you can buy a property today for $4.0 million and sell it in 6 years for $5.0 million. (you earn no rental income on the property.) a. if the interest rate is 9%, what is the present value of the sales price? note: do not round intermediate calculations. enter your answer in millions rounded to 3 decimal places. b. is the property investment attractive to you? c-1. what is the present value of the future cash flows if you also could earn $300,000 per-year rent on the property? the rent is paid at the end of each year. note: do not round intermediate calculations. enter your answer in millions rounded to 3 decimal places. c-2. is the property investment attractive to you now?

Answers

Answer 1

a) If the interest rate is 9%, the present value of the sales proceeds is $2.981 million.

b) The property investment is not attractive because the present value of the sales proceeds is far less than the investment cost.

c-1) The present value of the future cash flows with an annual rent of $300,000 is $4,327,112.2.

c-2) The property investment is now attractive because the total present value of the future cash flows exceeds the investment cost by $327,112.20 (NPV).

Data and Calculations:

Cost of a property today = $4.0 million

Sales proceeds in 6 years = $5.0 million

Annual rent = $300,000

Interest rate = 9%

Discounted factor for 9% in 6 years = 0.5962673

Present value of sales proceeds = $2,981,336.63 ($5 million x 0.5962673)

Present value annuity factor of 9% in 6 years = 4.4859186

Present value of annual rent = $1,345,775.58 ($300,000 x 4.4859186)

Total present value with annual rent = $4,327,112.21 ($2,981,336.63 + $1,345,775.58)

Calculations for a) Sales Proceeds:

N (# of periods) = 6 years

I/Y (Interest per year) = 9%

PMT (Periodic Payment) = $0

FV (Future Value) = $5,000,000

Results:

PV = $2,981,336.63

Total Interest $2,018,663.37

Calculations for c) Sales Proceeds and Annual Rent:

N (# of periods) = 6 years

I/Y (Interest per year) = 9%

PMT (Periodic Payment) = $300,000

FV (Future Value) = $5,000,000

Results:

PV = $4,327,112.21

Sum of all periodic payments = $1,800,000 ($300,000 x 6)

Total Interest $2,472,887.79

Thus, based on the above calculations, the property investment becomes attractive, based on the concept of present value, if annual rent of $300,000 is received.

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Related Questions

burger king decided to add breakfast to its hours of operation in order to increase its customers. this was an attempt to improve the organization's

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This was an attempt to improve the organization's effectiveness.

What is effectiveness?

The degree of outcomes from manager and staff actions is called effectiveness. Effective coworkers and managers contribute to the achievement of superior outcomes. Consider a worker on the sales floor as an illustration.

In the context of business, effectiveness is the standard of excellence with which a task or process is carried out, ultimately resulting in improved overall corporate performance.

The ability to deliver the desired outcome or result is what is meant by effectiveness. Effectiveness is the state of having an intended or anticipated result or leaving a strong, lasting impact.

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understanding that a benefit of ethical conduct is profits, how is unethical conduct detrimental to profitability?

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Unethical conduct is detrimental to profitability as the customers will not trust the business and as there are no or fewer customers the profit will go down.

Ethical conduct refers to the behavior of the organization with the public should be ethical. It is very easy to make more money by cheating the customer because the customer does not know you. The question arises will this customer ever come back to us? So in making a profit for the one-time deal we sill lose a customer forever.

So ethical conduct results in profit for the organization on a long-term basis. Not only will this customer buy from us they will also refer other customers to buy from us. In this way, the profit of an ethical organization increases manifold. The customers of the unethical conduct organization will not only not come back to us but if anyone asks them they will advise them also not to approach the organization.

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Take notes during the car salesman interview. What should you be on the lookout for when buying a car? how should you prepare when you’re getting ready to buy a car?.

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The thing that one need to on the lookout for when buying a car are:

Before you examine the car, make sure it is on a level surface.Keep an eye out for dents, scratches, and rust spots while you inspect the paint work.Make sure it's still in good shape by having a look inside the trunk.Remember to check the tires.The car's frame is very important.

How should you prepare when you’re getting ready to buy a car?.

Having the following available:

Your driver's license. Proof of insurance. The Form of payment. New utility bills. Credit score as well as history. Discount information.A list of any form of references.

The act of buying a car is one that entails a person using their money or the use of a loan so as to make the purchase.

Therefore, follow the above steps before and when buying a car.

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suppose that the market for labor is initially in equilibrium. an increase in immigration will cause the equilibrium wage

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Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage to will fall, and the equilibrium quantity of labor will rise.

someone should sponsor you or file an immigrant petition for you. Wait until the petition is accepted and there's a visa to be had in your class. Then observe for an inexperienced Card from in the U.S. you may nonetheless need to get a scientific exam, visit an interview, and watch for a selection for your utility.

Immigration regulation refers back to the national statutes, rules, and legal precedents governing immigration into and deportation from a rustic. Strictly talking, it's far distinct from different matters which include . Naturalization and citizenship, although they may be on occasion conflated.

Immigration is the procedure of transferring to a new us of a location with the intention of staying and living there. human beings may also select to immigrate for a selection of motives, such as employment possibilities, to escape a violent conflict, environmental factors, educational purposes, or to reunite with family.

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Salaries and wages expense should have been accrued on december 31st, but the entry was not made. The result of this oversight is that.

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The result of this oversight is that obligations are underestimated.

Adjusting Journal is an accounting journal that is used to make adjustments to certain account balances or post transactions to match the actual situation in the process of preparing financial statements. Examples of adjusting entries for merchandise inventory and office supplies. Adjusting entries are used by trading, service, manufacturing and other entities.

The basic concept of adjusting entries is the basic accounting concept used as the basis for making adjusting entries.

Examples of transactions recorded in adjusting entries are:

Prepaid lease transactions,Prepaid insurance,Prepaid income,Depreciation of fixed assets,Bad debts,Bank reconciliationSupplies on handIncome SummaryAllowance for loss of receivablesMerchandise inventory

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if a 35% price increase for product a causes a 10% decrease in its quantity demanded, but no change in the quantity demanded for product b, what is the cross-price elasticity of these goods? round your answer to one decimal place.

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If a 35% price increase for product A causes a 10% decrease in its quantity demanded, but no change in the quantity demanded for product B, the cross-price elasticity of these goods will be 0 i.e., no relationship.

What's cross price elasticity?

Cross price elasticity measures how sensitive the demand of a product is over a shift of a corresponding product charge. Frequently, within the marketplace, some goods can relate to one another. This could mean a product's charge growth or decrease can positively or negatively have an effect on the other product's demand.

What's cross price elasticity example?

An instance would be the fee of milk. If whole milk is going up in rate, human beings can also switch to 2% milk. Likewise, if 2% milk rises in charge instead, complete milk will become greater in demand.

What does it imply whilst cross price elasticity is extra than 1?

If the absolute price of the cross price elasticity is greater than 1, the cross price elasticity of call for is elastic, which means that a alternate in charge of top A consequences in a more than proportionate change in amount demanded for top B.

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in the planning process, what is the role of strategic goals and plans? links strategy and operations sets company direction sets purpose of business guides day-to-day activities

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Correct option is B. In the planning process, what is the role of strategic goals and plans is sets company direction.

What is the strategic planning process?

Leaders of a company develop their future vision and determine their organization's goals and objectives through the process of strategic planning. Establishing the order in which these objectives should be accomplished can help the company attain its stated vision.

Though it can run longer, strategic planning generally reflects mid- to long-term objectives with a life period of three to five years. This is distinct from business planning, which usually focuses on immediate, tactical objectives, including how a budget is allocated. A business plan may encompass a period of time that lasts from a few months to several years.

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lululemon sells high-end workout clothing. people are willing to pay high prices because of the clothing styles and the customer service received. these stores use .

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These stores use a differential strategy as it known that people are willing to pay high prices because of the clothing styles and the customer service received.

What is a differential strategy?

This refers to an approach businesses develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. The importance of differential strategy in marketing is that it provides a superior level of value to your customers and helps your company to distinguish itself in the marketplace.

Therefore, the stores use a differential strategy as it known that people are willing to pay high prices because of the clothing styles and the customer service received.

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Firms that disingenuously market products as environmentally friendly with the goal of gaining public approval and sales, rather than actually improving the environment, are guilty of.

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Firms that disingenuously market products as environmentally friendly with the goal of gaining public approval and sales, rather than actually improving the environment, are guilty of greenwashing.

Green PR and green marketing are deceptively utilized to convince the public that an organization's products, objectives, and policies are environmentally beneficial. This practice is known as "greenwashing," sometimes known as "green shine." Companies that purposefully engage in greenwashing communication tactics frequently do so to separate themselves from their own or their suppliers' environmental transgressions.

Greenwashing detractors contend that the development of the tactic, coupled with ineffectual regulation, contributes to consumer mistrust of all green claims and lessens the ability of consumers to influence businesses toward more environmentally friendly production methods and business practices.

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Firms that disingenuously market products as environmentally friendly with the goal of gaining public approval and sales, rather than actually improving the environment, are guilty of greenwashing.

What is greenwashing.?

Greenwashing is when a company or firms says or project that their products or goods are environmentally friendly, that their products are not causing any harm to the environment just so that they get a positive impression of their company being eco friendly. But actually these claims that companies make are false and they themselves are guilty of this. And they make zero to no efforts in improving the environment

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To help manage the natural fluctuations in markets, an international business executive should.

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To help manage the natural fluctuations in markets, an international business executive should have a broad portfolio of business.

A business portfolio is a collection of merchandise, services, and business gadgets that conform to a given agency and allows it to pursue its strategic dreams. This portfolio can also be defined as the set of available assets that the agency possesses to increase its assignment and attain its vision.

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what percentage of loss would a seller in deerfield beach have if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $153,000? round your answer to the nearest percent.what percentage of loss would a seller in deerfield beach have if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $153,000? round your answer to the nearest percent.

Answers

Add the cost of the lot and the cost of the house together to get the total cost ($163,000). Next, subtract the sales price from the total cost to get the amount of loss ($10,000) he took. Finally, divide the total cost by the loss amount ($10,000 ÷ $163,000).

The definition of cost is to be valued at something or to lose. A loaf of bread costing $3 is an example of a cost. Giving up your freedom in order to grant freedom to another person is an illustration of the cost.

A company's cost is the amount of money it had to spend to create its goods or services. It is calculated as the sum that the business spends to create a specific number of a product. Simply put, it is the cash that a business spends on things like labour, services, raw materials, and other costs.

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cost of universality: a comparative study of the overhead of state distillation and code switching with color codes

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Cost of universality: a comparative study of the overhead of state distillation and code switching with color codes One of the most important steps in creating scalable quantum computers is optimising and estimating the overhead of current fault tolerance systems.

One of the most important steps in creating scalable quantum computers is optimising and estimating the overhead of current fault tolerance systems. Numerous of the most promising schemes are based on two-dimensional (2D) topological codes, such as the surface and colour codes, and use a universal gate set that combines the inexpensive T-gate with easily implementable Cliffords. In this work, state distillation and code switching—two popular approaches—are used to assess the costs of fault-tolerantly implementing the T-gate in colour codes.State distillation is more resource-efficient than code flipping in terms of both qubit overhead and space time overhead, while being viewed less favourably in our research.

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the state transferred ownership of property to roger and pauline. which transfer document would the state agency use?

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The state transferred ownership of property to Roger and Pauline, the transfer document that the state agency will use us a deed of assignment.

What is a deed of assignment?

It should be noted that the deed of assignment simply means an instrument that's used to illustrate that a transfer has taken place.

Any property transaction needs a deed of assignment because it serves as the primary record between the seller and the buyer proving that all negotiations, inquiries, and other required due diligence have been made, the purchase price has been paid, and all other prerequisites have been met.

In this case, the state transferred ownership of property to Roger and Pauline, the transfer document that the state agency will use us a deed of assignment.

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What is the main difference between japanese capitalism and capitalism in the united states?.

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The main different between Japanese capitalism and capitalism in the United States is Japan's gov is highly involved in day-to-day business management.

Business management makes a specialty of organizing and handling a employer's resources (which includes human capital). business control is humans-centric. Business management ranges put a lot of emphasis on verbal exchange, human useful resource management and preferred-management theories.

What are the 4 types of business management?

The four maximum commonplace varieties of managers are top-level managers, middle managers, first-line managers, and team leaders.

Is business management a good course?

For the aspiring entrepreneurs and enterprise leaders, a commercial enterprise management diploma is constantly a famous choice. It gives the instructional information and abilities everyday pursue worldwide career possibilities and facilitates you broaden a vast expertise of companies and specific regions along with finance and human sources.

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a country with a low cost of labor would be attractive to an investor business for which two reasons?

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A country with a low cost of labor would be attractive to an investor business for the country might help the company compete better. The country would provide a way to lower production costs.

The economic analysis involves evaluating or investigating a topic or issue from an economic perspective. Economic analysis is the study of economic systems. It is also the study of production processes and industries. The purpose of the analysis is to determine how effectively the economy, or something within it, is functioning.

To estimate labor market potential, managers need data on the magnitude and rate of change of economic and socioeconomic factors. When an international operator considers where to do business, one of the first considerations is economic size.

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which geologic hazard occurs in all 50 states and causes $1 billion to $2 billion in damages annually?

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Landslides is the  geologic hazard occurs in all 50 states and causes $1 billion to $2 billion in damages annually.

What is a landslide?

The landslide can be defined to be the movement of the mass of rock that would cause the downward sloping movement of the soil and the rock that is underneath.

Gravity is the main cause of landslides. They are a form of what is called land wasting. Hence we can say that Landslides is the  geologic hazard occurs in all 50 states and causes $1 billion to $2 billion in damages annually.

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one product line at spearman fishing industries has turns per year and an annual sales volume​ (at cost) of ​$. how much inventory is being​ held, on​ average?

Answers

The inventory is being held on average is $80,400.

What is Inventory Management?
The process of ordering, storing, using, and selling a company's inventory is referred to as inventory management. This covers the storage and processing of such commodities as well as the management of raw materials, components, and completed goods.

One of a company's most crucial assets is its inventory. The core of an organization's activities in sectors with substantial inventories, such as retail, manufacturing, food services, and others, is its raw materials and completed items. A shortage can be quite damaging depending on when and where merchandise is required.

The inventory turnover ratio. In order to calculate the average amount of inventory, the sales volume (at cost) is divided by the quantity of turns.

=($1,447,200/18)

= $80,400

So,the average inventory is $80,400

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how has desertification affected the land in africa? choose all that apply. a it forces migration for farmers and livestockit forces migration for farmers and livestock b low productivity in agriculturelow productivity in agriculture c it improves securityit improves security d poor soil structurepoor soil structure e it creates more jobs

Answers

Desertification affected the land in Africa are:

Poor soil structurelow productivity in agricultureIt forces migration for farmers and livestockWhat is the primary reason for Africa's desertification?

Desertification is greatly facilitated by agricultural practices related to poverty. Desertification is accelerated by ongoing cultivation without supplemental fertilizer, excessive grazing, a lack of water and soil conservation infrastructure, and indiscriminate bushfires.

How is Africa affected by desertification?

A form of land degradation known as desertification occurs when fertile areas become acrider and rider and acrider arid as a result of biological productivity being lost as a result of biotic procedures or as a result of human activity.

What impact does desertification have on Africa?

People who are unable to longer survive off the land in Africa's drylands are being compelled to relocate to urban areas by the degradation of those areas. The UN Population Division projects that Lagos, Ni.geria's population will increase from 13.4 million in 2000 to 23.2 million in 2015, in part because of an influx of displaced rural communities.

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I understand that the question you are looking for is:

How has desertification affected the land in Africa? Choose all that apply.

A). poor soil structure

B). it improves security

C). it creates more jobs

D). low productivity in agriculture

E). it forces migration for farmers and livestock

Why did steel, electricity, chemicals, and petroleum take the place of textiles, railroads, iron, and coal in making the second industrial revolution successful?.

Answers

Steel, electricity, chemicals, and petroleum were needed to make business more productive.

The second Industrial Revolution is typically dated between 1870 and 1914, though some of its hallmark events can be traced back to the 1850s. It is clear, however, that the rapid rate of pathbreaking inventions slowed after 1825, before picking up steam once more in the final third of the century. This says little about the speed of technological progress as typically recognized in terms of increased productivity and product quality, which is much more dependent on smaller, cumulative, anonymous changes.

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The two caveats of the sullivan principles are first, a company should not obey the apartheid laws in its own south african operations and second, a company should.

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The two caveats of the Sullivan principles are first, a company should not obey the apartheid laws in its own south African operations and second, a company should do everything possible to abolish apartheid laws.

What are the Global Sullivan Principles?

The Global Sullivan Principles aim to support economic, social, and political justice by businesses where they operate; to support human rights and encourage equal opportunity at all levels of employment, including racial and gender diversity on committees and boards; to train and advance disadvantaged workers for technical, supervisory, and management opportunities; and to promote greater tolerance and understanding among people.

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a new restaurant recently opened and the owner wants to create an ad promoting the curbside delivery service.

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A new restaurant has recently opened, and the owner wishes to make an advertising curbside delivery. Brand awareness marketing objective does this ad align with.

What is Brand Awareness Marketing?

The degree to which consumers can recall or recognise a brand under various circumstances is known as brand awareness. The associative network memory model of brand knowledge has two aspects, one of which is brand awareness. Consumer behaviour, advertising strategy, and brand management all heavily rely on brand awareness. The choice to buy something is mostly based on the consumer's capacity to recognise or recall a brand. Consumers must first be aware of a product category and a brand within it in order to proceed with a purchase.

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Complete question

A new restaurant recently opened and the owner wants to create an ad promoting the curbside delivery service.

the children’s health insurance program (chip) was implemented in accordance with the balanced budget act (bba) to allow states to create or expand existing insurance programs, providing more federal funds to states for the purpose of expanding eligibility to include a greater number of currently uninsured children.

Answers

The State Children's Health Insurance Program(SCHIP) was implemented in accordance with the balanced budget act (BBA) to allow states to create or expand existing insurance programs providing more federal funds to states for the purpose of expanding MEDICAID eligiablity to include a greater number of currently uninsured children.

Insurance is a way to manipulate your hazard. when you buy coverage, you buy safety against unexpected financial losses. The insurance business enterprise pays you or someone you pick if something bad takes place for you. If you have no insurance and a coincidence occurs, you'll be responsible for all associated expenses.

Insurance is an agreement that transfers the threat of economic loss from an individual or enterprise to an insurance organization. They acquire small amounts of money from customers and pool that money together to pay for losses. coverage is split into two main categories: assets and Casualty insurance (percent).

Insurance plans are beneficial to everyone trying to protect their family, property/property, and themselves from financial risk/losses: coverage plans will assist you to pay for clinical emergencies, hospitalization, contraction of any ailments and remedies, and hospital treatment required within the destiny.

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industrialized nations have become societies and emploers used diplomas and detrees to determine who is elegible for jobs

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Industrialized nations have become credential societies. Employers use diplomas and degrees as sorting devices to determine who is eligible for a job. Schools will "weed out the incapable"

Degrees and diplomas are employed to determine employment suitability in a credential society. Employers, particularly in urban areas, require a method for determining who is and are not capable of working from a pool of anonymous applicants. Those with a college diploma have demonstrated obligation, consistency, and, supposedly, basic skills. Some occupations require highly specialized training that employers are unable to provide.

The demand for credentials has increased to the point where it is changing the face of higher education. Many students who go to college for a year or two (or even a two-year associate degree) and then begin working in an entry-level job may discover that a four-year degree is needed.

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Normally a company closes its books and then adjusts its records to update the account balances before preparing the financial statements. This statement is.

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This statement is false.

The company can adjust the records to update the account balances to show a true and fair view of the financial records even before closing its books and can update the records when and where required so as to have a true picture of the ledgers. It is not required to post adjusting entries after closing books only.

What are financial statements?

A financial statement (or financial reports) is the formal record of the financial activities and status of a company, person, or other entity.

Relevant financial information is presented in a structured, easy-to-understand format. These typically include four basic financial reports with management discussion and analysis.

A balance sheet or balance sheet reports a company's assets, liabilities, and equity at a particular point in time.Income Statement, or Income Statement (P&L) Statement, Comprehensive Income Statement, or Income Statement, reports a company's revenues, expenses, and profits for a specified period. The income statement provides information about the company's operations. This includes sales and miscellaneous expenses incurred during the specified period.A statement of changes in equity, statement of changes in equity, or statement of retained earnings reports changes in a company's equity over a period of time.A cash flow statement reports a company's cash flow activities, specifically, its operating, investing, and financing activities over a period of time.The statement of comprehensive income includes other comprehensive income items that are not included in determining net income.

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for each of the following goods that are imported in the united states, identify which of the three sources of comparative advantage (abundant inputs, specialized skills, or mass production) accounts for that country's comparative advantage.

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For each of the following goods that are imported in the United States, abundant input is the only source of comparative advantages that accounts for that country's comparative advantage. Therefore, the option A holds true.

What is the significance of a comparative advantage?

A comparative advantage can be referred to or considered as a situation in which a producer has an economic advantage over the other in a number of economic activities. At least two economies need to be a part of the society for the occurrence of a comparative advantage.

Abundant inputs is one of the key sources of comparative advantage. It is considered as a source that can account for another country's comparative advantage, when it lets the United States import its goods.

Therefore, the significance regarding comparative advantage has been aforementioned.

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when the sales of a certain flavor of ice cream slowed, a national grocery retailer decided to drop the price of that product, which resulted in a large increase in sales of the ice cream. this sales increase is a type of

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We can see here that when the sales of a certain flavor of ice cream slowed, a national grocery retailer decided to drop the price of that product, which resulted in a large increase in sales of the ice cream. This sales increase is a type of feedback.

What is feedback?

Feedback actually refers to the response one gets after a specific action has been successfully carried out.

We see that in the given scenario above, when the price of the ice cream was dropped, there was increase in sales. This gave the grocery retailer the feedback that a reduction in price will increase sales.

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waterloo, ltd. manufactures a component used in aircraft navigation systems. demand has been strong and the executive staff at waterloo is planning for next year. yesterday, you were called into a budgeting meeting where production plans were being reviewed. you learn that the inventory policy at waterloo is to hold one and one-half months’ worth of sales (to avoid issues with transportation disruptions). the sales budget for next year is 660,000 units, spread evenly over the year. because of an unexpected increase in demand, inventory at the end of this year is expected to be only 30,000 units. the capacity of the plant is 700,000 units annually.

Answers

To meet the target the projected output level for next year required is 712,750.

What is sales budget ?

A sales budget is a financial strategy that projects the entire income of a business over a given time frame. To forecast the performance of the company, it relies on two factors: the volume of products sold and the price at which they are sold.

The calculation of the production level required to accomplish the goals for the following year is presented below:

Ending Inventory (662,000 ÷ 12 × 1.5) 82,750

Sales Budget                                    662,000

Total inventory required                744,750

Less Beginning Inventory             -32,000

Production                                    712,750  

Question:

Waterloo, Ltd. manufactures a component used in aircraft navigation systems. Demand has been strong and the executive staff at Waterloo is planning for next year. Yesterday, you were called into a budgeting meeting where production plans are being reviewed. You learn that the inventory policy at Waterloo is to hold one and one-half months’ worth of sales (to avoid issues with transportation disruptions). The sales budget for next year is 662,000 units, spread evenly over the year. Because of an unexpected increase in demand, inventory at the end of this year is expected to be only 32,000 units. The capacity of the plant is 702,000 units annually.1. What production level next year will be required to meet the targets? (Do not round intermediate calculations.)

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skills are the most important for accountants when presenting their
work to clients.
O A. Communication
O B. Multitasking
OC. Social media
OD. Math

Answers

Communication is the answer

select the correct answer. what is the most likely explanation for sarah maintaining a log of each time she spends or receives money? a. making a note each time she receives money so that she does not forget where it came from b. making a note of each expense so that she does not repeat purchases c. preparing a report for her bank on how she spends money d. preparing a budget to review her expenses

Answers

Preparing a budget to review her expenses is the most likely explanation for sarah maintaining a log of each time she spends or receives money.\

What is expenses ?

The operational costs a business bears in order to make money are referred to as expenses. According to a proverb, "making money costs money."

Paying suppliers, paying employees, leasing facilities, and depreciating equipment are examples of frequent costs. Businesses are permitted to deduct tax-deductible expenses from their taxable revenue on their income tax returns in order to reduce their tax liability. However, there are tight guidelines set forth by the Internal Revenue Service (IRS) regarding which costs companies may deduct.

The operational costs a business bears in order to make money are referred to as expenses.

Businesses may deduct tax-deductible expenses on their income tax returns as long as they comply with IRS regulations.

Using one of two accounting methods—cash basis or accrual basis—accountants report expenses.

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xavier and shawn are co-owners of a party-planning business. they split all of the profits 50-50 and are able to make decisions that are binding on both parties. at one of their parties a guest is injured on a piece of equipment. the guest sues xavier and shawn, and they find they're personally liable for any damages. what kind of business structure do they have?

Answers

Xavier and Shawn are the general partners in this case. All partners in this structure have equal accountability for the company, making them both accountable for any losses.

Their personal assets would be shielded from this kind of lawsuit by an LLC. Given that there are several owners, it is clear that this is not a sole proprietorship.

What is general partnership?

A general partnership, which is the fundamental type of partnership under common law, is, in the majority of nations, a grouping of people or an unincorporated business having the main characteristics listed below: Estoppel, proof of existence, and agreement are all necessary for creation.

Let's take the case of Fred and Melissa opening a bakery as an illustration. F&M Bakery is the name of the store. Fred and Melissa became general partners in the company F&M Bakery by founding a shop together.

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