Which of the following ratios indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?
A. Margin of safety ratio
B. Costs and expenses ratio
C. Profit ratio

Answers

Answer 1

Answer:

The correct answer is the option A: Margin of safety ratio.

Explanation:

To begin with, the name of "Margin of Safety", in the field of business and accounting, is refered to a ratio whose main purpose is to establish the point in where the company knows that it has to sale obligately due to the fact that at that point the company can be sure that they have covered the fixed costs of it and after that point every sale will became a profit for the company. So that is why that this ratio indicates the percentage of each sales dollar that is available to cover those costs.


Related Questions

A company decides not to pay dividends to stockholders, but the company is requested to pay interest to debt holders. What does this mean about the performance of the company?

Answers

Answer: Poor Performance

Explanation:

Options are not available but the foremost reason why a company would decline to pay dividends but still be requested to pay interest to debt holders is that they performed poorly.

Dividends are based on how much net income the company got for the period and so if a company performs poorly, they should not pay out dividends as it will put them in financial difficulty.

Interest payments however have to be paid regardless of if the company made a profit or not. So even if the company performed poorly, they would still be requested to pay interest to debt holders.

You haven't been able to spend much time talking with your team lately, but your workload should be back to normal soon. When you checked in with your team today, several associates joked about being surprised to see you.

Assuming all option are possible, what would you be most and least likely to do?

Answers

Answer and Explanation:

I would most likely do this:

Explain the issue to the team and praise them for their work in my absence. I would let them know there would be more time soon. It is very essential to praise and appreciate these efforts by the associates since I have been absent for a while and do not know what efforts they have been putting in.

I would be least likely to:

Talk to the manager to explain this situation or propose that my some of my commitments are eased for me to have more time with my team

A publishing company sells 1,250,000 copies of certain books each year. It costs the company $1 to store each book for a year. Each time it must print additional​ copies, it costs the company $250 to set up the presses. How many books should the company produce during each printing in order to minimize its total storage and setup​ costs

Answers

Answer:

The Company should produce 25,000 books

Explanation:

The production size that minimizes total storage and setup costs is known as the optimum batch size.

Optimum batch size = √(2 × Annual Production Demand × Set up Cost) / Storage Cost per unit

                                  = √ (2 × 1,250,000 × $250) / $1

                                  = 25,000 books

Conclusion :

The Company should produce 25,000 books during each printing in order to minimize its total storage and setup​ costs.

Though not specifically cited in the producer's contract, the producer is expected to telephone prospects on the insurer's behalf to arrange sales appointments. This is an example of what kind of producer authority?

Answers

Answer:

Implied authority

Explanation:

Implied authority defines an authority with respect to agent that involves jurisdiction to perform the acts so that the objectives of the organization could be achieved. Also, it is a binding contract on other person behalf or company

Therefore according to the given situation, this is an example of implied authority

Who is responsible for responding to workflow(s) for equipment dispatch requests through the business workplace require An approving authority must approve

Answers

Answer:

Commander

Explanation:

GCSS-Army is short for Global Combat Support System-Army. The GCSS is a section of the United States Army that is fielded under the 11th Armored Cavalry Regiment. There are the GCSS Wave 1 and GCSS Wave 2. These two groups have different roles.

The role of the Commander falls under the Wave 2 functions where he is required to perform the roles of maintenance, dispatch, unit supply, and property book functions. The Wave 1 function is mostly about allowing access to support supply activity functions. The commanders in any organization they work with can screen several transactions and give approval for equipment dispatch.

The GoT cups are a fast seller and you need to ensure that you have enough rolls of paper to fulfill demand. The first stage in the process is to determine the total cost of the current inventory ordering model. Given the following information, how many rolls should they order to minimize costs?H: $1.75 per unitD: 500 rolls per monthQ: 100 units ordered at a timeS: $25 per order

Answers

Answer:

EOQ = 414 rolls

Explanation:

In order to calculate the number of orders to minimize the cost, we should calculate that by using the Economic order quantity model.

DATA

Holding cost = $1.75/unit

Annual demand = 500 rolls x 12 = 6000 rolls

Ordering cost = $25

Formula

EOQ =[tex]\sqrt{\frac{2Cod}{Ch} }[/tex]

Where

Co = ordering cost

D = Annual demand

Ch = Holding cost

Solution

EOQ = [tex]\sqrt{\frac{2(6000)(25)}{1.75} }[/tex]

EOQ = [tex]\sqrt{\frac{300000}{1.75} }[/tex]

EOQ = 414 rolls

They should order 414 rolls to minimize the cost.

Answer:

119 units

Explanation:

The economic order quantity is the minimum amount of inventory that a seller must keep to demand and lower the holding cost. The ordering cost is $25 per order. Holding cost is $1.75 per unit. The total demand is 500 units per month. The economic order quantity that will minimize the cost of the GoT cups is

EOQ = [tex]\sqrt{\frac{2*Demand*ordering cost}{Holding cost} }[/tex]

EOQ is 119 units.

Welcome Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. Welcome Inc. is most likely doing this to:

Answers

Answer:

reduce its cultural distance from the other countries

Explanation:

In this scenario, Welcome Inc. is most likely doing this to reduce its cultural distance from the other countries. Cultural distance refers to the differences in cultural values amongst countries, organizations, and stakeholders. In this case, Welcome Inc is trying to reduce this by making sure that they adjust their products and services to best accommodate these specific cultural differences in each country. In doing so they gain more loyal customers and increase their profits in each country which they do business in.

Florida Curtain Works is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 60% of sales. Fabric purchases and payments are to be made during the month preceding the month of sale. Wages are estimated at 20% of sales and are paid during the month of sale. Other operating costs amounting to 25% of sales are to be paid in the month following the month of sales. Sales revenue is forecasted as follows:
Month Sales
February $440,000
March $450,000
April $480,000
May $500,000
June $510,000
What is the amount of fabric purchases during the month of March?
a. $480,000.
b. $336,000.
c. $288,000.
d. $300,000.

Answers

Answer:

Florida Curtain Works

1. Fabric purchases during the month of March:

c. $288,000.

Explanation:

a) Data and Calculations:

                Month Sales     Cost of Sales  Purchases     Wages  Others

February    $440,000       $264,000       $270,000    $88,000

March        $450,000          270,000         288,000      90,000   $110,000

April           $480,000          288,000         300,000      96,000     112,500

May           $500,000          300,000         306,000     100,000    120,000

June          $510,000         306,000                             102,000    125,000

b) Florida Curtain Works can prepare its budget for the next year by estimating the cost of goods to be sold, the purchases and payments for Fabric during the month based on trade terms, and the wages and other expenses to incur.  The budget helps its management to plan, prepare, exert efforts toward achieving the set targets, and analyze actual performance against budget.

The IMF policies that accompany most IMF loans are typically: Multiple Choice expansionary in the short run. procyclical in the long run. contractionary in the long run. contractionary in the short run.

Answers

Answer:

contractionary in the long run

Explanation:

contractionary fiscal policy reduces spending and raises taxes. it contract the economy by reducing the amount of money that is available for businesses and for people to spend. it could reduce government expenditure or increase taxes or in other times do both. useful during inflation

In Rooney Company, direct labor is $18 per hour. The company expects to operate at 12,000 direct labor hours each month. In January 2017, direct labor totaling $222,400 is incurred in working 12,600 hours.
Prepare a flexible budget report.

Answers

Answer:

    Flexible budget Report for Rooney Company                              

                                       Flexed budget            Actual      Variance

Labour hours                  12,600                      12,600

Labour cost($)                  226,800                     222,400    4,400   Favorable

Explanation:

A flexible budget is that which is prepared to reflect the actual activity level achieved.  

It is useful for a control purpose; to compare the actual result to the expected performance. The expected performance is the the flexible budget which is a revised master budget.  

Also it uses the assumptions of the static budget like standard costs and prices.

Flexed budget for labour = standard hour × actual labour cost

                                          = $18×  12,600   = $ 226,800  

    Flexible budget Report for Rooney Company                              

                                       Flexed budget            Actual      Variance

Labour hours                  12,600                      12,600

Labour cost($)                  226,800                     222,400    4,400   Favorable

 

The percent change in nominal gross domestic product (GDP) minus the percent change in price level equals

Answers

Answer:

Real GDP

Explanation:

Nominal GDP less percent change in price levels equals to real GDP

Nominal GDP is GDP calculated using current year prices

Real GDP is GDP using base year prices. it has been adjusted for inflation.

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

whatis the general termfor resources used by a business to produce good or services referred to as

Answers

Answer:

Factors of Production

Hankins Corporation has 8.1 million shares of common stock outstanding, 300,000 shares of 4.1 percent preferred stock outstanding, par value of $100; and 185,000 bonds with a semiannual coupon rate of 5.5 percent outstanding, par value $2,000 each. The common stock currently sells for $57 per share and has a beta of 1.15, the preferred stock has a par value of $100 and currently sells for $99 per share, and the bonds have 18 years to maturity and sell for 107 percent of par. The market risk premium is 6.6 percent, T-bills are yielding 3.3 percent, and the company’s tax rate is 24 percent.A. What is the firm’s market value capital structure?B. If the company is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows?Solve for:A. DebtPreferred StockEquityB. Discount Rate

Answers

Answer:

common stocks = 8,100,000 x $57 = $461,700,000

preferred stocks = 300,000 x $99 = $29,700,00

debt = 185,000 x $2,000 x 1.07 = $395,900,000

total market value = $887,300,000

a)

capital structure:

common stocks = $461,700,000 / $887,300,000 = 52.03%

preferred stocks = $29,700,00 / $887,300,000 = 3.35%

debt = $395,900,000 / $887,300,000 = 44.62%

b) WACC = 7.48%

Re = 3.3% + (1.15 x 6.6%) = 10.89%

Cost of preferred stock = 4.1 / 99 = 4.14%

cost of debt = YTM = {55 + [(2,000 - 2,140)/36]} / [(2,000 + 2,140)/2] = 51.11 / 2,070 = 2.469 x 2 = 4.94%

WACC = (10.89 x 52.03%) + (4.14 x 3.35%) + (4.94 x 44.62% x 0.76) = 5.67% + 0.14% + 1.67% = 7.48%

As assistant to the CFO of Boulder Inc., you must estimate the Year 1 cash flow for a project with the following data:

Sales revenues $13,000
Depreciation $4,000
Other operating costs $6,000
Tax rate 35.0%

What is the Year 1 cash flow?
a. $6,962
b. $5,950
c. $7,438
d. $5,177
e. $7,378

Answers

Answer:

$5,950

Explanation:

Boulder incorporation reported the following data for year 1

Sales revenue= $13,000

Depreciation= $4,000

Other operating costs= $6,000

Tax rate= 35%

The first step is to calculate the EBIT

= sales revenue-operating costs-depreciation

= $13,000-$6,000-$4,000

= $3,000

Therefore, the cash flow for year 1 can be calculated as follows

= 3,000×35/100

= 3,000×0.35

= 1,050

= 3,000-1,050

= 1,950

Cash flow= 4,000+1,950

= $5,950

Hence the cash flow for year 1 is $5,950

A​ monopolist's maximized rate of economic profits is ​$1500 per week. Its weekly output is 500 ​units, and at this output​ rate, the​ firm's marginal cost is ​$32 per unit. The price at which it sells each unit is ​$42 per unit. At these profit and output rates, what are the firm's average total cost and marginal revenue?

Answers

Answer:

Average total cost = $39

Marginal revenue = $32 per unit

Explanation:

The computation of average total cost and marginal revenue is shown below:-

Average total cost = Selling price - (Economic profit ÷ Weekly output)

                              = $42 - ($1,500 ÷ 500)

                              = $42 - 3

                              = $39

Marginal revenue = Marginal cost

So,

Marginal revenue = $32 per unit

Therefore for computing the average total cost and marginal revenue we simply applied the above formula.

A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 8% and face value $1,000. Find the imputed interest income in: (a) the first year; (b) the second year; and (c) the last year of the bond’s life.

Answers

Answer:

First Year $ 17.17

Second Year $ 18.53

Last Year $ 74.08

Explanation:

Computation to Find the imputed interest income in: (a) the first year; (b) the second year; and (c) the last year of the bond’s life

Imputed Interest

First step

Using this formula

Imputed interest=(Present Value /1+Yield to maturity)^Numberd of years

Year Years Remaining to Maturity Constant Yield Value ( 1 / 1.08)^n

0 20 (1/1.08)^20= $ 214.54

1 19 (1/1.08)^19=$ 231.71

2 18 (1/1.08)^18=$ 250.24

19 1 (1/1.08)^1=$ 925.92

20 0 (1/1.08)^0=$ 1,000

Second step is to find the Imputed interest for the first year, second year; and the last year of the bond’s life

Year Years Remaining to Maturity Constant Yield Value ( 1 / 1.08)^n =Imputed Interest

0 20 $ 214.54

1 19 $ 231.71 $17.17

($231.71-$214.54)= $17.17

2 18 $ 250.24 $18.53

($250.24-$231.71)=$18.53

19 1 $ 925.92

20 0 $ 1,000 $74.08

($1,000-$925.92) =$74.08

Therefore the imputed interest will be:

First Year $ 17.17

Second Year $ 18.53

Last Year $ 74.08

On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.

Answers

Answer and Explanation:

The journal entry to record the given transaction is shown below:

Prepaid rent Dr $10,140

          To Cash $10,140

(Being the prepaid annual rent paid in cash is recorded)

For recording this we debited the prepaid rent as it increased the assets and credited the cash as it reduced the cash so that the proper posting could be done  

In 2019, Tim sells Section 1245 property for $28,000 that he had purchased in 2009. Tim has claimed $5,000 in depreciation on the property and originally purchased it for $15,000. How much of the gain is taxable as ordinary income?

Answers

Answer:

The taxable amount at an ordinary rate = $5000

Explanation:

The selling price of a property in 2019 is = $28000

The depreciation on the property = $5000

Original purchased price of property = $15000

Adjusted tax = an orginal price – depreciation  

Adjusted tax = 15000 – 5000 = $10000

Gain = selling price – adjusted tax

Gain = 28000 – 10000 = $18000

The part of gain ($18000) that is taxable as ordinary rate = $5000

Here, $13000 will be taxed as section 1231 as a gained tax at capital gain rate.

Harver company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 58000 units of RX5 follows. Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 58000 units of RX5 for 18.50 per unit. determine the total incremental cost making 58000 units of Rx5. Determine the total incremental cost of buying 58000 units of RX5. Should the company make or buy RX%

Answers

Answer:

Decision = Make

Explanation:

The incremental cost to buy and the incremental cost to make can be calculated as follows

DATA

Direct material = $4  (100% variable)

Direct labor = $8 (100% variable)

Overhead = $9 ( 70% fixed)

Total cost per unit = $21

Offered price = $18.5 per unit

Total units = 58,000

Solution

Incremental cost of making

Direct material ( 58,000 x $4) = $232,000

Direct labor (58,000 x $8) = $464,000

Overhead ( 58,000 x $9 x 30%) = $156,600

Total cost = $825,600

Incremental cost of buying

Total cost = No. of units x offered price

Total cost = 58,000 x $18.5

Total cost = $1,073,000

Decision: The company should make the product as the total cost to buy is $247,400 higher than the cost to make.

perline, inc., has balance sheet equity of $6.2 million.At the same time, the income statement shows net income of $948600. The company paid dividends of $493272 and has 100000 shares of stock outstanding. If the benchmark PE ratio is 26, what is the target stock price in one year?

Answers

Answer:

The target stock price in one year is $264.75

Explanation:

We first calculate the ROE as below

ROE= Earnings / Book value of Equity

ROE= $948,600 / $6,200,000

ROE= 0.153

The payout ratio is:

b=  Dividend / Net income

b = $493,272 / $948,600

b = 0.52

So the sustainable growth rate is:

g = ROE * (1-b)

g = 0.153 * (1-0.52)

g = 0.153 * 0.48

g = 0.07344

The earning in the first year are

EPS1 = $948,600 / 100,000  * (1 + 0.07344)

EPS1 = $9.486 * 1.07344

EPS1 = $10.1827

According to the benchmark PE ratio, the target stock price in one year is

Price = EPS1 * 26

Price = $10.1827 * 26

Price = $264.75

TB MC Qu. 9-100 The following labor standards have been ... The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.6 hours Standard labor rate $ 13.40 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,400 hours Actual total labor cost $ 96,200 Actual output 950 units What is the labor efficiency variance for the month

Answers

Answer:

Direct labor time (efficiency) variance= $23,048 favorable

Explanation:

Giving the following information:

Standard labor-hours per unit of output 9.6 hours

Standard labor rate $ 13.40 per hour

Actual hours worked 7,400 hours

Actual output 950 units

To calculate the direct labor efficiency variance, we need to use the following formula:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 9.6*950= 9,120

Direct labor time (efficiency) variance= (9,120 - 7,400)*13.4

Direct labor time (efficiency) variance= $23,048 favorable

As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D 0 = $0.80; P 0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from reinvested earnings?

Answers

Answer:

The cost of common equity from reinvested earnings is 11.84%

Explanation:

The constant growth model of DDM or DCF approach is used to calculate the price of a stock today whose dividends are expected to grow at a constant rate forever. The model values the stock based on the present value of the expected future dividends form the stock.

The formula for price today under this model is,

P0 = D0 * (1+g) / (r - g)

Where,

P0 is price todayD0 is the dividend todayr is the cost of equityg is the growth rate in dividends

Plugging in the available values for all the variables, we can calculate the r or cost of common equity to be,

22.5 = 0.8 * (1+0.08) / (r - 0.08)

22.5 * (r - 0.08) = 0.864

22.5r - 1.8 = 0.864

22.5r = 0.864 + 1.8

r = 2.664 / 22.5

r = 0.1184 or 11.84%

f covered interest arbitrage opportunities do not exist, Group of answer choices interest rate parity holds. interest rate parity does not hold. interest rate parity holds, and arbitragers will be able to make risk-free profits. arbitragers will be able to make risk-free profits. interest rate parity does not hold, and arbitragers will be able to make risk-free profits.

Answers

Answer: interest rate parity holds

Explanation:

Covered interest arbitrage is a trading strategy that is used by an investor when the person whereby takes advantage of the differences in interest rate between two nations and invest in the currency that brings higher value.

If covered interest arbitrage opportunities do not exist, it simply means that interest rate parity holds.

Compare and contrast the following forms of business organization: sole proprietorship,general partnership,limited liability company,and corporation as to ease of formation,liability of owners,management,and tax implications.

Answers

Answer:

Find the explanation below.

Explanation:

1. Sole Proprietorship is owned by a single person or a married couple.

a. Ease of formation: This business is very easy to form because owners are not required to have legal documentation for the business to begin operation.

b. Liability of Owners: Owners are personally liable for the success or failure of the business. This means that they bear the cost of whatever debt or losses that are incurred in the business and can be sued for it.

c. Management: The owner makes all the management decisions that could affect the business. He sets the time when his business can be run as well as the prices for his products.

d. Tax Implications: They fill out Schedule C where they calculate the profit and loss from their business. They declare their income in Standard Form 1040 and they are subject to Self-employment tax.

2. General Partnership is a business agreement between to or more owners.

a. Ease of Formation: It is quite easy to start this business because little or no legal documentation is required to kick-start the business.

b. Liability: All partners are liable for debts and losses incurred in the business.

c. Management Decisions: The management decisions are made by the general partners. This affords them a measure of flexibility.

d. Tax implications: Income tax is not paid rather, a separate tax return form is filed.

3. Limited Liability Company: These business entities are run by two or more business partners.

a. Ease of Formation: It is relatively easy to form because it is governed by state rules and regulations which must be adhered to by the business owners.

b. Liability: There is a limited liability as just the business assets can be withheld when there is a legal battle. Personal assets of partners can not be withheld.

c. Management Decisions: There could be a member-managed LLC where members make decisions in the business or a manager-managed LLC one or two non-members are employed to manage the business and make business decisions therein.

d. Taxation: Taxation is done once and profits realized are passed through to the personal income taxes of the members.

4. Corporations are set up by a group of businesspeople.

a. Ease of Formation: They are not easy to form as proper documentation which is governed by state laws must be adhered to.

b. Liability: There is a limited liability as shareholders are not held accountable for the debts and losses of the corporation.

c. Management: There are directors of the corporation who are elected by the shareholders, They make decisions for the corporation. Business officers are also appointed.

d. Tax Implications: There are lots of taxation requirements for which the corporation might seek advice from a taxation advisor to prevent double taxation.

Oriole Company uses flexible budgets. At normal capacity of 15000 units, budgeted manufacturing overhead is $120000 variable and $360000 fixed. If Oriole had actual overhead costs of $483000 for 18000 units produced, what is the difference between actual and budgeted costs

Answers

Answer:

$21,000 favorable

Explanation:

Given the above information,

Variable overhead rate = $120,000 / 15 units

= $8

Overhead variance = Real - Allocated

= $483,000 - (8 × 18,000 + $360,000 )

= $483,000 - $504,000

= $21,000 favorable

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 15 % 32 % Bond fund (B) 9 % 23 % The correlation between the fund returns is 0.15. What is the Sharpe ratio of the best feasible CAL?

Answers

Answer:

0.296875

Explanation:

Given the following :

Probability distribution of risky funds :

- - - - - - - - - - - - - - stock fund(S) - - bond fund(B)

Expected return - - - 15% - - - - - - - - - - 9%

Std - - - - - - - - - - - - - 32% - - - - - - - - - - 23%

Correlation between funds return = 0.15

Sure rate = 5.5%

To calculate the Sharpe ratio we use the formula :

Sharpe Ratio = (Expected Return of Investment - Risk Free Rate) / Standard Deviation of excess return of investment

For the stock fund :

Expected return = 15%

Risk free rate = market sure rate = 5.5%

Standard deviation = 32%

Sharpe ratio of stock fund :

(15% - 5.5%) / 32%

= 9.5% / 32%

= 0.296875

For Bond fund :

Expected return = 9%

Risk free rate = market sure rate = 5.5%

Standard deviation = 23%

Sharpe ratio of bond fund :

(9% - 5.5%) / 23%

= 3.5% / 23%

= 0.1521739

Therefore the Sharpe ratio of the best feasible CAL is the higher of the two ratios which is 0.296875

Joe-Bob wants to buy a car and will need to take out a loan in order to make the purchase. His current monthly income is $3,500 per month. His mortgage payment is $900 per month, and his student loan payment is $350 per month. Note: You do not need to take taxes into consideration for this journal.

a. According to the affordability formulas given, can he afford to take out another loan?
b. When should he follow the affordability formulas?
c. In what cases should he not?
d. How could taking out the car loan impact his other priorities?

Answers

Answer:

A) according to the affordability formula Joe-Bob can take out another loan because his DTI is 36%

B) He should follow the affordability formula when he wants to take out  loans

C) He should not follow DTI if he isn't taking out loans  

D) Taking out a loan will negatively impact his other priorities if his DTI is very high or greater than 100%

Explanation:

using the affordability formula

The debt to income ratio = [tex]\frac{total debt}{gross income}[/tex]

total debt = mortgage payment + loan repayment = $900 + $350

= $1250

gross income = $3500

hence debt to income ratio =  1250 / 3500 = 0.3571 = 35.7%

A) according to the affordability formula Joe-Bob can take out another loan because his DTI is 36%

B) He should follow the affordability formula when he wants to take out  loans

C) He should not follow DTI if he isn't taking out loans  

D) Taking out a loan will negatively impact his other priorities if his DTI is very high or greater than 100%

a. According to the affordability formulas, Joe-Bob cannot afford to take out a car loan.  His current DTI without the auto loan is almost 36%.

b. Joe-Bob should follow the affordability formulas to guide his decisions in taking a new loan.

c. Joe-Bob does not need to follow the affordability formulas when his debt to income ratio (DTI) is far below 36%.  He can also avoid the affordability formulas when he has the prospect of increasing his monthly income.

d. If Joe-Bob takes out the car loan despite his poor rating on the affordability formulas, he may not afford to pay his bills for necessities.

Thus, Joe-Bob should not take on more loans now until he improves his income.  An automobile will require routine maintenance and some repairs, including fuelling.

Data and Calculations:

Current monthly income = $3,500

Monthly mortgage payment = $900

Monthly student loan payment = $350

Total current debts = $1,250 ($900 + $350)

The Affordability Formula (Current Debt Payment to Income Ratio) =

35.7% ($1,250/$3,500 x 100)

The Affordability Rule states that Joe-Bob should not spend more than 36% of his monthly income repaying loans.

Learn more: https://brainly.com/question/20482529

Radoski Corporation's bonds make an annual coupon interest payment of 7.35% every year. The bonds have a par value of $1,000, a current price of $1,470, and mature in 12 years. What is the yield to maturity on these bonds

Answers

Answer:

The answer is 2.71 percent

Explanation:

The interest payment is annually.

N(Number of periods) = 12 years

I/Y(Yield to maturity) = ?

PV(present value or market price) = $1,470

PMT( coupon payment) = $73.5 ( [7.35 percent x $1,000)

FV( Future value or par value) = $1,000.

We are using a Financial calculator for this.

N= 12; PV = -1470 ; PMT = 73.5; FV= $1,000; CPT I/Y= 2.71

Therefore, the Yield-to-maturity of the bond annually is 2.71 percent

If you were on the Federal Reserve Board and you were concerned only with reducing high unemployment, you would implement_____________ monetary policy with a focus.

a. Short-term
b. Long-term
c. Contractionary
d. Expansionary

Answers

Answer: Expansionary; Short-term

Explanation:

If you were on the Federal Reserve Board and you were concerned only with reducing high unemployment, you would implement an expansionary monetary policy with a short-term focus.

Expansionary monetary policy has the effect of putting more money into the economy. As there is now more money in the economy, the expectation is that there will be more consumption spending as well as investment. More consumption because people have more money and more investment because interest rates reduce when there is an increased money supply. As there is now more investment as well as the need to satiate the increased demand, more companies can expand and employ people thereby reducing unemployment.

This should however be done with a short term view because expansionary monetary policy will lead to higher inflation in the longer term making business operations less profitable.

Abby had a checkbook balance of $1,002.45. She paid $76.98 to the electric company and $254.34 to the water company. What is Abby’s current checkbook balance?

Answers

Answer:

$671.13

Explanation:

Abby had a checkbook balance of $1,002.45

$76.98 was paid to the electric company

$254.34 was paid to the water company

Therefore the current checkbook balance can be calculated as follows

=$1,002.45-($76.98+$254.34)

= $1,002.45-$331.32

= $671.13

Hence Abby's current checkbook balance is $671.13

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