Answer: The supply of vegetables has shifted to the left along an inelastic demand curve
Explanation: The quantity of vegetables sold has been reduced by 20 percent, which simply means the aggregate market supply curve has experienced a drop/decrease and that is usually indicated by a complete shift of the supply curve to the left.
Furthermore, we can determine easily if the demand is elastic or inelastic, since the question has stated the percentage change in quantity demanded as 20% and the percentage change in price as 30%.
The coefficient of elasticity is calculated as
E = %change in quantity demanded/%change in price
E = 20/30
E =0.66
Since the coefficient of elasticity is less than 1, then it means demand is inelastic.
Answer: 16.33%
Explanation:
With the details given, the best method of Calculating the expected rate of return is the Capital Asset Pricing Model (CAPM).
The formula is,
Er = Rf + b(Rm - Rf)
Where,
Er is expected return
Rf is the risk free rate
b is beta
Rm - Rf is the Market Premium
Er = 3.87% + 1.38(9.03)
= 3.87% + 12.4614%
= 16.33%
The model accounts for inflation by including the risk free rate which is already adjusted for inflation.
Answer:
His total amount of interest over the period of 30 years would be $608,290.26.
Explanation:
His loan will be calculated based upon the remaining principle after each monthly payment.
For example his 1st payment @6.25% interest rate on full amount of $500,000 would be ($500,000*6.25%= $31,250/12 = $2,604.17). We divide the total amount of interest by 12 to get the monthly payment amount.
Now after we get the interest amount, we reduce this interest amount from his total monthly payment of $3,078.59 to get the monthly principle repayment which comes out at $474.42 for the first month.
After that we reduce this principle repayment from his original loan balance of $500,000 to get his new balance of $499,525 on which interest will be levied i.e. ($499,525*6.25%/12 = 2601.7). This step goes on for 30 years and his total interest payment in those 30 years will be $608,290.26.
Answer:
Financial management
Explanation:
The basic concepts regarding financial management can apply to all types ans sizes of organizations. Of course the work involved in managing the finances of a small partnership are not the same as those of an investment bank, but the basics remain. Finance is all about the value of money in time.
A company can have a very healthy balance sheet, but it may not be able to pay its utilities (electricity, water, gas) at the end of the month. That is why the net cash flow is so different than the income statement. A company may generate millions in revenue, but if they are not able to collect accounts receivables in time, it is useless.
Cash flow management is the number one priority in finance.
Answer:
(i) 9.1
(ii) 10.2
Explanation:
Accounts receivable turnover for 20Y2:
Average accounts receivable:
= (Beginning account receivable + Ending accounts receivable) ÷ 2
= (300,000 + 340,000) ÷ 2
= $320,000
Accounts receivable turnover ratio;
= Net annual credit sales ÷ Average accounts receivable
= $2,912,000 ÷ $320,000
= 9.1
Accounts receivable turnover for 20Y1:
Average accounts receivable:
= (Beginning account receivable + Ending accounts receivable) ÷ 2
= (280,000 + 300,000) ÷ 2
= $290,000
Accounts receivable turnover ratio;
= Net annual credit sales ÷ Average accounts receivable
= $2,958,000 ÷ $290,000
= 10.2
