The partnership would record the admission of Royal into the partnership as a credit to Royal's capital account and a debit to Cash account and the amount of investment is $50,000, which Royal will be investing in the partnership.
Royal's equity share in the partnership is 20%.As a result, on July 1, the following accounting entry is made by the partnership:The partnership would record the admission of Royal into the partnership as a credit to Royal's capital account and a debit to the cash account.
Hence, the correct option is a credit to Royal's capital account and a debit to Cash account.
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Primary demand is a desire for the ________ rather than for a ________; it is often the focus of marketing when there are few competitors with the same product. brand name; product category problem solution; product category product class; specific brand product concept; tangible product novelty; problem solution
Considering the market analysis, the Primary demand is a desire for the product class rather than for a specific brand; it is often the focus of marketing when there are few competitors with the same product.
What is Product Class?Product class is a term used to describe products or commodities that are homogeneous or deemed as substitutes for each other.
On the other hand, a Specific brand is a product with unique features that makes it different and known compared to other products.
Hence, in this case, it is concluded that the correct answer is option C. "product class; specific brand."
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QUESTION 19 .. The annual productivity report of Papyrus Inc. states that it has achieved the targets it had set for the year 2013. However, in this process, much of its resources have been wasted, and the amount spent on resources is more than the estimated amount. Its productivity has been: a. effective and efficient. b. neither effective nor efficient. c. not effective but efficient. d. effective but not efficient. e. stagnant in terms of efficiency and effectiveness.
The productivity of Papyrus Inc. can be categorized as effective but not efficient. The correct answer is d.
This is because the company achieved its targets for the year 2013, indicating that it was effective in accomplishing its goals. However, the company's productivity was not efficient as it wasted many resources, leading to higher costs than anticipated. This implies that the company could have achieved the same results with fewer resources, making it inefficient.
To improve its efficiency, Papyrus Inc. should focus on reducing wastage and improving resource utilization. This can be achieved through strategies such as adopting lean production techniques, improving supply chain management, and investing in technology to streamline operations. By doing so, the company can increase its efficiency while maintaining its effectiveness in achieving targets.
Overall, the company must strike a balance between being effective and efficient to remain competitive in the market.
Hence, option d. is correct
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Compared to a typical online ad campaign, remarketing campaigns typically have
a. Higher CTR and higher conversion rates
b. Lower CTR and higher conversion rates
c. Higher CTR and lower conversion rates
d. Lower CTR and lower conversion rates
Compared to a typical online ad campaign, remarketing campaigns typically have higher CTR (click-through rates) and higher conversion rates. Option A is the correct answer.
Remarketing campaigns target users who have previously interacted with a brand or website, often by visiting the website or adding items to their shopping carts without completing a purchase. These campaigns show ads specifically to these users as they browse other websites or platforms, aiming to bring them back and convert them into customers.
The higher CTR in remarketing campaigns is because the ads are displayed to a more targeted audience who has already shown interest in the brand or product. This increases the likelihood of users clicking on the ads. Additionally, since remarketing campaigns are designed to re-engage users who have already shown intent, the conversion rates tend to be higher as well. Option A is the correct answer.
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Which descriptions offer examples of Energy Distribution workers? Check all that apply.
a. Madison adds fuel and changes oil for customers’ cars.
Arleen installs air conditioning systems in buildings.
b. Rod checks electrical meters outside of buildings, and documents the amount of electricity used.
c. Dexter takes and analyzes samples of materials to determine whether they contain petroleum.
d. Douglas designs fuel cells for cars.
Joan repairs high-voltage power lines.
Which of the following careers are most likely to involve regular travel? Check all that apply.
a. oil drilling
b. gas pumping station c. operation pipelaying
d. electrical power-line installation
e. power dispatching
The descriptions offer examples of Energy Distribution workers is:
Rod checks electrical meters outside of buildings, and documents the amount of electricity used.Joan repairs high-voltage power lines.Transmission and distribution workers are employed in the electrical lighting and power industries. They operate and maintain the power conditioning equipment and high-voltage line networks that carry power from power plants to private, industrial, and commercial users.
The part of the power system that distributes electrical energy for local use is called the distribution system. In general, the distribution system is the electrical system between the grid-fed substation and the consumer's meter. Energy distribution technology is a collection of man-made systems that transport energy.
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Answer:A,B,C
Explanation:
Valentino & Oaks Footwear sells 100 units of one of a famous brand daily. The supplier takes two days to deliver more, and they want to have a safety stock of three day's sales.
At what quantity should the inventory manager place his/her next order?
PLEASE TELL ME THAT SOMEONE KNOWS REORDER POINTS
Answer:
500 units
Explanation:
In inventory management, the reorder point is the inventory level, where a business needs to issue a purchase order for more stocks. The reorder point is influenced by delivery time, desired safety stock, and the average daily sales.
The formula for calculating the reorder point is as follows.
Reorder point = ( average daily sales x delivery lead time) + safety stock
In this case,
Reorder point = (100 x 2) + (100 x3)
= 200 +300
=500 units
Here is the condensed 2021 balance sheet for Skye Computer Company (in thousands of dollars): 2021 Current assets Net fixed assets $1,400 2,600 $4,000 Total assets $ 600 200 1,350 250 Accounts payable and accruals Short-term debt Long-term debt Preferred stock (10,000 shares) Common stock (40,000 shares) Retained earnings Total common equity Total liabilities and equity 775 825 $1,600 $4,000 Skye's earnings per share last year were $2. 60. The common stock sells for $45. 00, last year's dividend (Do) was $1. 90, and a flotation cost of 11% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 10%. Skye's preferred stock pays a dividend of $2. 70 per share, and its preferred stock sells for $30. 00 per share. The firm's before-tax cost of debt is 9%, and its marginal tax rate is 25%. The firm's currently outstanding 9% annual coupon rate, long-term debt sells at par value. The market risk premium is 5%, the risk-free rate is 6%, and Skye's beta is 1. 612. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1. 55 million
The growth rate of dividends: is 0.0513 or 5
Total common equity = Common stock + Retained earnings
Total common equity = 40,000 shares * $45 per share + $825,000
Total common equity = $2,025,000
Calculate the cost of common equity using the CAPM model:
RCE = RF + β × (RM - RF)
RCE = 0.06 + 1.612 × 0.05
RCE = 0.14 or 14%
Calculate the cost of preferred stock:
RPS = Dps / Pps
RPS = $2.70 / $30
RPS = 0.09 or 9%
Calculate the cost of debt:
Rd = 0.09
Calculate the weighted average cost of capital (WACC):
WACC = (E/V) × RCE + (D/V) × Rd × (1 - T) + (P/V) × RPS
where E = market value of equity, D = market value of debt, P = market value of preferred stock, V = total value of the firm, and T = marginal tax rate.
First, we need to calculate the market value of equity:
Market value of equity = Number of common shares outstanding × Price per share
Market value of equity = 40,000 shares × $45 per share
Market value of equity = $1,800,000
Next, we need to calculate the market value of debt:
Market value of debt = Short-term debt + Long-term debt
Market value of debt = $775,000 + $775,000
Market value of debt = $1,550,000
Next, we need to calculate the market value of preferred stock:
Market value of preferred stock = Number of preferred shares outstanding × Price per share
Market value of preferred stock = 10,000 shares × $30 per share
Market value of preferred stock = $300,000
Finally, we can calculate the total value of the firm and the WACC:
Total value of the firm = Market value of equity + Market value of debt + Market value of preferred stock
Total value of the firm = $1,800,000 + $1,550,000 + $300,000
Total value of the firm = $3,650,000
WACC = ($1,800,000 / $3,650,000) × 0.14 + ($1,550,000 / $3,650,000) × 0.09 × (1 - 0.25) + ($300,000 / $3,650,000) × 0.09
WACC = 0.1142 or 11.42%
Calculate the growth rate of dividends:
Growth rate of dividends = Retention rate × Return on equity
Retention rate = 1 - Dividend payout ratio
Dividend payout ratio = Do / Earnings per share
Dividend payout ratio = $1.90 / $2.60
Dividend payout ratio = 0.73 or 73%
Retention rate = 1 - 0.73
Retention rate = 0.27 or 27%
Return on equity = Earnings per share / Book value per share
Book value per share = Total common equity / Number of common shares outstanding
Book value per share = $2,025,000 / 40,000 shares
Book value per share = $50.625 per share
Return on equity = $2.60 / $50.625
Return on equity = 0.0513 or 5
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When we say that families headed by a self-employed person make significantly more than families whose head works for someone else, to which type of income do we refer?.
Different measurement methods exist. The mean is the option that we use to describe the many forms of average income.
What distinguishes income from earnings?Wages refers to money made by employment, whereas income is the total amount of money received, which includes earnings, benefits, pensions, and other payments. Earnings, sometimes known as gross earnings, relate to the compensation received by employees in exchange for their work. Most evaluations of earnings only take into account gross earnings, which are earnings before any perks are provided or tax deductions are made (including National Insurance contributions). Original income is created by combining employee wages with self-employment earnings, private pensions, and other forms of income like investment income.
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when developing contingency plans, your textbook recommends developing a minimum of contingencies?
The textbook recommends developing at least three contingencies for any given situation.
What is contingency?
A contingency plan, as well known as Plan B informally, is a strategy developed to deal with a situation that is not anticipated in the regular (expected) plan. It is frequently used in risk management for just a rare risk that, while unlikely, could have disastrous results. Creating a contingency plan is frequently done by governments or businesses. The process of putting a contingency plan into action involves five steps: assembling a planning team, determining the extent of the issue, developing a plan, testing the plan, and maintaining the plan's accuracy. For instance, if a company's employees are all travelling on the same plane and it crashes, killing everyone on board, the company may be severely strained and even destroyed.
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If you were marketing a product to a particular target market and you only knew the demographic characteristics, what product benefits (WIIFM, or “What’s in it for me?”) would you highlight in your marketing
The product benefits to be highlighted in the marketing based on demographic characteristics are
beneficial to particular agebeneficial to particular working classbeneficial to particular gender etcWhat is the demographic segmentation?In marketing, this refers to the segmenting of customers according to gender, age, ethnicity, family size, religion etc.
The use of demographic segmentation in marketing helps to provide the needs and want to consumers based on the demograph gathered from them.
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2. Making choices is necessary in all economic systems because:
A. there are so many products that we cannot use them all at once
B. the government has so much money that it does not know what to do with it
C. there are so many resources compared to people’s needs that we have to choose which ones not to use
D. there are so many wants compared to scarce resources that we have to decide what to produce
Explanation:
it is d because we don't have enough resources to sustain forever so we have to figure out how to make them last.
car+dealer+is+advertising+an+apr+on+new+car+loans+of+1.50%.+if+interest+is+compounded+monthly,+what+is+the+ear?
The Effective Annual Rate (EAR) on the new car loans with a 1.50% APR and monthly compounding is approximately 1.5682%.
To calculate the Effective Annual Rate (EAR) when interest is compounded monthly, we can use the following formula:
EAR = \((1 + (APR / n))^n\) - 1
Where APR is the annual percentage rate and n is the number of compounding periods per year.
In this case, the APR on new car loans is 1.50% and interest is compounded monthly (n = 12). Let's calculate the EAR:
EAR = \((1 + (0.015 / 12))^{12} - 1\)
EAR = \((1 + 0.00125)^{12}\) - 1
EAR = \((1.00125)^{12}\) - 1
EAR ≈ 0.015682 or 1.5682%
Therefore, the Effective Annual Rate (EAR) on the new car loans with a 1.50% APR and monthly compounding is approximately 1.5682%.
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outline 2 advantages to H&H of using secondary market research
Today is Derek’s 25th birthday. Derek has been advised that he needs to have $3,297,882.00 in his retirement account the day he turns 65. He estimates his retirement account will pay 10.00% interest. Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 30.00th birthday and ending on his 65th birthday. How much must those deposits be?
Derek must make annual deposits of $6,511.09 into his retirement account from his 30th birthday until his 65th birthday in order to accumulate $3,297,882.00 by the time he turns 65.
To determine the amount Derek must deposit annually into his retirement account, we can use the formula for the future value of an annuity. The formula is:
\(FV = P * [(1 + r)^n - 1] / r\)
where FV is the future value, P is the annual deposit, r is the interest rate, and n is the number of years.
In this case, Derek wants to have $3,297,882.00 in his account when he turns 65. He will start making deposits on his 30th birthday and continue until his 65th birthday, which means he will make deposits for 36 years.
Since the interest rate is 10%, we convert it to a decimal by dividing it by 100, giving us 0.10.
Using the formula, we can rearrange it to solve for P:
\(P = FV * (r / [(1 + r)^n - 1])\)
Plugging in the values, we get:
\(P = 3297882 * (0.10 / [(1 + 0.10)^36 - 1])\)
Calculating this, the annual deposits must be approximately $6,511.09.
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Today, music in the western world focuses on the pentatonic and whole-tone scales.
True or False.
Answer:
False
Explanation:
Who is responsible for safe handling of the animal product once they get it home?
A. Transporter
B. Processor
C. Consumer
D. Producer
Answer:
I believe it's C. Consumer
Explanation:
How does your state’s on-time payment record compare to the national rate?
It should be noted that my state’s on-time payment record is high compare to the national rate.
What is a credit score?A credit score serves as a numerical expression based on a level analysis of a person's credit files.
This is a term that to represent the creditworthiness of an individual after his account has been checked.
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To address the eurozone crisis, the European Central Bank (ECB) adopted a negative interest rate policy in 2014. The ECB lowered its deposit rate to -0.1% that year to hold off deflation and move the economic bloc out of a prolonged recession. Today, the ECB deposit rate is - 0.5%, the lowest on record. In theory, negative rates would boost the economy by encouraging consumers and banks to take more risks through borrowing and lending money. Using the IS-LM framework, explain why traditional monetary policy fails in the presence of zero lower bounds, and how the negative interest rate policy may help the ECB to bring the economy out of recession.
In the presence of a zero lower bound, traditional monetary policy fails. The zero lower bound is the lowest possible nominal interest rate. Negative nominal interest rate are impossible.
The central bank cannot lower its policy rate beyond zero without imposing a fee on banks for holding reserve accounts. As a result, the demand for money becomes extremely inelastic. Fiscal policy, on the other hand, remains effective because government spending, transfers, and tax policies can all influence demand at any interest rate. In this regard, fiscal stimulus is more effective than monetary stimulus.
Negative interest rates may help the ECB to bring the economy out of recession by encouraging banks and individuals to lend and borrow money, according to the IS-LM model. Negative interest rates reduce borrowing costs, which increases consumption and investment. In the short run, there is a substantial rise in demand as a result of this.
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Tatianna's business just put up a "Now Hiring" sign. Felisha saw the sign and applied for the job. After negotiating her wages and hours , Felisha was hired. This transaction took place where in the circular flow of the economy ?
The transaction between Felisha and Tatianna's business took place in the labor market within the circular flow of the economy.
The transaction between Felisha and Tatianna's business took place in the labor market within the circular flow of the economy. In this market, individuals like Felisha offer their labor services (supply), and businesses like Tatianna's hire workers (demand). The negotiation of wages and hours and the hiring of Felisha represent the interaction between the demand and supply of labor in the economy. The labor market represents the interaction between individuals seeking employment (labor supply) and businesses or employers offering jobs (labor demand).
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You should induce vomiting in a child you suspect has been poisoned ONLY when
you have been instructed to do so by the poison center expert.
True
O False
Answer:
The correct answer is the option: False.
Explanation:
To begin with, when it comes to terms of helping someone and moreover saving someone's live it is absolutely necessary to always act in order to make sure that everything that was possible to do was done, so therefore that it is understandable that in a case where a child has been poisoned with something then the person closer must know that he could induce vomiting by putting the finger into the throat, gently, so that the body will automatically try to throw up. Otherwise if the person might have not been instructed by the poison center expert and the kid is posible to pass out then the situation can get worse if the person does not do something.
Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.Dividends Declared & PaidYear 1 $ 0Year 2 $ 6,000Year 3 $ 32,000The amount of dividends paid to preferred and common shareholders in Year 2 is:
Answer:
Preferred shareholders $6,000
Common shareholders = $0
Explanation:
Preference Stock holders have preference over Common stock holders when it comes to payment of dividends.
Also if the preference stocks are cumulative, previous dividends in arrears have to be settled before any distributions are made to common stockholders.
Preference Stock dividend per year is constant and is calculated as follows.
Preference Stock dividend = 7,000 × $10 × 5%
= $3,500
Year 1
No dividend was declared and paid.
Preference Stock dividend in arrears is $3,500.
No dividend is available for Common stockholders
Year 2
Dividend declared and paid amount to $6,000
Preference Stock dividend in arrears from first year to be paid is $3,500.
Preference Stock dividend in current year to be paid is $3,500.
This leaves an arrear of $1,000 to be paid to Preference Stock holders after the payments.
Calculation = $6,000 - $3,500 (Year 1) - $3,500 (Year 2) = $1,000 (Arrears)
No distributions are available for Common stockholders.
Conclusion :
The amount of dividends paid to preferred and common shareholders in Year 2 is:
Preferred shareholders $6,000
Common shareholders = $0
The required rate of return of Portfolio B is 9.5% and its standard deviation is 12%. If the risk-free rate is 3% and the expected return and standard deviation of Portfolio A are 11% and 17%, what can be said about the price of Portfolio A?
In terms of the required rate of return, Portfolio A has an expected return of 11%, while Portfolio B has a required rate of return of 9.5%. This suggests that Portfolio A is expected to generate a higher return compared to its required rate of return, indicating it may be priced at a premium.
In terms of risk, Portfolio A has a standard deviation of 17%, while Portfolio B has a standard deviation of 12%. A higher standard deviation implies greater volatility and risk. Therefore, Portfolio A is relatively riskier compared to Portfolio B.
Considering the relationship between risk and return, investors typically require higher returns for taking on higher levels of risk. In this case, Portfolio A offers a higher expected return but also comes with higher risk. The price of Portfolio A would depend on the risk appetite of investors and their assessment of its risk-return tradeoff.
If investors are willing to accept higher risk in pursuit of higher returns, the price of Portfolio A may be relatively higher compared to Portfolio B.
However, if investors prioritize lower risk and are satisfied with the lower return of Portfolio B, the price of Portfolio A may be relatively lower.
Ultimately, the price of Portfolio A would be influenced by the market's perception of its risk and return characteristics and the overall demand for such investments.
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1. Juanita worked for several years in her uncle's auto repair shop. She learned how to do all types of repairs. She enjoys getting out and meeting new people. She doesn't like sitting at a desk and working all day on the computer. Her math skills are good, but she did not take any math classes as part of her two-year associate's degree. She is good with people and good in a crisis. She is also detail oriented. Which insurance career listed above would probably be a good fit for Juanita? Why? (8 points)
Answer:
she'll be an claim adjuster/investigator she works at repair shop so she can investigate it and see what insurance they need
Explanation:
The insurance career that would probably be a good fit for Juanita based on her math skills would be a Claims Adjuster.
Who are Claim Adjusters ?Claims adjusters are responsible for investigating and resolving insurance claims. They typically work for insurance companies, but they may also work for independent adjusting firms.
Claims adjusters need to be good with people and be able to handle difficult situations. They also need to be detail-oriented and have good math skills. Juanita's experience working in her uncle's auto repair shop would give her a good foundation for this career. She would also be able to use her math skills to calculate estimates and settlements.
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During the year, Horace earned investment income of $13,500, incurred investment interest expense of $7,700, and other investment expenses of $9,000. Horace may carry over $3,200 of investment interest and deduct it in the future. (Correct/Incorrect state the reason)
"During the year, Horace earned an investment income of $13,500, incurred investment interest expense of $7,700, and other investment expenses of $9,000. Horace may carry over $3,200 of investment interest and deduct it in the future." This statement is True.
Investment is the willpower of cash to the acquisition an asset to attain an increase in fee over a period of time. funding requires a sacrifice of some present asset, inclusive of time, money, or effort. In finance, the purpose of investing is to generate a go back from the invested asset.
income investing is a funding strategy that is focused on building a funding portfolio specially established to generate ordinary earnings. the only objective of the profits investing method is to generate a steady move of earnings.
Funding is something we put our money in to assist its development. If we simply preserve our money in a piggy financial institution or drawer, it won't earn any money for us.
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The Free enterprise system is:
A: Supply & Demand
B: Designed to protect consumers' best interests
C. Requires both sides of the story
D. Free of competition
Answer:
Free enterprise is the freedom of individuals and businesses to regulation. It enables individuals and businesses to create, produce, are able and willing, enterprising people produce goods and services for produce and sell goods and services. In this system, no one forces people they believe to be best for them.
a monopoly that can perfectly price discriminate has a marginal revenue curve that is _____ the demand curve for the good that the monopoly produces. if a monopoly can perfectly price discriminate, it produces _____ deadweight loss.
The marginal revenue curve of a monopoly with perfect price discrimination is steeper than the demand curve. A monopoly doesn't cause any deadweight loss if it can properly price discriminate.
What impact does perfect pricing discrimination have on revenue?The monopolist will continue to produce until marginal cost matches the price of the good because under perfect price discrimination, the marginal revenue curve corresponds with the market demand curve.
What happens when pricing discrimination is perfect?The effects of perfect price discrimination: more will be produced than a single-price monopolist (Qp=MC), certain consumers will pay higher prices than they would have otherwise (Pm), while other consumers will pay lower prices.
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what is the independent variable in the following scenario? select the best answer. researchers study the impact of a room's color on productivity.
In the scenario of studying the impact of a room's color on productivity, the independent variable is the room's color.
The independent variable in an experiment is the factor that researchers manipulate or control to observe its effect on the dependent variable. In this case, the researchers are studying the impact of a room's color on productivity. The independent variable is the room's color because the researchers will deliberately choose and manipulate different colors in the rooms they study.
To determine the influence of room color on productivity, the researchers may set up multiple rooms with different colors, such as blue, green, red, or neutral colors. They will then observe and measure the productivity levels of individuals in each room.
By manipulating the independent variable (room color), the researchers can examine its impact on the dependent variable (productivity).
Therefore, in the context of this study, the independent variable is the room's color as it is being controlled and manipulated to investigate its effect on productivity.
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PLEASE HELP WITH THIS
Supplies Expense 2,900,Supplies 2,900This entry records the supplies used during the year. The Supplies Expense account is debited for the amount of supplies used.
What is year ?Year is a measurement of time that is commonly defined as the number of full rotations of the earth around the sun. A year is typically divided into twelve months, each of which consists of thirty to thirty-one days. Depending on the calendar system, a year can also include an extra day or two to account for the fraction of a rotation that is leftover. In most cases, a year is 365 days long, although leap years are 366 days long. The length of a year determines how we mark the passage of time and when events are celebrated.
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An investment of $110,000 in safe 10-year corporate bonds yields an average of 6% per year, payable each year. The effective income tax rate is 35%, and inflation will average 2% per year. How much will this investment of $110,000 be worth in 10 years in today's purchasing power after income taxes and inflation are taken into account? The FW is $ (Round to the nearest dollar.)
The investment of $110,000 is worth $132,506 in 10 years in today's purchasing power after income taxes and inflation are taken into account.
To find the future worth of a $110,000 investment in 10-year corporate bonds, we need to consider the yearly yield, income tax rate, and inflation.
1. Calculate the annual yield after tax
Annual yield = 6% * (1 - 35%)
Annual yield = 6% * (1 - 0.35)
Annual yield = 6% * 0.65
Annual yield = 3.9%
2. Calculate the real annual yield after considering inflation
Real annual yield = (1 + Annual yield) / (1 + Inflation rate) - 1
Real annual yield = (1 + 3.9%) / (1 + 2%) - 1
Real annual yield = (1.039) / (1.02) - 1
Real annual yield = 0.0186 or 1.86%
3. Calculate the future worth of the investment after 10 years in today's purchasing power
FW = Initial investment * (1 + Real annual yield) ^ Number of years
FW = $110,000 * (1 + 1.86%) ^ 10
FW = $110,000 * (1.0186) ^ 10
FW = $110,000 * 1.2046
FW ≈ $132,506 (rounded to the nearest dollar)
So, the investment of $110,000 in safe 10-year corporate bonds will be worth approximately $132,506 in today's purchasing power after income taxes and inflation are taken into account in 10 years.
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Identify the relevant auditing standards (PCAOB, AICPA, and IAASB) relating to communicating with audit committees. Locate the standards on each organization’s website.
Compare the scope of communication intended in the PCAOB standard versus that of the harmonized AICPA/IAASB standards.
How do the AICPA/IAASB standards define "those charged with governance"?
The PCAOB standard notes that the prior auditing standard relating to this topic, AU 380 (1989), indicated that audit committee communications are incidental to the audit. The new PCAOB standard takes quite a different approach, articulating the critical importance of audit committee/auditor communication throughout the year, and certainly before the issuance of the audit report. Comment on why you think the profession has shifted its focus in this regard so significantly.
According to the PCAOB standard, what are the four objectives of the auditor in communicating with the audit committee?
The relevant auditing standards for communicating with audit committees are as follows:
PCAOB (Public Company Accounting Oversight Board):
PCAOB Standard No. 16, Communications with Audit Committees
The standard can be found on the PCAOB's website under "Standards."
AICPA (American Institute of Certified Public Accountants) and IAASB (International Auditing and Assurance Standards Board):
AICPA and IAASB have harmonized their standards on communicating with those charged with governance. The relevant standards are:
AICPA - AU-C Section 260, The Auditor's Communication with Those Charged with Governance
IAASB - ISA 260 (Revised), Communication with Those Charged with Governance
These standards can be found on the AICPA's and IAASB's websites under "Standards and Guidance."
The scope of communication intended in the PCAOB standard is more comprehensive compared to the harmonized AICPA/IAASB standards. The PCAOB standard emphasizes the importance of continuous communication with the audit committee throughout the year, including discussions about the audit plan, significant audit findings, and the auditor's independence. The AICPA/IAASB standards also cover similar topics but may have some differences in specific requirements.
The AICPA/IAASB standards define "those charged with governance" as the individuals or organizations with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability and financial reporting process.
The shift in focus by the profession regarding audit committee/auditor communication can be attributed to several factors. These include a greater emphasis on corporate governance and accountability, increased regulatory scrutiny, and the recognition of the audit committee's vital role in ensuring effective financial reporting and audit quality.
According to the PCAOB standard, the four objectives of the auditor in communicating with the audit committee are:
To provide an overview of the overall audit strategy, including timing and significant risks.
To communicate significant audit findings, including any material weaknesses in internal control.
To discuss the auditor's evaluation of the entity's financial statements and significant accounting policies.
To address other matters required to be communicated by auditing standards, laws, or regulations.
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