Answers
Answer:
And we can find this probability using the normal standard distribution table or excel and we got:
Explanation:
Previous concepts
Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".
The Z-score is "a numerical measurement used in statistics of a value's relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean".
Solution to the problem
Let X the random variable that represent the expected return, and for this case we know the distribution for X is given by:
Where and
We are interested on this probability
And the best way to solve this problem is using the normal standard distribution and the z score given by:
If we apply this formula to our probability we got this:
And we can find this probability using the normal standard distribution table or excel and we got:
Related Questions
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The leader of two postpartum women's support groups is interested in the depression levels of the women in her groups. She administers the Center for Epidemiologic Studies Depression Scale (CES-D) screening test to the members of her groups. The CES-D is a 20-question self-test that measures depressive feelings and behaviors durin the previous week. The mean depression level from the screening test for the 6 women in the first group is mu_1 = 16; the mean depression level for the 10 women in the second group is mu_2 = 12. Without calculating the weighted mean for the combined group, you know that the weighted mean is: Midway between 16 and 12 Closer to 16 than to 12 Closer to 12 than to 16 Compute the weighted mean. Enter your answer rounded to one decimal place. mu = The support group leader realizes that she should also screen for alcohol abuse, so she gives the women in her two groups the Michigan Alcohol Screening Test (MAST). The MAST is a 22-question self-test focusing on the use and abuse of alcohol. The first group has a mean score of mu_1 = 18. The second group has a mean score of mu_2 = 14. Compute the weighted mean. Enter your answer rounded to one decimal place. mu =
Kirk wants to get an FHA loan. Which of the following is Kirk himself not likely to do during the application process?
You are asked to lend money for a major commercial real estate development in a foreign country. There is some talk about a further devaluation of the foreign country's currency. What information do you need to assess the creditworthiness of this project? In your evaluation of the project, be sure to take into account translation exposure and economic exposure (operating and transaction), as well as exchange risk.
Answers
Answer:
Midpoint formula = - 7.43
Other formula = - 4.88
Elastic PED - Decrease price to increase total revenue
Explanation:
Price elasticity of demand is the responsiveness of quantity demanded to a change in price. The midpoint formula calculation is as follows:
(Q2 - Q1) / [(Q2 + Q1/2]
(P2 - P1) / [(P2 + P1/2]
In this scenario:
Q1 = 433 (old quantity)
Q2 = 169 (new quantity)
P1 = 0.88 (old price)
P2 = 0.99 (new price)
When this is substituted into the formula, it is as follows (I shall do it one step at a time to make it easier):
(169 - 433) / [(169 + 433/2]
(0.99 - 0.88) / [(0.99 + 0.88/2]
(169 - 433) / 301
(0.99 - 0.88) / 0.935
- 264 / 301
0.11 / 0.935
- 0.877
0.118
PED =- 7.43(PED is always a negative figure because price and quantity demanded have an inverse relationship. i.e. when one falls, the other rises)
PED is elastic if it is more than 1 and elastic if it is less than 1.
In this case, 5.8 is more than 1, hence PED is elastic.
In such a case, a change in price will always lead to a higher change in quantity demanded. Therefore, it is important to decrease the price to increase total revenue.
However, a different answer can be obtained using a different PED calculation
% change in quantity demanded
% change in price
(Q2 - Q1) / Q1
(P2 - P1) / P1
(433 - 169) / 433
(0.99 - 0.88) / 0.88
0.61
0.125
PED = - 4.88
Common stock 110,000 Warranties payable (short term) 6,500
Notes receivable (short term) 32,500 Gain on sale of equipment 19,000
Allowance for doubtful accounts 19,000 Operating expenses 65,000
Accumulated depreciation 66,000 Cash flow from investing activities 116,000
Notes payable (long term) 160,000 Prepaid rent 38,000
Salvage value of building 21,000 Land 95,000
Interest payable (short term) 6,000 Cash 41,000
Uncollectible accounts expense 45,000 Inventory 101,000
Supplies 6,500 Accounts payable 55,000 Equipment 243,000
Interest expense 36,000 Interest revenue 6,200
Salaries payable 68,000 Sales revenue 940,000
Unearned revenue 47,000 Dividends 20,000
Cost of goods sold 595,000 Warranty expense 9,200
Accounts receivable 108,000 Interest receivable (short term) 3,600
Depreciation expense 3,000
Answers
Answer:
Eller Equipment Co.
Income statement
Particular Amount($) Amount ($)
Sales revenue 940,000
Less: Cost of good sold (595,000)
Gross margin 345,000
Operating expenses
Salaries expenses 122,000
Operating expenses 65,000
Warranty expenses 9,200
Un-collectible account expenses 45,000
Depreciation expenses 3,000
Total operating expenses (244,200)
Operating income 100,800
Non-operating expenses
Interest revenue 6,200
Interest expenses (36,000)
Gain on sale of equipment 19,000
Total non-operating items (10,800)
Net Income $90,000
Balance Sheet
Assets Amount$
Current Assets
Cash 41,000
Accounts receivable 108,000
Less: Allowance for doubtful (19,000) 89,000
accounts
Merchandise inventory 101,000
Interest receivable 3600
Prepaid rent 38,000
Supplies 6,500
Notes receivable 32,500
Total current assets 311,600
Property Plant and Equipment
Equipment 243,000
Less: Accumulated depreciation (66,000) 177,000
Land 95,000
Total property plant and equipment 272,000
Total Assets 583,600
Liabilities and Stockholder Equity
Current liabilities
Account payable 55,000
Unearned revenue 47,000
Warranties payable 6,500
Interest payable 6,000
Salaries payable 68,000
Total current liabilities 182,500
Long-term liabilities
Notes payable 160,000
Total long-term liabilities 160,000
Stockholders equity
Common stock 110,000
Retained earning 131,100
Total stockholders equity 241,100
Total liabilities and stockholders equity $583,600
Workings
Retained earning = Beginning retained earning + Net income - Dividend
= 61,100 + 90,000 - 20,000
= 131,100
Final answer:
The multistep income statement and the classified balance sheet was prepared for the Eller Equipment Co. using the provided year 1 figures. The net income was found to be $98,200 and total assets for the company were calculated to be $541,000. These statements are essential tools for financial decision making in business.
Explanation:
Multistep Income Statement for Eller Equipment Co.
Start by listing the different income categories. The sales revenue is $940,000.
Deduct the cost of goods sold which is $595,000 to calculate the gross profit: $345,000.
Next, deduct the operating expenses that include salaries expense ($122,000), uncollectible accounts expense ($45,000), operating expenses ($65,000), depreciation expense ($3,000), and interest expense ($36,000) to arrive at an operating income: $73,000.
Lastly, consider the gain on sale of equipment ($19,000) and the interest revenue ($6,200) to find a net income of $98,200.
Classified Balance Sheet for Eller Equipment Co.
Start with assets that include cash ($41,000), accounts receivable ($108,000 - $19,000 = $89,000), inventory ($101,000), Prepaid Rent ($38,000), Land ($95,000), and Equipment ($243,000 - $66,000 = $177,000) to get a total asset of $541,000.
Next, consider liabilities which include accounts payable ($55,000), salaries payable ($68,000), interest payable ($6,000), unearned revenue ($47,000), warranties payable ($6,500), and notes payable ($160,000) to get a total liability of $342,500.
Finally, calculate the equity. The retained earnings are beginning retained earnings ($61,100) + net income ($98,200) - dividends ($20,000) = $139,300.
Adding the common stock ($110,000) will give a total equity of $249,300.
Check your work: Assets ($541,000) = Liabilities ($342,500) + Equity ($249,300)
Learn more about Financial Decision Making here:
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Answers
Answer:
increase
listening to the law when a supplier increases the price their supply increases the quality aswell!!
Answers
Answer & Explanation:
a. MPC = 0.50; Change in consumption spending = $345.8 billion
According to multiplier formula,
Change in real GDP/ Change in consumption spending = 1/(1-MPC) = 1/(1-0.5) = 1/0.5 = 2
So, Change in GDP = Change in consumption spending*2 = (345.8)*2 = $691.6 billion
Change in GDP = $691.6 billion
b. Change in investment = -$100
According to multiplier formula,
Change in real GDP/ Change in investment = 1/(1-MPC) = 1/(1-0.5) = 1/0.5 = 2
So, Change in GDP = Change in investment*2 = (-100)*2 = -200
So, total change in GDP = 691.6 - 200 = $491.6 billion
Change in real GDP = $491.6 billion
c. Percentage change in real GDP = (Change in Real GDP/GDP at the end of 2014)*100 = (491.6/15,982.3)*100 = 3.08%
One way of investing is to purchase stock or bonds from a private company.
Suppose TouchTech, a hand-held computing firm, is selling stocks to raise money for a new lab—a practice known as---------(debt/equity)------ finance. Buying a share of TouchTech stock would give Nick-----(a claim to partial ownership in/an IOU, a promise to pay, from)------- the firm. In the event that TouchTech runs into financial difficulty, --------(nick and the other stockholders/ the bondholders)------will be paid first.
Suppose Nick decides to buy 100 shares of TouchTech stock.
Which of the following statements are correct? Check all that apply.
----Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Nick's shares to decline.
----The Dow Jones Industrial Average is an example of a stock exchange where he can purchase TouchTech stock.
----An increase in the perceived profitability of TouchTech will likely cause the value of Nick's shares to rise.
Alternatively, Nick could invest by purchasing bonds issued by the government of Japan.
Assuming that everything else is equal, a bond issued by a government that is engaged in a civil war most likely pays a ----(higher/lower)---- interest rate than a bond issued by the government of Japan.
Answers
Answer:
(1) A practice known as "equity" finance
(2) Busing a share of TouchTech stock would give Nick "a claim to partial ownership"
(3) "the bondholders" will be paid first"
(4) Of the three statements provided, statement # 1 and statement # 3 are correct
(5) A government that is engaged in civil war mist likely pays a "higher" interest rate
Explanation:
Lets look at the answer to each question individually below:
(1) Touch Tech is selling stocks to raise money. The process involves issuing common shares through investment banks in a primary market to raise capital. The firm is essentially selling pieces of itself to investors, or "shareholders" which is known as equity finance
(2) The firm sells a part of itself to the investors who buy stocks and shares in the company. This means that essentially the company is selling ownership up to a certain amount. This gives the shareholders rights to residual income of the company. So each shareholders is a part owner and their individual ownership depends on the percentage of shares that they hold relative to the total shares outstanding.
(3) Shareholders by definition have a claim on the residual income/cashflows of the company. This is income that has been derived after paying for operating activities, other expenses, interest payments, and tax payments. Bondholders are debt holders of a company and in terms of seniority of claim, the debt holders are paid off first. The shareholders come at the very bottom of the hierarchy in terms of getting paid compared to debt holders, the government, and preference shareholders.
(4) Expectation of a recession would mean a company finds it hard to achieve sales and therefore impacts the profitability. If the profitability is impacted negatively, shareholders would get a lower rate of return on their investment which would push down the demand for share, and this is why the price of the shares would likely decline. Similarly, if investors believe the Touch Tech will be able to earn good sales figures and good profitability, the rate of return on investment would be expected to be higher. Therefore, in this case, the increased demand for shared would drive up the price of the shares as well. Therefore both these statements are true,
On the other hand, the Dow Jones Industrial Average is NOT a stock exchange. An example of a stock exchange is the NYSE (New York Stock Exchange) where investors can buy and sale shares. This is the exchange where Nick can buy the shares. The DJIA is simply an index that indicates how the prices of a select number of stocks from across the board are moving. The level at which the DJIA is at gives investors and idea as to how the overall market is performing rather than looking at the share price and volume trades of each individual stock.
(5) A war torn government issuing bonds would be perceived by investors as having difficulties in pay back its debts. Tax collections and economic performance of the country would be deeply impacted by the civil war. This would make the risk of not getting paid back a lot higher for a bondholder than a government that is stable and plenty of cash reserves. To compensate for this added risk, the government of a war torn state would have to offer investors a higher rate of return in exchange for their investment.
Answers
Answer:
Explanation:
The fixed cost is relevant in this situation as it can not be avoided and there would be no other use for the facility.
Unit cost
Direct materials 9.70
Variable manufacturing cost 3.55
Fixed manufacturing overhead 4.50
Direct labor 8.70
Total 26.45
Units produced cost of producing 38,000 = 38000* 26.45 = 1,005,100
Cost of buying 38,000 = 38,000 * 24.55 = 932,900
Cost saved = 1,005,100 - 932,900 =72,200