4. Suppose GDP is $800 billion, taxes are $150 billion, private saving is $50 billion, and public saving is $20 billion. Assuming this economy is closed, calculate consumption, government purchases, national saving, and investment.

Using the method of recursion, compute y[n] for n = 0 to 20, when x[n]=u[n] and y[-1]=2:

?[? + 1] − 0.8?[?] = ?[?]

Find a closed-form expression for your result.

Let f be a continuous function on the closed interval [0,1] with a range also contained in [0,1]. Prove that f that there exists an x in [0,1] such that f(x)=x. Is the same explanation still valid if f is not continuous?

5. Find a closed-form formula for the exponential generating function for the number of strings of length n with symbols a, b, c, where (number of a′s) + (number of b′s) ≥ 1; and, # c′s = even

Determine if the following requirements for a wet well control system, are consistent:

a) If the pump is on then the valve shall be open.

b) If the valve is closed then the water level is ≤ 10 meters.

c) If the water level is >10 meters then the pump is on.

A country’s government has been running a deficit for the past few years. Suppose this country decides to increase its government spending. Compare the impact of the increase in government spending in a closed economy and an open economy.

Describe how the Liskov Substitution Principle can influence the way that you might implement the Open Closed Principle in software. (Describe how it might help but also how it might constrain implementations of the OCP.)

Assume Southern Coper Corporation (SCCO) acquired mining equipment for $100,000 cash on January 1,2016. The equipment had an expected useful life of four years and zero salvage value. SCCO calculates depreciation using the SL method over the remaining expected useful life in all cases. On dec.31, 2016 after recognizing deprecation for the year,  SCCO learns that new equipment now offered on market makes the purchased equipment partially obsolete.     The market value of the equipment on Dec.31, 2016, reflecting this obsolescence, is $60,000. The expected useful life does not change. On Dec,31, 2017, the market value of the equipment is $48,0000. SCCO sells the equipment on Jan. 1, 2019 for 26,000

Required:

Assume for this part that SCCO accounts for the equipment using Historical cost adjusted for depreciation and impairment losses. Using the analytical framework discussed, indicate the effects of the following events on BS and IS.

Acquisition of the equipment foe cash on Jan.1,2016.

Depreciation for 2016

Impairment loss for 2016

Depreciation 2017

Depreciation 2018

Sale of equipment on January 1,2019.

Assume that SCCO accounts for the equipment using current fair market values adjusted for depreciation and impairment losses (with changes in fair values recognized in net income). Using the analytical framework discussed, indicate the effects of the following events on BS and IS

1. Acquisition of the equipment foe cash on Jan.1,2016.

            2. Depreciation for 2016

            3. Impairment loss for 2016

            4. Depreciation 2017

            5. Recognition of unrealized holding gain or loss for 2017

            6. Depreciation 2018

            7. Recognition of unrealized holding gain or loss for 2018

            8. Sale of equipment on January 1, 2019.

C.  After the equipment is sold, why is retained earning on Jan. 1, 2019, equal to negative   

      $74,000 in both cases despite having shown a different pattern of expenses, gains,

      and losses over time?

Question Number 2

Effect of Valuation Method for Monetary Asset on Balance Sheet and Income

Statement.

Assume Walmart acquires a tract of land on Jan.1, 2016, for $100,000 cash. On Dec. 31,  2016, the current market value of the land is $150,000. On Dec. 31,2017, the current market value of land is 120,000 The firm sells the land on Dec.31, 2018, for $180,000 cash.

Assume that Walmart has accounted for the value of the land at acquisition cost and sells land on Dec. 31, 2018, for a two year note receivable with present value of $180,000 instead of for cash, the note bears interest at 8% and requires cash payments of $100,939 on Dec. 31, 2019 and 2010. Interest rates for notes of this risk level increase to 10% on Dec.31, 2019, resulting in a market value for the note date of $ 91,762.

Required

Ignore income taxes. Indicate the effect on BS and IS of the preceding information for 2018, 2019, and 2020 under each of the following valuation methods.

Valuation of the note at the present value of future cash flows using the historical market interest rate of 8% (Approach 1):

Valuation of the note at the present value of future cash flows, adjusting the note to fair  

value upon changes in market interest rates and including unrealized gains and losses in      net income (Approach 2).

Why is retained earning on Dec.31, 2020, equal to $101,878 in both cases despite the reporting of different amounts of net income each year?