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Bilbo Baggins is about to go on a journey and is deciding how much to eat before his departure and how much after his return. While he is on the road, his expenses are covered by Thorin Oakenshield, so he doesn't have to worry about spending any of his income for his keep during that time. Bilbo's current income y1 is 8000 shillings. He has some belongings, mostly doilies and dishes he inherited from his mother, worth 1000 shillings (f1). He is bringing back two chests of gold and silver from his adventure with the dwarves, and the contents are worth 1,500,000 shillings (y2). Bilbo is a little impatient and discounts the future with β=0.9. The real interest rate is 3 percent, and his flow utility function is u(c)=c^(σ/σ). σ = 0.5 A. Calculate the present value of Bilbo's income and initial financial wealth. Do not round intermediate results. Round your answer to the nearest shilling. B. Assuming that Bilbo allocates consumption over time optimally, calculate the growth rate of consumption between periods 1 and 2 (in percent), i.e., (c2−c1)/c1×100. (Do not round intermediate results. Round your answer to the nearest tenth of a percent.) C. Calculate the consumption-to-income ratio in period 1 (in percent). (Do not round intermediate results. Round your answer to the nearest tenth of a percent.) D. The answer to the previous question implies that Bilbo consumes [ Select ] in period 1 and [ Select ] in period 2. - choose from exactly, more than, or less than E. Now, suppose that Bilbo reverses the course of time. He earns 1,500,000 shillings in period 1 and 8,000 in period 2. His mother's doilies and dishes somehow escape this reversal, and we have f1= 1000. Compute c1. (Round your answer to the nearest shilling.) F. Calculate the growth rate of consumption between periods 1 and 2 (in percent), i.e., (c2−c1)/c1×100. (Do not round intermediate results. Round your answer to the nearest tenth of a percent.) G. Calculate the consumption-to-income ratio in period 1 (in percent). (Do not round intermediate results. Round your answer to the nearest tenth of a percent.)
Akash M.
Lorenzo, the owner of a local poster shop, comes to you for help. While his shop has been breaking even for the past two years, it has not been able to generate a profit. For him to keep the shop open, he needs to earn at least $12,000 in operating income next year. You agree to help Lorenzo and ask him for some current information about his products' selling price and costs. You tell him you will work through some possible scenarios that might involve changing his sales price to generate the number of units sold needed to reach his target profit. Lorenzo shares the following information with you as you ponder different scenarios to help your client. Selling price: $7.50 Cost for paper, per unit: $0.70 Cost for printing, per unit: $1.10 Cost for film, per unit: $0.60 Staff salaries: $48,000.00 Other operating costs: $12,120.00 Using Lorenzo's data and proper Excel formulas, first, plan to get an understanding of Lorenzo's financial situation based on breakeven. Then look at the following five pricing scenarios: 1. Lower the selling price by 10% to increase sales volume by 5%. 2. Advertise on radio and social media for a combined cost of $1,000 to increase volume by 10%. 3. Use a more affordable paper on which to print the posters (available for $0.60 per unit), in combination with a less-expensive film to coat the surface of the poster (available for $0.40 per unit). 4. Instead of paying the salespeople a fixed salary, move to a commission-based compensation plan (save $20,000 in salary; incur $1.50 per unit sold commission), which should increase sales volume by 20%. 5. Advertise on radio and social media for a combined cost of $1,000 and, instead of paying salespeople a fixed salary, move to a commission-based compensation plan (save $20,000 in salary; incur $1.50 per unit sold commission), which could increase sales volume by 25%. A few days later, Lorenzo calls back and says he realizes he didn't take into account any tax consequences. He lets you know that he estimates his tax rate to be about 25% and asks if you could please factor that into the various options. He is open to raising the price of his posters if you think that is a viable option. He also lets you know that he's been approached by a potential client inquiring about a special order, and he wants you to advise him on whether to accept the order. The client wants 500 custom posters for $7 per poster. The posters will require a different type of paper that will cost $0.10 more per poster. The order will also require Lorenzo to pay an extra $1000 in employee costs. Per Lorenzo's request, you also decide to see what effect a price increase might have on Lorenzo's position. You have noticed that Lorenzo's is one of the only poster shops in the area, and customers may be willing to pay more, and a higher price may even signal higher quality. Though, there are no guarantees that the market will accept the price increase. Lorenzo is looking at increasing the sales price to $9.25. You let Lorenzo know that you will do an analysis of all options and present your recommendations when you are done.
Smith company purchased a machine on December 2, 2021, add an invoice price of 45,000 with term 3/10, net of 30. On December 6, 2021, Smith paid $540 for the delivery of the machine. On December 10, 2021, smith borrowed money to pay the required amount for the machine. On December 31, 2021, smith paid 1300 plus 7% PST and 5% GST. For final installation and testing of machine, Smith also paid 1900 for interest on the borrowed money. The machine was ready to use on January 1, 2022. It was estimated useful life of five years (after installation and testing) and residue of the value of 8000. Partial amortization should be based on months. Compute what should be recorded cost of machine on January 1, 2022 Assume that on January 1, 2022, cost of machine should be 47,900. What is the difference in the amount of amortization expense that should be recorded in 2022 if a straight-line method is used versus the double decline method Assume January 1st, 2022, the cost of machine should be 47,000 and further assume that is miss always used a straight-line method of amortization. On March 31, 2020, for acute computerized control panel costing 5700 was added to the machine. Engineer estimated that it will extend the useful life of the machine by two years and will result in a revised resident will value of 11,200 1a) what should be recorded cost of machine? 1b) and recorded amount of the accumulated amortization related to the machine as of December 31, 2024 Assume that on December 31, 2022, is mid exchange is existing machine in return for a similar new one along with the exchange you receive 3900 of cash. The new machine has a fair value of 39,000 while the existing fair value is unknown, prepare the general entry for this transaction. 1c) The transaction lacks commercial substance 1d) The transaction has commercial substance
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