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Lyrx [107]
2 years ago
10

Jill took $50,000 that she had in savings and started her own business. If left in investments she would have earned $5,000 this

year. Jill also left a job that paid her $70,000 a year and plans on paying herself $40,000. Materials and other labor costs will be $80,000. The company is located in a building that Jill owns. She could have rented the building out for $40,000 but plans on charging the company only the insurance and mortage payment of $20,000. What do the accounting and economic costs equal?
Business
1 answer:
vova2212 [387]2 years ago
7 0

Answer:  Economic cost = $175,000

Accounting cost = $100,000

Explanation: The difference between economic cost and accounting coast is economic cost takes into consideration the next best alternative foregone, that is, opportunity cost whereas accounting cost only sums cost incurred. In the given case the interest on savings and salary of job is the opportunity cost of Jill.

Therefore,

Economic cost = $5000 + $70,000 + $80,000 + $40,000 - $20,000=$175,000

Accounting cost =  $80,000 +  $20,000 =  $100,000

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It is answer C.How can customer payments be ........
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​Joy's Accessories bought 69 necklaces for $ 11 each on account. The payment terms of 3​/10, ​n/30. In​ addition, 9 necklaces we
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Answer:

To record the initial purchase, the entries required in Joy's Accessories are:

Debit Purchases Account with 69x$11 - $759

Credit Supplier's Account (Accounts Payable) - $759

Explanation:

The initial purchase is recorded as it was made without taking into account activities that happened after.

Once value had been received, it is recognized immediately.  When 9 necklaces are returned before payment, then the entries above would be reduced by 9 x $11 or $99 through Purchases Return Account.

If payment is made within 10 days, Joy's Accessories will be able to take advantage of the 3% cash discount offered by the supplier and then pays the net value.  And subsequently, this will be recognized in the books.

7 0
2 years ago
A stock price is currently $40. Over each of the next two three-month periods it is expected to go up by 10% or down by 10% (mea
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Answer:

Explanation:

The Risk neutral probability is given by

e rt − D / U-D

U=1.1

D=0.9

R=0.12

T=3/12

π u = e∧ 0.12 ∗ 3 / 12 − 0.9 /1.1 − 0.9

 =0.652

π d = 1− 0.652 = 0.348

The values of american and european options at each node is given in the following table.

                                    0.652  

                                                                                                    0  

                                                                0.81   48.4  

                                                                0.652    

                                                                0.81    

American option value     2.54         44    

probability                    0.652/0.3478'  

Option value                     2.12        2.4  

Futures price                        40           6      39.6  

                                                               0.3478    

                                                               4.76    

                                                                  36    

                                                                                           0.3478  

                                                                                           9.6  

                                                                                          32.4  

Time period                         0      3           6

the value at up node at 3 months is given by = ( 0.652∗ 0 ) + ( 0.3478 ∗ 2.4 )/e ∧0.12 ∗ 3 / 12 = 0.81

Hence, value of european put option =$2.12

Value of American put option = 2.54

4 0
2 years ago
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