Which one of the following will produce the lowest present value interest factor? A. 6 percent interest for 5 years B. 6 percent

Answer:

The interest amounts to $1,000,000.

Explanation:

The standard format of an income statement includes:

Revenue/Sales (+)

Cost of Goods Sold (COGS) (-)

=Gross Profit

Marketing, Advertising, and Promotion Expenses (-)

General and Administrative (G&A) Expenses (-)

=EBITDA

Depreciation & Amortization Expense (-)

=Operating Income or EBIT

Interest (-)

Other Expenses (-)

=EBT (Pre-Tax Income)

Income Taxes (-)

=Net Income

For this case:

EBIT equals $6,000,000.

The interest is to be determined.

Tax is calculated as 0.40.

EBITDA stands at $3,000,000.

The interest formula is: interest = [EBITDA / (1 - tax)] - EBIT

Substituting values, interest = 3000000 / 0.60 - 6000000 = -$1,000,000.

With EBIT at 6 million, the interest is $1 million, and the tax amounts to 2 million (calculated as (EBIT - interest) * 0.40).

Thus, the net income is $3 million.

Answer:

Decrease in purchasing power =$(96.67)

Explanation:

To determine the alteration in purchasing power, we assess the value of the IRA after three years relative to its worth considering prices from three years ago.

The value of $5,500 after three years equals 5,500 × 1.012^3 = 5700.385

The purchasing power of $5,700.38 based on past prices for three years earlier

=5700.385504 × 1/(1.018^3)

= $5403.32

Change in purchasing power =  $5403.32 -  $5,500= $(96.67)

Decrease in purchasing power =$(96.67)

Answer:

To maximize utility, the consumption of product Y should be increased while reducing the intake of product X.

Explanation:

The utility-maximizing principle asserts that a consumer optimizes utility when the marginal utility per dollar spent is equal for both products.

For Product X, the marginal utility per dollar is:

= 2 utils per dollar

For Product Y, the marginal utility per dollar is:

= 8 utils per dollar

According to this principle, the consumer should increase the consumption of product Y and decrease that of product X.

Response:

This question lacks components that are enumerated as follows:

A) Prepare a bank reconciliation as of October 31, 20Y9

B) Journalize the required entry

C) If a balance sheet were generated for Coastal Bike Co., what amount should be recorded as cash?

Solution

Beginning cash balance -  36,016Cash deposited -             138,030

Check written -                (138,571)                                          35,475

Bank reconciliation for Coastal Bike as of October 31 20Y9

Cash balance from Bank statement  -                43,940

Unrecorded deposit               1796

Bank error (750-570)               180

Outstanding checks               6281

Total adjustments                                                           4,305

Adjusted balance                                                           39,635

Cash balance adjusted after transactions of the month   35,475

Note collected by bank                    5670

Bank service charges paid                            26

Returned checks received                               1,394

Discrepancy recorded for a check(210-120)       90

Total adjustments made                             4160

Adjusted balance after all transactions                    39,635

B

Increase in cash entries

Description                               Debit                    Credit

Cash                                          5670

Note receivable collected                                                     5400

Interest income noted                                                        270

Accounts payable (Rack pro)      90

Accounts receivable (Bay view) 1394

Bank service charges incurred                            26

Cash accounted for in final calculation                                           1510

c

Amount to report as cash on balance sheet

Opening cash account -  36,016

Cash deposited -             138,030

Check payment made -                (138,571)

                                         35,475