to a product or service. The answer is option A.
The people providing the service are often the same people selling it. Putting people first means companies value their people. In return, employees will appreciate the organization.
They tend to come to work happier. Satisfied employees also create satisfied customers.
Advertising is a promotional activity aimed at selling a product or service to a target audience. It's one of the oldest forms of marketing, trying to influence the actions of the target audience to buy, sell, or do something specific.
With a highly personalized message, ads can be niche (targeted to a small audience) or generic (targeted to large audiences).
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The company collected $27,000 on may 30th, 2017 for 12 months of service which will take place from june of 2017 through may of 2018. as a result of this transactions, on may 30th teamsnap's?
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The company collected $27,000 on may 30th, 2017 for 12 months of service which will take place from june of 2017 through may of 2018. as a result of this transactions, on may 30th teamsnap's Assets increased .
The Accounting Equation: What Is It?The relationship between assets, liabilities, and equity is depicted by the accounting equation. It serves as the cornerstone on which the double entry accounting system is built. In order to make sure that every component of a journal entry is accurate, business transactions must be recorded in line with the accounting equation.
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Turn to Part C of the Systems Analyst's Toolkit and review the concept of net present value (NPV). Determine the NPV for the following: An information system will cost $175,000 as an initial investment to implemented over a six month period and will produce no savings during the last six months of first year once it has gone online. When the system goes online, the company will save $27,750 during the second year of operation. For the next four years, the savings will be $39,250,$45,500,$48,500, and $40,250, respectively per year. Assuming a 4.25% discount rate, what is the NPV of the system? Explain in detail whether.or.not this a good investment (one four sentence paragraph at a minimum).
Answers
The NPV of the system is the sum of the present values of the cash flows minus the initial investment, which needs to be calculated based on the given data.
To calculate the NPV, we need to discount the future cash flows to their present values and subtract the initial investment. Using a discount rate of 4.25%, we can calculate the present value of each cash flow and sum them up. The present value of each cash flow is calculated by dividing the cash flow by (1 + discount rate) raised to the corresponding period. After calculating the present values, we subtract the initial investment of $175,000. If the resulting NPV is positive, it indicates that the project is a good investment. If the NPV is negative, it suggests that the project may not be worthwhile.
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what is the modern technology used instead of traditional Technology
Answers
Answer:
Many traditional technologies are being replaced by the modern technologies. For example, typewriters have been replaced by computers.
Differentiate between traditional and modern technology.
Explanation:
Traditional Technology: For photography, film camera was used. Modern Technology: For photography, the digital camera is used.
Answer: The wheel
Explanation:
your question is rather vague, so ill give an example of modern technology based off of traditional technology))
During the stone age, wheels were created, and they used traditional methods to make such wheels.
Now, wheels are used on many things using modern technology, factory equipment and usually nobody hand-makes wheels for industrial use traditionally anymore.
What type of contract is created by an agreement that is oral when it is required by the Statute of Frauds to be in writing?
Answers
The type of contract created by an agreement that is oral when it is required by the statute and required in writing is: legally voidable contract.
What is a Contract?A contract is a legal agreement that binds individuals or groups. It defines and governs the mutual rights and obligations of the parties involved.
In a Legally voidable contract, the parties involved create an agreement orally especially when it is required by the statute of fraud. Although contracts that fall outside the statute need not be in writing.
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commercial activity engaged in as a means of livelihood or profit.
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commercial activity engaged in as a means of profit. This type of activity is known as "business" or "commerce".
It involves the exchange of goods or services for money or other valuable consideration, with the intention of making a profit. Business may take various forms, such as sole proprietorship, partnership, corporation, or limited liability company (LLC), and can involve various industries or sectors such as retail, manufacturing, service, finance, and more. The goal of most businesses is to create value for customers and stakeholders, generate revenue, and achieve sustainable growth and profitability over time. Profit is the financial gain earned by a business after deducting all expenses. It is crucial for a company's survival and growth, and is a key measure of success in business.
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Which expense category will most likely be changed to allow money for the purchase of a car? savings Which expense category will most likely be changed to allow money for the purchase of a car?
savings
groceries
utilities
entertainmentgroceries utilities entertainment
Answers
Answer:
D. entertainment
Why do you only pay tax on a certain amount of income
Answers
Answer:
because it means that the more you earn, the more you pay. If your income equals or exceeds these amounts, you will need to file taxes. and that's why you have to pay certain amounts of taxes.
Explanation:
(sorry if you get it wrong)
What is the difference between a shift along a demand curve and a shift of a demand curve.
Answers
The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid 10.50 per hour. In addition, the variable manufacturing overhead rate is 1.50 per direct labor-hour. The fixed manufacturing overhead is 80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is 22,000 per quarter.
(b) Prepare the company's manufacturing overhead budget.
Answers
The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year. Production is the process of making or manufacturing goods and products from raw materials or components. In other words, production takes inputs and uses them to create an output for an end-user or customer.
To calculate manufacturing overhead, you need to add all the indirect factory-related expenses incurred in manufacturing a product. This includes the costs of indirect materials, indirect labor, machine repairs, depreciation, factory supplies, insurance, electricity, and more.
The manufacturing overhead budget contains all manufacturing costs other than direct materials and direct labor. The information in this budget becomes part of the cost of goods sold line item in the master budget.
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If the quantity demanded is greater than the quantity supplied, what will happen to the price?
A. Go up
B. Go up then down
C. Go down
D. Remain the same
Answers
On December 15, 2021, Rigsby Sales Co. sold a tract of land that cost $4,000,000 for $5,000,000. Rigsby appropriately uses the installment sales method of accounting for this transaction. Terms called for a down payment of $490,000 with the balance in two equal annual installments payable on December 15, 2022, and December 15, 2023. Ignore interest charges. Rigsby has a December 31 year-end. In 2021, Rigsby would recognize realized gross profit of:
a. $1,400,000.
b. $126,000.
c. $450,000.
d. $0.
Answers
forms of activity that have some of the characteristics of orthodox businesses but are illegal are called
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The forms of activity that have some of the characteristics of orthodox businesses but are illegal are called illicit businesses.
An illicit business is a term used to describe a type of business activity that is illegal or forbidden by law, government policies, or societal norms. Examples of such businesses include drug dealing, human trafficking, money laundering, piracy, and tax evasion. These businesses often have some characteristics of lawful businesses such as revenue streams, organizational structures, and customer relations.
However, their operations are not regulated by the government, making them illegal and often dangerous for their participants. Illicit businesses are often organized and have hierarchies similar to legal businesses. They may involve corruption, blackmail, or other illegal activities that are harmful to society.
Governments worldwide are working to combat such activities through law enforcement agencies, and many countries have enacted legislation to address the issue.
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let’s focus on the second quarter since the change in velocity is so dramatic. during that quarter, the cpi fell by 0.9%, real gdp fell by 9.0%, the money supply rose by 23%, and velocity changed by %. give your answer to one decimal.
Choose one: A. People and banks were spending their money at faster rates.
B. There was a substantial increase in the money supply.
C. People and banks were holding on to their money longer.
D. The inflation rate was negative.
Answers
There is some indication that the United States may be entering a recession as a result of the fact that now the economy shrunk in the second period and GDP fell by 0.9%.
A shrunk economy is what?Economic contraction is the term used to describe the business cycle's downward slope. A period of declining economic production is known as a contraction. The economy is currently producing less than it did previously. In order to create less goods and services, businesses must use fewer resources, especially labor.
The US economy has it shrunk?One definition of the a recession is supported by the most recent GDP measurement, which shows that the US economy contracted for two consecutive quarters. During in the 2nd period of 2016, the US GDP contracted by 0.6%.
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If you use an ATM card or a Debit card, transactions will be treated as if you have written a check. Question 9 options: True False
Answers
True. When you use an ATM card or a Debit card, transactions are treated as if you have written a check.
This means that the funds are directly deducted from your bank account, similar to how a check payment works. When you make a purchase or withdraw cash using your ATM or Debit card, the amount is immediately debited from your account, providing real-time access to your available funds. This is different from a credit card, where the payment is made on credit and you need to repay the amount later. With an ATM or Debit card, the transactions are processed electronically, making it convenient and efficient for everyday transactions. It is important to keep track of your spending and ensure sufficient funds in your account to avoid any overdraft fees or declined transactions.
A charge card, otherwise called a check card or bank card, is an installment card that can be utilized instead of money to make buys. On either the front or back of the card, the bank's name, a card number, the cardholder's name, and an expiration date typically appear.
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Money you pay up front to reduce the amount you will owe is called a
A. fixed loan
B. late payment
C. down payment
D. short-term loan
Answers
Answer:
down payment
Explanation:
A down payment is money paid upfront in a financial transaction, such as the purchase of a home or car. Buyers often take out loans to finance the remainder of the purchase price.
Answer:
down payment
Explanation:
The service time of the first service of a BMW is found to be normally distributed with a mean of 70 minutes and a standard deviation of 9 minutes.
If a customer brings her BMW in for its first service, calculate the probability that the car will be ready within one hour. Draw a sketch of the graph to show the area. (6)
Calculate the probability that the job will take more than an hour and a half. Draw a sketch of the graph to show the area. (5)
What percentage of first services will be completed between 50 and 60 minutes? Draw sketch of graph to show the area. (6)
The BMW dealer has a policy to give its customers a 15% discount on the cost of the first service if the service is not completed within 80 minutes. From a sample of 80 customers who brought their BMWs in for the first service how many are likely to receive the 15% discount? Illustrate your answer by sketch. (7)
Answers
A normal distribution graph to visualize the areas under the curve mentioned in each calculation.
1. Probability that the car will be ready within one hour (60 minutes): To find this probability, we need to calculate the area under the normal curve up to the value of 60 minutes. We can use the z-score formula to standardize the value and then find the corresponding area in the standard normal distribution table.
Z-score = (X - μ) / σ
Z = (60 - 70) / 9
Z = -10 / 9 ≈ -1.11
Using the z-score table or a calculator, we can find the corresponding area as approximately 0.1335. Therefore, the probability that the car will be ready within one hour is 0.1335 or 13.35%.
2. Probability that the job will take more than an hour and a half (90 minutes):
Similarly, we standardize the value of 90 minutes using the z-score formula.
Z-score = (X - μ) / σ
Z = (90 - 70) / 9
Z = 20 / 9 ≈ 2.22
Using the z-score table or a calculator, we find the area to the left of 2.22 as approximately 0.9857. To find the probability of taking more than 90 minutes, we subtract this value from 1.
Probability = 1 - 0.9857 = 0.0143 or 1.43%.
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The contact between the breccia and the underlying granite is an example of a(n):____.
a. nonconformity.
b. angular unconformity.
c. disconformity.
d. intrusive contact.
e. fault (tectonic) contact
Answers
Correct option is (b): angular unconformity
The contact between the breccia and the underlying granite is an example of angular unconformity
Breccia is a type of sedimentary rock which is composed of large angular broken fragments of minerals or rocks cemented together by a fine-grained matrix.
In the Italian language ,Breccia word means "rubble". A breccia may have a variety of different origins, as indicated by the named types including sedimentary breccia, igneous breccia, impact breccia, tectonic breccia and hydrothermal breccia.
Granite is a coarse-grained intrusive igneous rock which is composed of quartz, alkali feldspar, and plagioclase. It forms from magma with a high content of silica and alkali metal oxides that slowly cools and solidifies underground
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Long-term capital gains (depending on type) for individual taxpayers can be taxed at a maximum rate of:
Answers
Long-term capital gains (depending on type) for individual taxpayers can be taxed at a maximum rate of 20%.
What do you mean by taxpayer?A taxpayer is a natural person, business, or other entity that must pay taxes. The government may provide identity or reference numbers to individuals or businesses as modern taxpayers. One who pays taxes is often referred to as a "taxpayer". A taxpayer is a person or a business that must pay taxes to local or federal taxing authorities. In addition to many other types, taxes can take the form of income taxes or property taxes levied against owners of real property (such as homes and vehicles).What is tax?Tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax reliefs. A tax is a mandatory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organisation in order to fund government spending and various public expenditures (regional, local, or national). Around 3000–2800 BC, the first recorded taxation was enacted in ancient Egypt.Learn more about taxpayer here:
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1. When something is balanced, it is evenly distributed on all sides. When
you're talking about a budget, it means income equals
——-
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When something is balanced, it is said to evenly distributed on all sides. When you are talking about a budget, it means income equals to the expenditures.
A balanced budget which is particularly that of a government, is a budget in which the revenues are equal to expenditures. So here, neither a budget deficit nor a budget surplus exists. However, generally, it is a budget which has no budget deficit, but could possibly have a budget surplus.
In the financial planning or the budgeting process, a balanced budget refers that revenues are equal to or they also can be greater than the total expenses.
Hence, a budget can be considered balanced after a full year of revenues and expenses have been incurred and recorded.
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what do you have to be cautions of before purchasing anything that is on sale
Answers
You have to be cautious of the price of the item because it can still total up to be a lot of money even when it is on sale.
What are the factors that influence buying decision?Any purchase decision must start with this as its primary consideration. The answer is straightforward.
The function factor is entirely focused on needs and is supported by the reasoning that what is reasonable and also serves the interests of the client is appropriate.
The marketing mix is made up of four elements: product, pricing, promotion, and place of distribution. Each of these elements affects customers' decision-making either directly or indirectly.
Age, occupation, way of life, social and economic standing, and gender of the consumer are some examples of personal characteristics.
These elements may have an impact on customers' purchasing decisions either singly or jointly.
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interview any business owner on impact of crime
Answers
Answer:
Businesses that had been affected by crime were found to be 17 to 22 percent less likely to increase employment. Almost half the businesses said that fear of crime among their clients or customers had had a negative impact on their businesses. This figure was particularly high in townships and inner city locations.
Explanation:
I hope this helps you sorry if it doesn’t
What do taxes pay for? a. Schools, government departments, roads, and emergency services
b. Privately-owned businesses
c.Operation of financial institutions
d. None of the above
Answers
A
Because thats what the government gets in order to pay for everything we have that is for the Public
Taxes are payed for the development of schools, government departments, roads and emergency services. They are payed by the citizens of a country.
What are taxes ?A tax is defined as payments or charge of money on the tax payers. They are the levy imposed by the government on its citizens to fund development projects and government schemes for its people.
Why are taxes paid ?It is the main source of revenue for the government.
The money collected is spent to maintain and develop public infrastructure and fund public services through welfare programs.
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a 5-year bond of a firm in severe financial distress has a coupon rate of 14% and sells for $875. the firm is currently renegotiating the debt, and it appears that the lenders will allow the firm to reduce coupon payments on the bond to one-half the originally contracted amount. the firm can handle these lower payments. what are (a) the stated and (b) the expected yield to maturity of the bonds? the bond makes its coupon payments annually.
Answers
(a) Stated yield to maturity = 16.07%
(b) Expected yield to maturity = 8.53%
What is the Stated yield to maturity?Stated yield to maturity is the coupon rate of the bond, which is 14%. However, the bond is currently selling for $875, which is below its face value of $1000.
This means that investors are expecting to earn a higher yield on the bond than the coupon rate.
The expected yield to maturity can be calculated using the following formula:
YTM = (coupon payments + (face value - current price) / maturity) / (current price)
In this case, the expected yield to maturity is:
YTM = (140 + (1000 - 875) / 5) / 875 = 8.53%
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How does a production possibility chart assist in outlining.
Answers
Answer:
The first use of the idea of 'sine' in the way we use it today was in the work Aryabhativam by Aryabhata, in AD 500. Aryabhata used the word ardha-jya for the half-chord, which was shortened to jya or jiva in due course. When the Aryabhatiyam was translated into Arabic, the word jiva was retained as it is. The word jiva was translated into sinus, which means curve, when the Arabic version was translated into Latin, Soon the word sinus, also used as sine, became common in mathematical texts throughout Europe.
Smart fraudsters will avoid financial statement fraud involving the overstatement of ___ because of the compounding effect from period to period.
Answers
Smart fraudsters will avoid financial statement fraud involving the overstatement of **revenue** because of the compounding effect from period to period.
When a fraudster overstates revenue in one period, it creates a higher starting point for future periods. This means that the fraudster would need to continue inflating revenue in subsequent periods to maintain the illusion of consistent growth. As a result, the fraudulent activity becomes more difficult to sustain over time.
Let's take an example to illustrate this concept. Imagine a company that overstated its revenue by $100,000 in the first year. If the fraudster doesn't correct the inflated revenue and maintains it in the following year, they would need to inflate revenue by another $100,000 just to match the previous year's overstated amount. This cycle continues, and the compounding effect becomes more pronounced with each passing year.
Eventually, the inflated revenue becomes so significant that it raises suspicion among auditors, investors, and regulators. Therefore, smart fraudsters avoid overstatement of revenue in financial statements to minimize the risk of detection and legal consequences.
The compounding effect from period to period makes smart fraudsters wary of engaging in financial statement fraud involving the overstatement of revenue.
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which of the following is a characteristic of love?
Answers
The statement "It is based on respect" is true, but love is not always rational, seldom demanding, or one-dimensional. Option B.
Love is a complex and multifaceted emotion that encompasses a variety of qualities and characteristics. While it is challenging to define love definitively, certain common aspects can be associated with it.
Respect is a fundamental component of love. Love involves recognizing and appreciating the inherent worth and value of the other person. It encompasses treating them with dignity, considering their opinions and feelings, and honoring their boundaries.
Respect fosters a healthy and nurturing environment for love to thrive, where both individuals feel valued, understood, and supported.
However, it is important to note that love is not always rational. Love often involves strong emotions, intense feelings, and a certain degree of irrationality. It can transcend logic and reasoning, leading individuals to make choices or act in ways that may not always be rational or objectively sensible.
Moreover, love is not one-dimensional by nature. It encompasses a wide range of dimensions, such as emotional, intellectual, physical, and spiritual aspects. Love involves a deep connection that goes beyond surface-level attraction or infatuation. It involves understanding, empathy, and a willingness to grow and evolve together.
In conclusion, while the statement "It is based on respect" is true, love is not always rational, seldom demanding, or one-dimensional. It is a complex and multi-faceted emotion that involves various qualities, experiences, and dimensions. So Option B is correct.
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Note the complete question is
Which of the following statements is true of the characteristics of love?
A- It is seldom demanding.
B- It is based on respect.
C -It is always rational.
D -It is one-dimensional by nature.
A characteristic of love is a deep affection or attachment towards someone or something.
love is a complex emotion that can be characterized by several key traits. One characteristic of love is a deep affection or attachment towards someone or something. Love often involves feelings of warmth, tenderness, and care for the person or thing that is loved. It can also include a strong desire to be close to the loved one and a willingness to make sacrifices for their well-being. Love is often associated with positive emotions such as happiness, joy, and contentment. It can also involve a sense of intimacy and connection with the loved one. Love can be expressed in various ways, including through words, actions, and gestures of affection.
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emery mining inc. recently reported $115,000 of sales, $68,500 of operating costs other than depreciation, and $11,800 of depreciation. the company had $16,500 of outstanding bonds that carry a 7.25% interest rate, and its federal-plus-state income tax rate was 25%. how much was the firm's net income? the firm uses the same depreciation expense for tax and stockholder reporting purposes. (round your intermediate and final answers to two decimal places.)
Answers
The company's net income was $25,127.81.
Net Income: What is it?Net income is the amount that a person or business makes after expenses, reimbursements, and taxes. The amount left over after costs like salaries and wages, the price of goods or raw materials, and taxes have been paid is known as a company's net income.
In the simplest terms, net profit is the sum that is left over after expenses are paid. Either the corporation keeps the revenues as part of retained earnings or common investors can elect to receive dividends on net income. On an annual basis, per fiscal year, net income is frequently estimated.
Net income is defined as an entity's revenue less costs, depreciation and amortization, interest, and taxes for a specific accounting period in both business and accounting.
Sales $115,000
Less: operating costs $68,500
Less: depreciation $11,800
Earnings before interest and tax $34,700
Less: interest expenses ($16,500 * 7.25%) $1,196.25
Earnings before tax $33,503.75
Less: tax (25%) $8,375.94
Net income $25,127.81
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the country of doomsville is currently in a recession. the government of doomsville, in an effort to maintain its tax revenues in a time when incomes are falling, decides to increase the tax rate. would this policy help or hurt the recession?
Answers
Answer:
This policy would likely make Doomsville's recession worse.
Explanation:
Hope this helps, Have a great morning/night! :D
A supermarket building was purchased for $567,000. The down payment was 12%. The balance was financed at 7.97% for 25 years. Find the montly payment is
Answers
The monthly payment for the supermarket building is approximately $3,667.63. To find the monthly payment for a supermarket building, the following formula: Monthly payment = P[r(1+r)^n/((1+r)^n)-1)]
we will need to make use of the following formula: Monthly payment = P[r(1+r)^n/((1+r)^n)-1)]
where P = the principal,
r = the interest rate per month, and
n = the total number of months.
We will calculate the values of P, r, and n using the information provided in the problem statement:
Down payment = 12% of $567,000 = 0.12 × $567,000 = $68,040
Principal = $567,000 − $68,040 = $498,960
Interest rate per year = 7.97%
Number of years = 25Number of months = 25 × 12 = 300To convert the interest rate per year to the interest rate per month, we will divide by 12:
Interest rate per month = 7.97% ÷ 12 = 0.6642% Plugging in these values into the formula, we get:
Monthly payment = $498,960[0.006642(1+0.006642)^300/((1+0.006642)^300−1)]
Monthly payment = $3,667.63.
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