An increase in the interest rate A. increases the percentage yield of holding money. B. decreases the opportunity cos

Answers

Answer 1

Answer:

increases the opportunity cost of holding money

Explanation:

An increase in the interest rate actually increases the opportunity cost of holding money.

The opportunity cost of holding money is the nominal interest rate. Opportunity cost can be referred to as the interest rate that is forgone on alternative assets. So, when interest rate increases, the opportunity cost of holding money also increases.

Related Questions

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes):Income Statement Balance Sheet Sales $38,000 Assets $27,300 Debt $6,700Costs 32,600 Equity 20,600Net income $5,400 Total $27,300 Total $27,300The company has predicted a sales increase of 20 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.a. Prepare the pro forma statements.b. Determine the external financing needed.
Tanner-UNF Corporation acquired as a long-term investment $330 million of 5.0% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Tanner-UNF paid $300.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $310.0 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. 3. At what amount will Tanner-UNF report its investment in the December 31, 2021, balance sheet? 4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $290.0 million. Prepare the journal entry to record the sale.
A group of analysts are reviewing the financial results of Airline A and Airline B. Both are medium-sized companies that operate domestic flights. Airline A has reported huge profits for the year compared to losses in the previous years. On the otherhand, Airline B reported losses mainly because of the costs associated with the servicing of its $3 billion debt. One of the analysts advocates investing in Airline A because of the reported numbers and the attractive valuation of it stock. Another analyst argues that Airline B is a better investment target as it could be possibly turned around.Which of the following, if true, would weaken the argument that Airline A is a good candidate for investment?A.The bulk of Airline A's profits came from other income which included the sale of some of its fleet.B.In anticipation of increased demand, Airline A has set aside funds for buying medium sized jets for short-haul routes.C.A look at the stock price and the balance sheet of Airline A reveals that the company's stock is trading below its book value.D.Airline A plans to reduce flights to sectors where the traffic volume is low.E.The company's cost per passenger mile traveled is different from a typical cost per mile traveled in the commuter rail industry.
Milo receives a commission of on all sales. If his commission on a sale was , find the cost of the item he sold.
9. Suppose an investor has two choices:Choice 1: invest in a Bond A which is a 2-year bond with an interest rate of 12% Choice B: two 1-year bonds with sequential interest payment of 10% and 14%?Which Choice would produce a greater return if the pure expectations theory was to hold true. *A) Choice AB) Choice BC) Both of the choices would produce the same returnD) We can’t tell.

Blue is the owner of all of the shares of an S corporation, and Blue is considering receiving a salary of $110,000 from the business. She will pay the 7.65% FICA taxes on the salary, and the S corporation will pay the same amount of FICA tax. Blue reduces her salary to $50,000 and takes an additional $60,000 as a cash distribution. How would her Federal income tax liabilities change

Answers

Solution and Explanation:

The calculation of tax saving is shown below:

if B is getting the whole amount of salary the combined FICA tax liability of B and S Corp will be:

= $110000 multiply with 15.3 divide by 100

= $16830

If B is getting $50000 as salary the combined FICA tax liability of B and S corp will be

= $50000 multiply with 15.3 divide by 100

= $7650

thus the tax saving will be :

$16830 minus $7650

= $9180

The IRS can deem this arrangement unfit as make it mandatory for B to get the whole amount as salary. In that case, no change will take place in the tax liability.

Elsa joined her new law firm expecting to participate in exciting environmental law cases, and cutting edge research. After one month at the firm she still hasn't been assigned a case and spends most of her time filing standardized appeals for title disputes with insurance companies. In which stage of the socialization process is Elsa?

Answers

Full question:

Elsa joined her new law firm expecting to have a part in exciting environmental law cases, and cutting edge research. After one month at the firm she still hasn't been assigned a case and spends most of her time filing standardized appeals for title disputes with insurance companies. In which stage of the socialization process is Elsa?

A) prearrival

B) encounter

C) metamorphosis

D) ritual

E) systemic

Answer:

encounter stage of the socialization process is Elsa

Explanation:

Encounter Stage is the portion of the grades of socialization where a character enters or enrolls in an organization. Encounter is the secondary stage of socialization. People determine how to fit their expectations of equal entities inside the organization.

Because of the encounter stage, and how well a fresh employee fits, it circumscribes the potency, responsibility, and turnover of an employee. This is the type of transition, diversity, and wonder of the newcomer. This can generate a lot of stress for a fresh employee.

Toshlin issues financial statements on June 30. If payroll was $30,000 through June 30th and wages were to be paid on July 5. What is the correct journal entry on June 30?Assume FIT = 15%, FICA = 8%, SUTA = 6%, FUTA = 1%,

Answers

Answer:

a. No entry is required.

b. Payroll Dr. $30,000

Wages Payable Cr. $30,000

c. Payroll Dr. $30,000

Federal Income Tax Cr. $4,500

FICA Taxes Payable Cr. $2,400

Wages Payable Cr. $23,100

d. Payroll Dr. $30,000

Federal Income Tax Cr. $4,500

FICA Taxes Payable Cr. $2,400

SUTA Cr. $1,800

FUTA Cr. $300

Wages Payable Cr. $21,000

Project A has a predicted payback period of 2.5 and Project B has a predicted payback period of 5. Based on this information we can conclude that Select one: A. more information should be gathered before deciding on which project, if either, is desirable. B. Project A is preferred to Project B. C. Project B provides twice the return of Project A. D. Project B is preferred to Project A, but it is not necessarily twice as profitable.

Answers

Answer:

A. more information should be gathered before deciding on which project, if either, is desirable.

Explanation:

The lower Payback Period is not sufficient information to decide which project is more profitable. The payback period indicates when in the life of a project the initial investment principal cash flow is achieved.

But to decide about a certain project it is better to know the interest yield, it is also important to get the life of the project and other information.

For example:

a.- 250 investment 100 per year payback in 2.5-year life 3 years

b.- 500 investment 100 per year payback in 5-year life 20 years

While A payback occurs before project B is better

During the first five years of operations, Red Raider consulting reports net income and pays dividends as follows.Year Net Income Dividends Retained Earnings1 $1200 $500 2 1700 500 3 2100 1000 4 3200 1000 5 4400 1000 Calculate the balance of retained earnings at the end of each year.

Answers

Answer:

Please refer to the below for the retained earnings at each year end

Explanation:

Retained earnings refers to the earnings available to a business enterprise after the deduction or payment of dividend.

Retained earnings = Beginning balance + Net income for the year - Dividends paid

Year 1

Retained earnings = 0 + 1,200 - 500

= $700

Year 2

Retained earnings = 700 + 1700 - 500

= $1,900

Year 3

Retained earnings = 1,900 + 2,100 - 1,000

= $3,000

Year 4

Retained earnings = 3,000 + 3,200 - 1,000

= $5,200

Year 5

Retained earnings = 5,200 + 4,400 - 1,000

= $8,600

Compute the Work-in-Process transferred to the finished goods warehouse on April 30 using the following information: Work-In-Process Inventory, April 30 $275
Direct material purchased during April 250
Work-In-Process Inventory, April 1 300
Direct labor costs incurred 400
Manufacturing overhead costs 350
Direct materials used in production 225

Answers

Answer:

$1,100

Explanation:

Computation for the Work-in-Process transferred to the finished goods warehouse on April 30

Work-In-Process Inventory, April 1 300

Direct materials used in production 225

Direct labor costs incurred 400

Manufacturing overhead costs 350

Less Work-In-Process Inventory, April 30 ($175)

Work-in-Process transferred to the finished goods warehouse $1,100

Therefore the Work-in-Process transferred to the finished goods warehouse on April 30 will be $1,100

Other Questions

ameron Company uses a process cost system and the weighted average method to account for its production. The following information was available for August: units Costs Work in Process, August 1 100 $ 2,990 Work in Process, August 31 200 (A) During the month, 800 units were started into production, and $5,000 in costs were incurred. Ending inventory was 50% complete. The cost of the units transferred out would be: (Do not round your intermediate calculations.)

The supply of money increases whena. the value of money increases.b. the interest rate increases.c. the Federal Reserve purchases bonds.d. velocity increases.

Assume Gillette Corporation will pay an annual dividend of $ 0.61 one year from now. Analysts expect this dividend to grow at 12.9 % per year thereafter until the 6th year. Thereafter, growth will level off at 1.7 % per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.8 %?

By the late 1800s, soft coal miners earned a higher hourly wage than other industrial workers of similar skill levels. The mining wage is an example of a. wage discrimination. b. a monopsony market. c. a compensating wage differential. d. an efficiency wage.