Assume that Equilibrium Real GDP is $20,000 while Potential Real GDP is $15,000. The marginal propensity to consume is 9/10. Assume that government decides to lower taxes by $1,000. To pay for this, it lowers government purchases by $1,000. As a result of these two changes, what is the new Equilibrium Real GDP?

Answers

Answer 1

The new equilibrium real GDP is $19,900, resulting from a decrease in government purchase and a decrease in taxes with a marginal propensity to consume of 9/10.

To determine the new equilibrium real GDP resulting from the changes in taxes and government purchases, we need to consider the impact of these changes on aggregate demand (AD) and potential real GDP (Yp).

Given the information provided:

Equilibrium Real GDP (Y) = $20,000

Potential Real GDP (Yp) = $15,000

Marginal Propensity to Consume (MPC) = 9/10

The formula for aggregate demand is:

AD = C + I + G + (X - M)

where C is consumption, I is investment, G is government purchases, X is exports, and M is imports.

In this case, we are assuming that investment (I), exports (X), and imports (M) remain unchanged.

consumption (C) and government purchases (G).

1. Change in consumption:

Given the marginal propensity to consume (MPC) of 9/10, a $1,000 decrease in taxes will result in an increase in consumption by (MPC * $1,000) = $900.

2. Change in government purchases:

A decrease in government purchases by $1,000 directly reduces aggregate demand by $1,000.

To find the new equilibrium real GDP, we need to calculate the change in aggregate demand (ΔAD) resulting from the changes in consumption and government purchases.

ΔAD = ΔC + ΔG

    = $900 + (-$1,000)

    = -$100

The change in aggregate demand, ΔAD, is -$100. To find the new equilibrium real GDP, we need to add this change to the initial equilibrium real GDP.

New Equilibrium Real GDP (Ynew = Y + ΔAD

                                = $20,000 + (-$100)

                                = $19,900.

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Related Questions

The rate of flow ft) of a continuous income stream is a linear function, decreasing from $11.000 per year when t=0 to $6,000 per year when t= 12. Find the total income produced in the first 12 years. The total income produced in the first 12 years in s (Simplify your answer.)

Answers

To determine the total income generated in the first 12 years, add the income streams over that time period using arithmetic series formula:

What is a finite arithmetic sequence's formula?

A finite arithmetic series is obtained by adding a finite number of terms in an arithmetic sequence. When a=1 and d=1, a simple arithmetic sequence is formed, which is the sequence of positive integers: Tn=a+(n−1)d=1+(n−1)(1)=n∴{Tn}=1;2;3;4;5;…

Sn = (n/2) * (a + l)

When t = 0, the first term (a) is $11,000 per year, and when t = 12, the last term (l) is $6,000 per year. The series contains a total of 12 terms (n = 12).

Total income = ∫(mt + b) dt from t=0 to t=12

= ∫((-($5,000/12))t + $11,000) dt from t=0 to t=12

= [(-($5,000/12))(t²/2) + $11,000t] from t=0 to t=12

= [(-($5,000/12))(12²/2) + $11,000(12)] - [(-($5,000/12))(0²/2) + $11,000(0)]

= [(-($5,000/12))(72) + $11,000(12)] - [0 + 0]

= (-$30,000 + $132,000) - $0

= $102,000

As a result, the total income generated in the first 12 years is $102,000.

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Parker Plumbing has received a special one-time order for 1,500 faucets (units) at $5 per unit. Parker currently produces and sells 7,500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $1,250 on the special order, the size of the order would need to be:
A) 4,500 units.
B) 2,250 units.
C) 1,125 units.
D) 625 units.
E) 300 units.

Answers

The size of the special order needed to earn a profit of $1,250 is 2,250 units. The correct option B.

To earn a profit of $1,250 on the special order, Parker Plumbing needs to generate additional revenue of $1,250 plus cover the additional production costs of the new machine. The cost to produce one unit is $4.50, including fixed and variable costs. Therefore, the additional cost to produce 1,500 units would be 1,500 units x $4.50 per unit = $6,750.

To calculate the minimum number of units Parker Plumbing needs to produce to earn a profit of $1,250, we can use the following equation:

Profit = Revenue - Total Cost

We know that the revenue from the special order would be 1,500 units x $5 per unit = $7,500. We also know that Parker currently produces and sells 7,500 units at $6 each, for a total revenue of 7,500 units x $6 per unit = $45,000.

To find the minimum number of units Parker needs to produce to earn a profit of $1,250, we can set up the following equation:

$1,250 = $7,500 + $45,000 - ($6,750 + (x units * $4.50 per unit))

Solving for x, we get:

x = 2,250 units

Therefore, the size of the special order needed to earn a profit of $1,250 is 2,250 units, option B.

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Suppose the economy is in a long run equilibrium to start. Now suppose the government misreads the economic data and engages in contractionary fiscal policy by raising income taxes, reducing some government spending and keeps it that way.
Per our model, what happens in the long run?
a. price level will fall
b. real output will increase
c. SRAS will shift to the left
d. the money supply will fall

Answers

In the long run, if the government engages in contractionary fiscal policy by raising income taxes and reducing government spending, the result will be (a) the price level will fall.

Contractionary fiscal policy refers to the deliberate actions taken by the government to reduce aggregate demand in the economy. It typically involves measures such as increasing taxes and reducing government spending.

The primary objective of contractionary fiscal policy is to slow down economic growth and control inflationary pressures.

Overall, the objective of contractionary fiscal policy is to reduce aggregate demand and slow down economic growth, with the aim of controlling inflation. While a decrease in aggregate demand can have implications for price stability, it does not guarantee a fall in the price level itself.

The relationship between aggregate demand, inflation, and the price level is complex and influenced by various factors, including the overall state of the economy, inflation expectations, and supply-side factors.

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a company's net sales are $775,420, its costs of goods sold are $413,890, and its net income is $117,220. its gross margin ratio equals group of answer choices 46.6% 28.3% 31.5% 53.4%

Answers

To find the gross margin ratio, we need to first calculate the gross profit. It is the difference between the company's net sales and its costs of goods sold.


Gross profit = Net sales - Costs of goods sold
Gross profit = $775,420 - $413,890
Gross profit = $361,530
Then, we can calculate the gross margin ratio by dividing the gross profit by the net sales and multiplying by 100:
Gross margin ratio = (Gross profit / Net sales) x 100
Gross margin ratio = ($361,530 / $775,420) x 100
Gross margin ratio = 46.6%
Therefore, the company's gross margin ratio is 46.6%.

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A stock just paid $2 dividend yesterday. The dividend is expected to grow at 3.6% per year thereafter. If the beta of the stock is 1.2, risk-free rate is 3.5%, and the market risk premium is 6%, then using the dividend discount model, the stock price should be _______.

Answers

The stock price should be approximately $40.12.

The Dividend Discount Model (DDM) can be used to estimate the stock price by discounting the future dividends. The formula for the DDM is:

Stock Price = Dividend / (Required Rate of Return - Dividend Growth Rate)

In this case, the dividend just paid is $2, and it is expected to grow at a rate of 3.6% per year thereafter. The beta of the stock is 1.2, the risk-free rate is 3.5%, and the market risk premium is 6%.

To calculate the required rate of return, we use the Capital Asset Pricing Model (CAPM):

Required Rate of Return = Risk-Free Rate + Beta * Market Risk Premium

Required Rate of Return = 3.5% + 1.2 * 6% = 3.5% + 7.2% = 10.7%

Substituting the values into the DDM formula:

Stock Price = $2 / (0.107 - 0.036)

Simplifying the expression gives:

Stock Price = $2 / 0.071

Calculating the value gives approximately $28.17.

Therefore, the stock price should be approximately $40.12 when rounded to two decimal places.

The question should be:

A stock just paid $2 dividend yesterday. The dividend is expected to grow at 3.6% per year thereafter. If the beta of the stock is 1.2, risk-free rate is 3.5%, and the market risk premium is 6%, then using the dividend discount model, the stock price should be _______. (Round your answer to two decimal places, such as 12.34).

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You would like to create a portfolio that is equally a invested in a risk-free asset and two stocks. One stock has a beta of 0.55. If you want the portfolio to be equally a as risky as the overall market, what must be the beta of the second stock?

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The beta of the second stock must be 2.45 to create a portfolio equally as risky as the overall market.

To create a portfolio that is equally invested in a risk-free asset and two stocks, with the goal of having the same level of risk as the overall market, we need to determine the appropriate beta for the second stock.

The beta of a stock measures its sensitivity to market movements. A beta of 1 indicates that the stock tends to move in line with the overall market. A beta less than 1 suggests that the stock is less volatile than the market, while a beta greater than 1 implies that the stock is more volatile.

Since we want the portfolio to be equally risky as the overall market, we need to balance the beta values of the two stocks.

Let's denote the beta of the second stock as "β2". Given that the first stock has a beta of 0.55, we can calculate the required beta for the second stock using the formula:

Portfolio Beta = (Beta of Stock 1 * Weight of Stock 1) + (Beta of Stock 2 * Weight of Stock 2)

Since we want an equal investment in the risk-free asset and the two stocks, the weights would be 1/3 for each stock. We can substitute these values into the formula:

1 = (0.55 * 1/3) + (β2 * 1/3)

Simplifying the equation, we have:

1 = 0.1833 + (β2 * 1/3)

Subtracting 0.1833 from both sides:

0.8167 = β2/3

Multiplying both sides by 3:

β2 = 2.45

Therefore, to have a portfolio equally risky as the overall market, the second stock should have a beta of approximately 2.45.

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YOU Inc., a radio cassette manufacturer, sold its business due to poor market shares. According to the BCG Matrix, the firm sold its business because the business had become a _____ as seen in its poor prospects and performance.
a. star
b. question mark
c. cash cow
d. dog

Answers

According to the BCG Matrix, YOU Inc., a radio cassette manufacturer, sold its business due to poor market shares because the business had become a (d) dog. The term "dog" in the BCG Matrix refers to a business unit with low market share and low market growth, resulting in poor prospects and performance.

In conclusion, the BCG Matrix can be a useful tool for evaluating the performance and prospects of a company's products or services.

By understanding which category a product or service falls into, a company can make informed decisions about whether to invest in it, divest from it, or maintain its current position.

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How do you... Calculate the Net Present Value, Payback Period, and Internal Rate of Return of this
project. (please use any random values so that I can grasp an understanding)
And... Interpret the values you calculated. Should the company proceed with the project or not?

Answers

Positive NPV, acceptable Payback Period, and IRR exceeding the discount rate indicate a financially viable project that exceeds the cost of capital, supporting the company's decision to proceed.

To calculate the Net Present Value (NPV), Payback Period, and Internal Rate of Return (IRR) of a project, you need cash flows and a discount rate. Let's assume the following random values for a project:

Initial Investment: $100,000

Year 1 Cash Flow: $30,000

Year 2 Cash Flow: $40,000

Year 3 Cash Flow: $50,000

Discount Rate: 10%

1) Net Present Value (NPV):

NPV calculates the present value of expected cash flows by discounting them back to the present. NPV is calculated as the sum of discounted cash flows minus the initial investment.

NPV = Present Value of Cash Flows - Initial Investment

Using the discount rate of 10%:

NPV = ($30,000 / (1 + 0.10)^1) + ($40,000 / (1 + 0.10)^2) + ($50,000 / (1 + 0.10)^3) - $100,000

2) Payback Period:

Payback Period calculates the time required to recover the initial investment. It is the length of time it takes for the cumulative cash inflows to equal or exceed the initial investment.

Payback Period = Number of Years before Cumulative Cash Inflows ≥ Initial Investment

3) Internal Rate of Return (IRR):

IRR is the discount rate at which the NPV of cash flows becomes zero. It indicates the project's rate of return.

Using the given cash flows, the IRR can be calculated by finding the discount rate that makes the NPV zero.

Interpretation:

- If the NPV is positive, it indicates that the project is expected to generate more cash inflows than the initial investment. A higher positive NPV signifies higher profitability.

- The Payback Period indicates how quickly the initial investment can be recovered. A shorter payback period is generally favorable.

- The IRR represents the rate of return the project is expected to generate. If the IRR is higher than the discount rate (10% in this case), it indicates the project is expected to yield returns higher than the required rate of return.

Based on the calculated values, if the NPV is positive, the Payback Period is within an acceptable timeframe, and the IRR is higher than the discount rate, it suggests that the company should proceed with the project as it is expected to be financially viable and generate returns that exceed the cost of capital. However, the specific decision to proceed should consider other factors such as strategic fit, market conditions, and risk assessment.

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Regardless of whether a company adopts proactive or reactive public relations, no company has total control over public opinion about its brand. Critically examine this statement and provide justification why this seems to be the case.

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Regardless of whether a company adopts proactive or reactive public relations, no company has total control over public opinion about its brand.The statement is true.

Public opinion is formed by a complex interplay of various factors, including personal experiences, media coverage, social media conversations, word-of-mouth, and individual perceptions. While proactive public relations efforts can help shape and influence public opinion through strategic communication, storytelling, and brand management, they cannot guarantee complete control over how the public perceives a company. Similarly, reactive public relations aims to address and mitigate negative perceptions or crises, but it cannot entirely dictate how the public will react or interpret the company's response.

Public opinion is subjective and can be influenced by external factors beyond a company's control. Individuals may form opinions based on their own biases, beliefs, or experiences, which may not align with a company's intended message. Additionally, public opinion can be swayed by external events, competitive actions, or unforeseen circumstances, making it challenging for a company to maintain absolute control over public perception.

While proactive and reactive public relations efforts are crucial for managing and influencing public opinion, no company can have complete control over how the public perceives its brand. Companies can only strive to shape public opinion by consistently delivering positive experiences, engaging in transparent communication, and effectively managing their reputation.

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QUESTION 6 One of the negative of a corporation is known as "double taxation". What does this concept refer to? a. the corporate tax rate is double the individual tax rate b. both officer's salaries and dividends to shareholders are taxed c. Corporate earnings are subject to income tax and sales tax d. both corporate earings and dividends to shareholders are taxed

Answers

The correct answer is:

d. both corporate earnings and dividends to shareholders are taxed.

The concept of "double taxation" refers to the situation where corporate earnings are taxed at the corporate level, and then when those earnings are distributed to shareholders in the form of dividends, they are taxed again at the individual shareholder level. This results in the same income being subject to taxation twice.

First, the corporation pays income tax on its earnings at the corporate tax rate, which is typically higher than the individual tax rate. Then, when the corporation distributes dividends to its shareholders, those dividends are treated as personal income for the shareholders and are subject to individual income tax.

This double taxation can be seen as a disadvantage of the corporate form of business because it can reduce the after-tax profits available to shareholders. It creates a potential tax burden on corporate profits that is not present in other business structures, such as partnerships or sole proprietorships, where profits are taxed only once at the individual level.

It's important to note that not all countries have the same tax laws, and the specifics of corporate taxation can vary. However, in general, double taxation refers to the taxation of both corporate earnings and dividends to shareholders.

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the primary goal of a business firm is to question content area bottom part 1 a. make a quality product. b. maximize profit. c. promote fairness. d. increase its production. e. promote workforce job satisfaction.

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The primary goal of a business firm is to maximize profit.

The fundamental objective of a business firm is to generate profits and achieve financial success. Maximizing profit entails increasing revenues, minimizing costs, and optimizing overall financial performance. Profitability is crucial for a business to sustain its operations, invest in growth, provide returns to shareholders, and create long-term value. While aspects such as making a quality product, increasing production, promoting fairness, and fostering workforce job satisfaction are important considerations for a business, they are typically seen as means to achieve the ultimate goal of maximizing profit. By focusing on profit maximization, a business firm can ensure its viability, competitiveness, and ability to meet the needs and demands of its stakeholders, including customers, employees, and investors.

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Which of the following statements is correct regarding the accuracy of the estimates derived under the gross profit method?
a. Estimates are always less accurate than those derived from the retail inventory method.
b. Estimates are always more accurate than those derived from the retail inventory method.
c. Accuracy depends on the nature of the business.
d. Accuracy depends on the size of the business.

Answers

The correct statement regarding the accuracy of estimates derived under the gross profit method is that accuracy depends on the nature of the business.

This is because the gross profit method assumes a consistent gross profit percentage, which may not be true for all businesses. For example, a business that experiences significant fluctuations in its cost of goods sold or sales volume may have a less accurate estimate using the gross profit method. Additionally, the accuracy of estimates can be affected by the level of detail and accuracy of the underlying data used in the calculations. Therefore, it is important for businesses to carefully evaluate the appropriateness and reliability of the gross profit method for their specific circumstances and to regularly review and adjust their estimates as necessary.

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An advantage of tradable permits over command and control policies is that:
options:
a.policy makers do not need to know abatement costs to produce an optimal tax rate.
b.policy makers determine the best abatement method.
c.the marginal cost of abatement decreases as the environment becomes cleaner.
d.the law of diminishing returns will cause abatement costs to decline.

Answers

The correct option is: c. The marginal cost of abatement decreases as the environment becomes cleaner.

Tradable permits, also known as cap-and-trade systems, are a market-based approach to environmental regulation. They involve setting a total limit or cap on the amount of pollution that can be emitted by regulated entities. This total limit is divided into individual permits that can be bought, sold, or traded among participants.

One advantage of tradable permits over command and control policies, which prescribe specific pollution control measures, is that tradable permits create economic incentives for pollution reduction. By allowing permits to be traded, firms that can achieve pollution reductions at a lower cost can sell their permits to those facing higher abatement costs. This creates flexibility and encourages cost-effective pollution reduction strategies.

As the environment becomes cleaner and pollution levels decrease, the demand for permits decreases, leading to a decrease in their price. This reduction in permit prices reflects a decrease in the marginal cost of abatement. Firms that have already implemented effective pollution control measures can sell their permits at a lower cost, benefiting from their early action.

In contrast, command and control policies do not provide the same flexibility and cost-effectiveness. They often impose uniform requirements on all regulated entities, regardless of their individual abatement costs or capabilities. This can lead to inefficient allocation of resources and potentially higher overall costs of pollution reduction.

Tradable permits offer the advantage of decreasing marginal abatement costs as the environment becomes cleaner, providing economic incentives for cost-effective pollution reduction strategies and allowing for flexibility in meeting environmental goals.

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Lady GaGa donated cash of $300,000 to a public charity
that she has long supported. What is her maximum charitable
contribution deduction for the year 2021 if her AGI is
$400,000?

Answers

Lady Gaga can claim a maximum charitable contribution deduction of $300,000 for the year 2021, based on her cash donation to a public charity and her AGI of $400,000. This deduction allows her to reduce her taxable income, potentially lowering her overall tax liability.

For the tax year 2021, the maximum charitable contribution deduction an individual can claim depends on their adjusted gross income (AGI) and the type of organization they are donating to.

In Lady Gaga's case, she donated $300,000 in cash to a public charity. For cash donations made to public charities, the Internal Revenue Service (IRS) allows individuals to deduct up to 100% of their AGI. Since her AGI is $400,000, Lady Gaga is eligible to deduct the full amount of her cash donation, which is $300,000.

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True/false: Companies today are focused on vertical integration encompassing the ownership and coordination of all supply chain activities while also outsourcing their core competencies.

Answers

False. While some companies may focus on vertical integration, many others are pursuing a strategy of outsourcing non-core competencies to specialized vendors while retaining control over their core competencies.

This allows companies to benefit from the expertise of external partners while focusing on their own areas of expertise. The main answer to the question is false, and the is that while vertical integration is a viable strategy for some companies, many are pursuing a different approach that involves outsourcing non-core activities.
True/false: Companies today are focused on vertical integration encompassing the ownership and coordination of all supply chain activities while also outsourcing their core competencies.

False. While some companies do focus on vertical integration to control their supply chain activities, it is not accurate to say that all companies today follow this approach. Furthermore, outsourcing core competencies would be counterproductive, as companies generally aim to strengthen and retain control over their core competencies to maintain a competitive advantage in the market.

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star residences fails to provide the utilities to its tenants’ apartments, making their use and enjoyment of the premises exceedingly difficult. this is most likely

Answers

This situation is most likely a violation of the tenants' rights and can be considered a breach of the landlord's responsibilities.

It may be categorized as a case of landlord negligence or a failure to fulfill contractual obligations.

By failing to provide utilities to the tenants' apartments, Star Residences is not meeting its duty to maintain habitable living conditions and provide basic amenities as outlined in many landlord-tenant agreements and local housing regulations. Access to utilities such as water, electricity, and heating is generally considered essential for tenants' use and enjoyment of the premises.

The lack of utilities can significantly impact the tenants' daily lives, making it exceedingly difficult for them to carry out basic activities such as cooking, cleaning, and maintaining a comfortable living environment. It can also create health and safety concerns.

In such a situation, the affected tenants may have grounds to take legal action against Star Residences to seek remedies such as repairs, compensation for inconvenience, or potentially terminating the lease agreement without penalty. They may also consider reporting the issue to local housing authorities or seeking legal advice to understand their rights and s.

It's important for landlords to fulfill their responsibilities and provide essential services to their tenants, ensuring that the premises are habitable and meet reasonable living standards.

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describe the steps a land surveyor would need to do when performing a boundary survey. rank the steps from first to last. resethelp

Answers

When performing a boundary survey, a land surveyor follows a specific set of steps to accurately determine the boundaries of a property.

The steps can vary depending on the specific circumstances and requirements of the survey, but here is a general outline of the process, ranked from first to last:

1. Gather information: The surveyor begins by collecting all available information related to the property, including deeds, plats, previous surveys, and any other relevant documents. This information helps establish the starting point for the survey and provides valuable data about the property's history.

2. Research: The surveyor conducts research to understand the legal description of the property, its boundaries, and any applicable local regulations or restrictions. This step helps ensure that the survey is conducted in compliance with legal requirements.

3. Locate property corners: Using the gathered information and any physical evidence on-site, such as existing monuments or markers, the surveyor identifies and locates the property corners. This typically involves physical measurements and the use of surveying equipment, such as total stations or GPS.

4. Measure boundary lines: Once the property corners are established, the surveyor measures the boundary lines between the corners. This may involve using surveying equipment to take accurate distance and angle measurements, as well as accounting for any natural or man-made features that affect the boundaries.

5. Document and record findings: The surveyor documents all measurements, observations, and relevant data obtained during the survey. This includes creating sketches, maps, or plats that illustrate the boundaries and any significant features. The findings are then compiled into an official survey report.

6. Prepare survey report: The surveyor prepares a comprehensive survey report that includes a detailed description of the survey methodology, the legal description of the property, the boundary measurements, and any other relevant information. This report serves as an official record of the survey findings.

7. Mark boundaries: As a final step, the surveyor may place physical markers or monuments along the property boundaries to provide a visual reference for future use. These markers help property owners and other professionals identify and respect the established boundaries.

It's important to note that the specific steps and their order may vary depending on the unique circumstances of each boundary survey. Local regulations, terrain conditions, and the complexity of the property can influence the surveyor's approach. Consulting with a professional land surveyor is recommended to ensure accurate boundary determination.

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if the annal net cash flow of phase 2 is $5000000 per year, what is the present value of the net cash flow when evaluated at the beginning of phase 2 (year 4)?note that phase 2 is 7 years.

Answers

To calculate the present value of the net cash flow of phase 2 when evaluated at the beginning of year 4, we need to use the formula for present value of an annuity.

Step 1: Calculate the discount rate or the rate of return that could be earned on an investment with similar risk. Let's assume the discount rate is 8%.

Step 2: Determine the present value factor. Using a present value table, we can find the present value factor for an annuity due with 8% discount rate and 7-year duration. The factor is 5.3349.

Step 3: Multiply the present value factor by the annual net cash flow.

PV = 5.3349 x $5000000 = $26,674,500

Therefore, the present value of the net cash flow of phase 2 when evaluated at the beginning of year 4 is $26,674,500.

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Problem 1
Bank made a $200M loan at 12%. The bank wants to hedge the exposure by
entering a TRS with a counterparty. The bank promises to pay the interest on
the loan plus the change in market value in exchange for LIBOR+40bp. If after
one year the market value of the loan decreased by 3% and LIBOR is 11% what is
the net obligation of the bank?
Problem 2
A credit spread option has a notional of $100M with a maturity of one year.
The underlying security is a 8% 10-year bond issued by corporation XYZ. The
current spread is 150bp against 10- year Treasuries. The option is European type
with a strike of 160bp.
Assume that at expiration Treasury yield has moved from 6.5% to 6% and
the credit spread widened to 180bp.

Answers

The net obligation of the bank in this TRS arrangement is -$27,200,000. the outcome of the credit spread option is a payoff of $300,000.

Problem 1: To calculate the net obligation of the bank in the Total Return Swap (TRS), we need to determine the interest payment on the loan and the change in market value.

Loan amount: $200 million

Interest rate: 12%

Market value decrease: -3%

LIBOR rate: 11%

TRS rate: LIBOR + 40 basis points (0.40%)

First, let's calculate the interest payment on the loan:

Interest payment = Loan amount * Interest rate

Interest payment = $200,000,000 * 12% = $24,000,000

Next, let's calculate the change in market value of the loan:

Market value decrease = -3%

Change in market value = Loan amount * Market value decrease

Change in market value = $200,000,000 * -3% = -$6,000,000

Now, let's calculate the TRS payment based on LIBOR and the TRS rate:

TRS payment = Loan interest payment + Change in market value

TRS payment = $24,000,000 + (-$6,000,000) = $18,000,000

Since the TRS rate is LIBOR + 40 basis points, we need to calculate the LIBOR payment:

LIBOR payment = Loan amount * (LIBOR rate + TRS rate)

LIBOR payment = $200,000,000 * (11% + 0.40%) = $45,200,000

Finally, the net obligation of the bank is the TRS payment minus the LIBOR payment:

Net obligation = TRS payment - LIBOR payment

Net obligation = $18,000,000 - $45,200,000 = -$27,200,000

Therefore, the net obligation of the bank in this TRS arrangement is -$27,200,000.

Problem 2:

To calculate the outcome of the credit spread option, we need to determine the change in Treasury yield and the change in credit spread.

Notional: $100 million

Maturity: 1 year

Underlying security: 8% 10-year bond by corporation XYZ

Current spread: 150 basis points (1.50%)

Option type: European

Strike: 160 basis points (1.60%)

Treasury yield change: 6.5% to 6%

Credit spread change: 150bp to 180bp (1.50% to 1.80%)

First, let's calculate the change in Treasury yield:

Treasury yield change = Initial Treasury yield - Final Treasury yield

Treasury yield change = 6.5% - 6% = 0.5%

Next, let's calculate the change in credit spread:

Credit spread change = Final credit spread - Initial credit spread

Credit spread change = 180bp - 150bp = 30 basis points (0.30%)

Since the option is European, we only consider the final values for the Treasury yield and credit spread.

If the credit spread has widened to 180 basis points (1.80%) and the Treasury yield is 6%, we compare the credit spread to the strike:

If Credit spread > Strike:

Option payoff = Notional * Credit spread change

Option payoff = $100,000,000 * 0.30% = $300,000

Therefore, the outcome of the credit spread option is a payoff of $300,000.

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question 4: a monetarist economist believes that a. if the economy was left alone, it would rarely operate at full employment b. the economy is self-regulating and always at full employment c. the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic d. the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic

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A monetarist economist believes that the economy- c.  is self-regulating and will normally operate at full employment if monetary policy is not erratic.

What does this mean?

This means that they believe the government should not intervene too heavily in the economy, but rather focus on controlling the money supply to stabilize prices and stimulate growth.

However, they do acknowledge that the economy may not always operate at full employment due to external shocks or unpredictable events. Therefore, they argue that fiscal policy should also be managed in a responsible manner to ensure stability and growth.

In summary, a monetarist economist believes in limited government intervention, a focus on monetary policy, and responsible fiscal policy to achieve a stable and prosperous economy.

Hence, option c. is correct.

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What is the first and last name of the Adventure Works customer that spent the most on the website?
Only include transactions paid in currency ‘US Dollar’.
You will need to use the FactInternetSales, dimCustomer and dimCurrency tables.
Nichole Nara
Maurice Shan
Kate Anand
Janet Munoz

Answers

To find the first and last name of the Adventure Works customer that spent the most on the website in US Dollars, we will need to use the FactInternetSales, dimCustomer, and dimCurrency tables.

What do we need?

First, we will need to filter the transactions to only include those paid in US Dollars. Then, we will join the FactInternetSales table with the dimCustomer table to get the customer information.

We can use the SUM function to calculate the total amount spent by each customer.

Finally, we can sort the results in descending order and select the first row to get the customer who spent the most.

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under a disability income policy which provision would be payable

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Under a disability income policy, the provision that would be payable is the disability benefit provision.

This provision specifies the conditions and criteria under which the insured individual is eligible to receive benefits in the event of a disability that prevents them from working or earning income.

The disability benefit provision typically outlines the definition of disability, waiting periods before benefits are payable, benefit duration, and the calculation of benefit amounts. It ensures that the insured individual receives financial support during the period of disability, helping to replace lost income and cover living expenses. The specific details of the provision may vary depending on the terms and conditions of the policy.

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A customer purchased 10 municipal OID bonds at 92. If he holds them to maturity, he will be federally taxed on which of the following?
A) $800.
B) $8,000.
C) $0.
D) $80.

Answers

The investor would need to report the OID as taxable income in the year it accrues. Here option D is the correct answer.

If the customer purchased 10 municipal OID (Original Issue Discount) bonds at 92 and holds them to maturity, the federal tax implications would depend on the specific characteristics of the bonds and the investor's tax situation.

Municipal OID bonds are typically issued by state or local governments, and the interest income they generate is generally exempt from federal income tax. However, if the bonds are purchased at a discount, such as in this case where they were bought at 92, the OID portion may be subject to taxation.

OID represents the difference between the purchase price and the face value of the bond at maturity. In this scenario, since the bonds were bought at 92, the OID amount would be the difference between 92 and 100 (the face value of the bond). So, in this case, the OID is $8 per bond (100 - 92 = 8).

To determine the federal tax implications, the investor would need to report the OID as taxable income in the year it accrues. So, if the investor holds the bonds to maturity, they would need to report the total OID amount, which is $8 per bond multiplied by 10 bonds, equaling $80.

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This question gives you more market sizing practice (it’s a skill you’ll need). Using the logic from the chapter, try to estimate the possible market for the number of pairs of football pants a manufacturer could sell in your city. Hints:
1.Go online and find the number of high schools in your city’s school districts. If you live in a large city, focus on only the largest school district.
2.Assume that 90% of those high schools have both a varsity football team (with 40 players) and a junior varsity team (35).
3.Assume also that each player gets 2 pairs of game pants (one in the dark school colors, and one in the light), and on average, 1.5 pairs of white pants for practice

Answers

To estimate the potential market for football pants in a city, we can follow a logical approach based on the given hints. By finding the number of high schools in the city's school district.

To estimate the market size for football pants in a city, we can start by researching the number of high schools in the city's school district. Let's assume that 90% of these high schools have both a varsity football team with 40 players and a junior varsity team with 35 players. Each player typically needs two pairs of game pants, one in dark school colors and one in light colors. Therefore, the total number of game pants required can be calculated by multiplying the number of teams (varsity and junior varsity) by the number of players per team by 2.

Additionally, on average, each player requires 1.5 pairs of white pants for practice. So, we can calculate the total number of white practice pants required by multiplying the total number of players by 1.5. By summing up the total number of game pants and white practice pants, we can estimate the potential market size for football pants in the city, assuming all teams and players purchase the pants from the manufacturer.

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explain clearly..
The market for apcie sies in the city Estonia is competitive and has the following demand schedule Demand Schedule Price Quantity Demanded (Dollars) (Pies) 1.200 1.300 > 4 200 5 800 6 ? 500 400 0 10 1

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In the given demand schedule for apcie sies in the city of Estonia, we have the price and the corresponding quantity demanded. The demand schedule shows how the quantity demanded varies at different prices.

At a price of $1.20 per pie, the quantity demanded is greater than 4 pies.

At a price of $1.30 per pie, the quantity demanded is 200 pies.

At a price of $5 per pie, the quantity demanded is 800 pies.

The demand schedule does not provide information about the quantity demanded at a price of $6 per pie. It only shows a question mark (?), indicating that the data is missing or not provided.

At a price of $10 per pie, the quantity demanded is 400 pies.

At a price of $0 per pie (which is unlikely in a real market), the quantity demanded is 1,000 pies.

It's important to note that the demand schedule represents the relationship between price and quantity demanded in a competitive market. As the price increases, the quantity demanded typically decreases, and vice versa.

To determine the quantity demanded at a price of $6 per pie, additional information is needed, such as market research data or consumer behavior analysis. Without that information, we cannot determine the exact quantity demanded at that specific price.

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A principal of $1000 is invested at 3% interest. Find the amount after 10 years if the interest is compounded (a) annually, (b) semiannually, (c) quarterly, (d) monthly, and (e) daily.

Answers

The amount after 10 years with different compounding frequencies would be:(a) annually: $1343.

to calculate the amount after 10 years with different compounding frequencies, we can use the formula for compound interest:

a = p * (1 + r/n)⁽ⁿ*ᵗ⁾

where:a = amount after t years

p = principal amountr = annual interest rate (in decimal form)

n = number of times interest is compounded per yeart = number of years

given:

principal amount (p) = $1000annual interest rate (r) = 3% = 0.03

(a) compounded annually (n = 1)

a = 1000 * (1 + 0.03/1)⁽¹*¹⁰⁾ = $1343.92

(b) compounded semiannually (n = 2)a =[tex]1000 * (1 + 0.03/2)(2*20)[/tex]= $1347.98

(c) compounded quarterly (n = 4)

a = 1000 * (1 + 0.03/4)⁽⁴*¹⁰⁾ = $1351.58

(d) compounded monthly (n = 12)a = 1000 * (1 + 0.03/12)⁽¹²*¹⁰⁾ = $1353.74

(e) compounded daily (n = 365)

a = 1000 * (1 + 0.03/365)⁽³⁶⁵*¹⁰⁾ = $1354.45 92

(b) semiannually: $1347.98(c) quarterly: $1351.58

(d) monthly: $1353.74(e) daily: $1354.45

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A common tool project teams use is a responsibility assignment matrix (RAM). Typically, this chart will depict: a. the early start and early finish, and late start and late finish, of each schedule activity. b. the duration of each activity. c. all the work packages and the resources assigned for various responsibilities regarding each work package. d. the hierarchical organizational reporting structure.

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The correct answer is c. all the work packages and the resources assigned for various responsibilities regarding each work package.

A responsibility assignment matrix (RAM), also known as a RACI matrix, is a project management tool that clarifies and communicates the roles and responsibilities of team members involved in a project. It depicts the different work packages or activities of the project and identifies the individuals or roles responsible, accountable, consulted, or informed (RACI) for each activity.

The RAM chart helps to ensure that there is clarity and accountability within the project team by clearly defining who is responsible for completing specific tasks or work packages. It outlines the project's organizational structure in terms of responsibility assignments, providing a visual representation of the project team's roles and responsibilities.

Option c accurately describes what a responsibility assignment matrix (RAM) typically depicts, making it the correct answer. The RAM does not usually include information about the early start and finish or late start and finish of each activity (option a), the duration of each activity (option b), or the hierarchical organizational reporting structure (option d).

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bernie is a former executive who is retired. this year bernie received $220,000 in pension payments and $10,800 of social security payments. what amount must bernie include in his gross income?

Answers

In the given scenario, Bernie, a retired executive, received $220,000 in pension payments and $10,800 in Social Security payments. To determine the amount Bernie must include in his gross income, we need to consider the taxability rules for pension and Social Security income.

Pension Income:

Pension income is generally taxable and must be included in gross income. Therefore, Bernie needs to include the full amount of $220,000 in his gross income.

Social Security Income:

The taxability of Social Security benefits depends on Bernie's total income and filing status. If Bernie's combined income (adjusted gross income + nontaxable interest + half of Social Security benefits) exceeds certain thresholds, a portion of his Social Security benefits may become taxable.

To calculate the taxable portion of Social Security benefits, Bernie needs to use the appropriate worksheet in the IRS Publication 915 or consult a tax professional.

In summary, Bernie must include the full $220,000 pension income in his gross income. The taxable portion of his Social Security benefits will depend on his total income and should be determined based on the applicable IRS rules.

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when real estate licensing laws were established state legislatures

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Real estate licensing laws were established by state legislatures in the early 20th century to regulate the real estate industry and ensure consumer protection.

These laws vary from state to state and govern the requirements and qualifications for obtaining a real estate license, as well as the conduct and responsibilities of licensed real estate agents and brokers.

In the early 20th century, concerns over fraudulent practices and unethical behavior in the real estate industry prompted state legislatures to establish licensing laws. These laws aimed to protect consumers by setting standards for professional competency and ethics among real estate practitioners. By requiring individuals to obtain a license, states could ensure that agents and brokers met certain qualifications and adhered to specific regulations. Over time, licensing laws have evolved and been refined to keep pace with changing industry practices and protect the interests of both buyers and sellers in real estate transactions.

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Question 7 (5 marks) 1/2 A B с A 0,0 2,0 4,0 B 0,2 -1,-1 1,-1 с 0,4 -1,1 -2,-2 lestions Q i. Solve for a mixed strategy Nash equilibrium. Show your working.

Answers

To solve for a mixed strategy Nash equilibrium, we need to determine the probabilities with which each player chooses their respective strategies. In this case, we have a 3x3 game with players A, B, and C.

Given the payoff matrix:

         A      B     C

A     0,0   2,0   4,0

B     0,2  -1,-1   1,-1

C     0,4  -1,1   -2,-2

Let's assume that player A chooses strategy A with probability p, strategy B with probability q, and strategy C with probability (1 - p - q). Similarly, player B chooses strategy A with probability r, strategy B with probability s, and strategy C with probability (1 - r - s).

To find the mixed strategy Nash equilibrium, we need to calculate the expected payoffs for each player and set them equal across all strategies.

Player A's expected payoff for choosing strategy A:

E(A, A) = 0p + 2r + 4(1 - p - r) = 4 - 2p + 2r

Player A's expected payoff for choosing strategy B:

E(A, B) = 0q - 1s + (-1)(1 - p - q - s) = -1 + p - q + s

Player A's expected payoff for choosing strategy C:

E(A, C) = 0(1 - p - q) + (-1)(1 - r - s) + (-2)(p + q) = -1 - 3p - 2q + r + s

Setting the expected payoffs equal for each strategy, we get the following equations:

4 - 2p + 2r = -1 + p - q + s    (Equation 1)

-1 + p - q + s = -1 - 3p - 2q + r + s   (Equation 2)

Simplifying Equation 2:

4p + q - r = 0    (Equation 3)

Now, let's consider player B's expected payoffs:

Player B's expected payoff for choosing strategy A:

E(B, A) = 0p + 2r + 4(1 - p - r) = 4 - 2p + 2r

Player B's expected payoff for choosing strategy B:

E(B, B) = 2p - s - r + (-1)(1 - p - q - s) = 1 + p - q - s

Player B's expected payoff for choosing strategy C:

E(B, C) = 2(1 - p - q) - 1(1 - r - s) + (-2)(p + q) = 2 - 2p - 2q - r - s

Setting the expected payoffs equal for each strategy, we get the following equations:

4 - 2p + 2r = 1 + p - q - s    (Equation 4)

1 + p - q - s = 2 - 2p - 2q - r - s    (Equation 5)

Simplifying Equation 5:

3p + q + r = 0    (Equation 6)

Now, we have a system of three equations (Equations 3, 4, and 6) that we can solve simultaneously to find the mixed strategy Nash equilibrium.

Solving Equations 3, 4, and 6:

4 - 2p + 2r = 1 + p - q - s    (Equation 4)

3

p + q + r = 0    (Equation 6)

Simplifying Equation 4:

-3p + 2q - 2r + s = -3    (Equation 7)

Now we have a system of three equations (Equations 3, 6, and 7) that we can solve simultaneously to find the mixed strategy Nash equilibrium.

Solving Equations 3, 6, and 7:

4p + q - r = 0    (Equation 3)

3p + q + r = 0    (Equation 6)

-3p + 2q - 2r + s = -3    (Equation 7)

From this point, you can use various methods such as substitution or elimination to solve the system of equations and find the values of p, q, r, and s that represent the mixed strategy Nash equilibrium.

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