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Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method...

Exercise 7-7A Effect of recognizing uncollectible accounts on the financial statements: percent of receivables allowance method LO 7-2

[The following information applies to the questions displayed below.]

Leach Inc. experienced the following events for the first two years of its operations:

Year 1:

Issued $27,000 of common stock for cash.
Provided $96,700 of services on account.
Provided $53,000 of services and received cash.
Collected $86,000 cash from accounts receivable.
Paid $55,000 of salaries expense for the year.
Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.
Closed the revenue account.
Closed the expense account.

Year 2:

Wrote off an uncollectible account for $820.
Provided $105,000 of services on account.
Provided $49,000 of services and collected cash.
Collected $98,000 cash from accounts receivable.
Paid $82,000 of salaries expense for the year.
Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible

Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

In: Accounting

During Year 1 and Year 2, Agatha Corp. completed the following transactions relating to its bond...

During Year 1 and Year 2, Agatha Corp. completed the following transactions relating to its bond issue. The corporation’s fiscal year is the calendar year. Year 1 Jan. 1 Issued $330,000 of 8-year, 8 percent bonds for $324,000. The annual cash payment for interest is due on December 31. Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest. Dec. 31 Closed the interest expense account. Year 2 Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest. Dec. 31 Closed the interest expense account. Required a-1. When the bonds were issued, was the market rate of interest more or less than the stated rate of interest? a-2. If Agatha had sold the bonds at their face amount, what amount of cash would Agatha have received? b. Prepare the liabilities section of the balance sheet at December 31, Year 1 and Year 2. c. Determine the amount of interest expense that will be reported on the income statements for Year 1 and Year 2. d. Determine the amount of interest that will be paid in cash to the bondholders in Year 1 and Year 2.

In: Accounting

During Year 1 and Year 2, Agatha Corp. completed the following transactions relating to its bond...

During Year 1 and Year 2, Agatha Corp. completed the following transactions relating to its bond issue. The corporation’s fiscal year is the calendar year.

Year 1

Jan. 1 Issued $310,000 of 10-year, 6 percent bonds for $298,000. The annual cash payment for interest is due on December 31.

Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest.

Dec. 31 Closed the interest expense account.

Year 2

Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest.

Dec. 31 Closed the interest expense account.

Required

a-1. When the bonds were issued, was the market rate of interest more or less than the stated rate of interest?

a-2. If Agatha had sold the bonds at their face amount, what amount of cash would Agatha have received?

b. Prepare the liabilities section of the balance sheet at December 31, Year 1 and Year 2.

c. Determine the amount of interest expense that will be reported on the income statements for Year 1 and Year 2.

d. Determine the amount of interest that will be paid in cash to the bondholders in Year 1 and Year 2.

In: Accounting

Problem 12-26 Close or Retain a Store [LO12-2] Superior Markets, Inc., operates three stores in a...

Problem 12-26 Close or Retain a Store [LO12-2]

Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below:

Superior Markets, Inc. Income Statement For the Quarter Ended September 30
	Total		North Store			South Store		East Store
Sales	$	4,100,000	$	860,000		$	1,640,000	$	1,600,000
Cost of goods sold		2,255,000		515,000			860,000		880,000
Gross margin		1,845,000		345,000			780,000		720,000
Selling and administrative expenses:
Selling expenses		839,000		242,400			320,500		276,100
Administrative expenses		438,000		117,000			167,400		153,600
Total expenses		1,277,000		359,400			487,900		429,700
Net operating income (loss)	$	568,000	$	(14,400	)	$	292,100	$	290,300

The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use:

The breakdown of the selling and administrative expenses that are shown above is as follows:

	Total		North Store		South Store		East Store
Selling expenses:
Sales salaries	$	263,400	$	69,600	$	80,600	$	113,200
Direct advertising		176,000		62,000		83,000		31,000
General advertising*		61,500		12,900		24,600		24,000
Store rent		280,000		80,000		113,000		87,000
Depreciation of store fixtures		21,500		5,700		7,100		8,700
Delivery salaries		24,300		8,100		8,100		8,100
Depreciation of delivery equipment		12,300		4,100		4,100		4,100
Total selling expenses	$	839,000	$	242,400	$	320,500	$	276,100

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store managers' salaries	$	86,500	$	26,500	$	35,500	$	24,500
General office salaries*		61,500		12,900		24,600		24,000
Insurance on fixtures and inventory		36,000		10,800		14,500		10,700
Utilities		86,145		27,735		29,480		28,930
Employment taxes		65,355		17,565		22,320		25,470
General office—other*		102,500		21,500		41,000		40,000
Total administrative expenses	$	438,000	$	117,000	$	167,400	$	153,600

*Allocated on the basis of sales dollars.

The lease on the building housing the North Store can be broken with no penalty.
The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.
The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $11,900 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,900 per quarter. All other managers and employees in the North store would be discharged.
The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person’s salary is $5,100 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete.
The company pays employment taxes equal to 15% of their employees' salaries.
One-third of the insurance in the North Store is on the store’s fixtures.
The “General office salaries” and “General office—other” relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person’s compensation is $6,450 per quarter.

Required:

2. How much employment taxes will the company avoid if it closes the North Store?

In: Accounting

Problem 12-26 Close or Retain a Store [LO12-2] Superior Markets, Inc., operates three stores in a...

Problem 12-26 Close or Retain a Store [LO12-2]

Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below:

Superior Markets, Inc. Income Statement For the Quarter Ended September 30
	Total		North Store			South Store		East Store
Sales	$	4,100,000	$	860,000		$	1,640,000	$	1,600,000
Cost of goods sold		2,255,000		515,000			860,000		880,000
Gross margin		1,845,000		345,000			780,000		720,000
Selling and administrative expenses:
Selling expenses		839,000		242,400			320,500		276,100
Administrative expenses		438,000		117,000			167,400		153,600
Total expenses		1,277,000		359,400			487,900		429,700
Net operating income (loss)	$	568,000	$	(14,400	)	$	292,100	$	290,300

The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use:

The breakdown of the selling and administrative expenses that are shown above is as follows:

	Total		North Store		South Store		East Store
Selling expenses:
Sales salaries	$	263,400	$	69,600	$	80,600	$	113,200
Direct advertising		176,000		62,000		83,000		31,000
General advertising*		61,500		12,900		24,600		24,000
Store rent		280,000		80,000		113,000		87,000
Depreciation of store fixtures		21,500		5,700		7,100		8,700
Delivery salaries		24,300		8,100		8,100		8,100
Depreciation of delivery equipment		12,300		4,100		4,100		4,100
Total selling expenses	$	839,000	$	242,400	$	320,500	$	276,100

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store managers' salaries	$	86,500	$	26,500	$	35,500	$	24,500
General office salaries*		61,500		12,900		24,600		24,000
Insurance on fixtures and inventory		36,000		10,800		14,500		10,700
Utilities		86,145		27,735		29,480		28,930
Employment taxes		65,355		17,565		22,320		25,470
General office—other*		102,500		21,500		41,000		40,000
Total administrative expenses	$	438,000	$	117,000	$	167,400	$	153,600

*Allocated on the basis of sales dollars.

The lease on the building housing the North Store can be broken with no penalty.
The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.
The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $11,900 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,900 per quarter. All other managers and employees in the North store would be discharged.
The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person’s salary is $5,100 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete.
The company pays employment taxes equal to 15% of their employees' salaries.
One-third of the insurance in the North Store is on the store’s fixtures.
The “General office salaries” and “General office—other” relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person’s compensation is $6,450 per quarter.

Required:

4. Assuming that the North Store's floor space can’t be subleased, would you recommend closing the North Store?

In: Accounting

Problem 12-26 Close or Retain a Store [LO12-2] Superior Markets, Inc., operates three stores in a...

Problem 12-26 Close or Retain a Store [LO12-2]

Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below:

Superior Markets, Inc. Income Statement For the Quarter Ended September 30
	Total		North Store			South Store		East Store
Sales	$	4,100,000	$	860,000		$	1,640,000	$	1,600,000
Cost of goods sold		2,255,000		515,000			860,000		880,000
Gross margin		1,845,000		345,000			780,000		720,000
Selling and administrative expenses:
Selling expenses		839,000		242,400			320,500		276,100
Administrative expenses		438,000		117,000			167,400		153,600
Total expenses		1,277,000		359,400			487,900		429,700
Net operating income (loss)	$	568,000	$	(14,400	)	$	292,100	$	290,300

The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use:

The breakdown of the selling and administrative expenses that are shown above is as follows:

	Total		North Store		South Store		East Store
Selling expenses:
Sales salaries	$	263,400	$	69,600	$	80,600	$	113,200
Direct advertising		176,000		62,000		83,000		31,000
General advertising*		61,500		12,900		24,600		24,000
Store rent		280,000		80,000		113,000		87,000
Depreciation of store fixtures		21,500		5,700		7,100		8,700
Delivery salaries		24,300		8,100		8,100		8,100
Depreciation of delivery equipment		12,300		4,100		4,100		4,100
Total selling expenses	$	839,000	$	242,400	$	320,500	$	276,100

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store managers' salaries	$	86,500	$	26,500	$	35,500	$	24,500
General office salaries*		61,500		12,900		24,600		24,000
Insurance on fixtures and inventory		36,000		10,800		14,500		10,700
Utilities		86,145		27,735		29,480		28,930
Employment taxes		65,355		17,565		22,320		25,470
General office—other*		102,500		21,500		41,000		40,000
Total administrative expenses	$	438,000	$	117,000	$	167,400	$	153,600

*Allocated on the basis of sales dollars.

The lease on the building housing the North Store can be broken with no penalty.
The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.
The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $11,900 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,900 per quarter. All other managers and employees in the North store would be discharged.
The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person’s salary is $5,100 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete.
The company pays employment taxes equal to 15% of their employees' salaries.
One-third of the insurance in the North Store is on the store’s fixtures.
The “General office salaries” and “General office—other” relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person’s compensation is $6,450 per quarter.

Required:

3. What is the financial advantage (disadvantage) of closing the North Store?

In: Accounting

Background In this hypothetical scenario, you are the Chief Executive Officer (CEO), of a company, Island...

Background

In this hypothetical scenario, you are the Chief Executive Officer (CEO), of a company, Island Ports Limited. Your business, is a global business, with shipping ports in all of the major English speaking Caribbean countries. On January 7, 2020, you signed a Heads of Agreement with the Government of The Bahamas to invest $120 million during Phase I to develop a cruise port on the island of New Providence. As you can appreciate, the signing and the commitment of your shareholders to this project, preceded any information available to your company and its shareholders with respect to the potential impact of the coronavirus, i.e. COVID-19.

Concessions granted to Island Ports (hypothetical scenario)

The following were the concessions granted to Island Ports during the signing of the Heads of Agreement:

i. A twenty (20) year tax holidays in relation to the payment of any real property tax for this project. Island Ports, Chief Financial Officer, has estimated that the tax forgiveness by the Government of The Bahamas is equivalent to $1.01 million annually.

ii. A ten (10) year tax waiver on the payment of Value Added Tax on all goods imported for the construction of the port and goods sold to the public, once the port is operational. The CFO estimates that the gain to Island Ports as a result of this tax concession, is conservatively estimated at $5.4 million annually.

iii. A ten (10) year waiver of import duties on all inputs needed in the construction of the port. The CFO has estimated that this import tax waiver amounts to an average of $2 million over the next ten (10) years.

iv. A land grant of ten (10) acres for the construction of the port. This is land that is owned by the Government of TheBahamas and will be given to Island Ports for a nominal price of $10. The land has a market value of $15.5 million.

Commitments from Island Ports to the Government and People of The Bahamas

In light of the concessions granted to Island Ports as listed above, the company has committed the following to the Government and people of The Bahamas:

i. Five hundred (500) direct jobs during the Phase I construction of the port. During the initial signing of the Heads of Agreement, in January, 2020, there was a commitment for the construction to start September, 2020, with the first phase completed May, 2021.

ii. Phase I of the project is estimated to cost $60 million. The entire sum, i.e. $60 million needed for the construction of this phase, will be sourced from external investors. These investors had pledged the financing prior to the COVID-19 pandemic.

iii. Some local ownership by offering shares to the general public. The public is expected to have a 40% stake in the project. It is estimated that this 40% stake will provide a net benefit to the domestic economy of $40 million over the next 5-7 years.

iv. By way of the added economic activity created as a result of Island Ports, the government is expected to get an added $15 million in revenues in head tax revenues from cruise passengers to the new port. This additional $15 million in revenues is predicated on the port being operational August 1, 2021, which means that construction must begin September, 2020.

The following is the outlook for The Bahamas, based on baseline data (as at 2019) taken from the Central Bank Quarterly Digest at www.centralbankbahamas.com and projections for 2020 based on these baseline numbers:

Table I: Key Metrics for The Bahamas

Key Metrics	As at 2019 (Pre COVID-19)	Impact – Projected 2020
National Debt as at December, 2019 ($mils.)	$8,749	$10,413
Debt in Foreign Currency ($mils.)	$2,618	$4,282
Foreign Reserves as at Feb., 2020 ($mils.)	$2,001	$900
Gross Domestic Product (2019) ($mils.)	$12,900	$10,900
National Debt as % of GDP	67.8%	95.5%
Tourism Expenditure as at 2019 ($mils.)*	$2,817	$1,665
Unemployment as at November, 2019	11.0%	24.8%
Government GFS Deficit ($mils.)	($377.6)	($1,664)

• The tourism expenditure of $1.665 billion does not take into account seasonal adjustments/variations, which may result in even a lower level of receipts from tourism.

You have just been appointed the Chief Operating Officer (COO) of Island Ports. You have over twenty years experienceadvising CEO’s on strategic decisions. In addition to your experience as an advisor on strategy, you are accomplished academically. You were a graduate of the University of TheBahamas and later pursued your Masters at Yale in Analytics and Strategy. Needless to say, there is high expectations from your office, in helping the company, Island Ports on the way forward.

Decision

Island Ports has to decide as to whether it wishes to move forward in September, 2020, with the start of construction of Phase I of the construction of the cruise port in New Providence. Island Ports investors are also reluctant to move forward in the current environment. The Government of The Bahamas is also applying pressure to Island Ports to get started with its construction, as this project will provide much needed jobs for the economy, at a time when jobs and incomes are really needed. The government has also reminded Island Ports of the generous concessions that were granted on the condition that the project gets started on time. While the Government of The Bahamas is applying pressure to Island Ports, the company has reminded the government that its project will provide tremendous benefits to the country, through its efforts and ingenuity.

As the COO, you are asked to advise the company on the way forward by way of answering the following questions:

i. Should Island Ports move forward with the construction of the cruise port with effect from September, 2020. What is the rationale that would support such a move? What is the rationale for not moving ahead?

ii. The company is also interested in knowing, from the perspective of the government, how can the company be persuaded that it should move with the construction at this time? In other words, assume that Island Ports is reluctant to move forward, what would be factors that would force Island Ports to move ahead with construction in this environment?

iii. In light of the metrics and the information provided in this scenario, what is the impact for the domestic economy; and for the company in moving forward with this project?

iv. What are your recommendations from the perspective of (a) Island Ports; and (b) the Government of The Bahamas in relation to whether the project should move forward.

v. Any other thoughts.

APPENDIX

Key Metrics – The Bahamas

Assumptions and other notes:

• A key assumption is that there will be some semblance of normalcy, circa August, 2020. The length of time and the depth, i.e. sectors impacted are all factors that could impact the metrics.

• During the period of the Financial Crisis, i.e. Great Recession, the unemployment statistics in The Bahamas ranged from around 12% to a height of 16.8% in 2011. This Pandemic, i.e. COVID-19 is expected to be more severe when compared to the Great Recession of 2008, which was concentrated primarily within the area of Financial Services/Financial Markets, COVID-19 is much broader in scope affecting all sectors/markets. The projected rate is 24.8%. This is conservative, considering that at the height of this crisis, the U.S. is projecting 32% , as a result of COVID-19, ending at about 12% by year end 2020, based on recovery starting third quarter.

• The projected increase in the national debt, reflects the existing debt stock of $8.749 billion and the projected GFS deficit of $1.664 billion. The increase in foreign currency borrowing, reflects that new borrowings will come exclusively from outside rather than internal borrowings in B$.

• It is conceivable that the impact to GDP depending on the length of the shut-down, some estimates are on the high end of closer to $2.8 billion of the GDP impact. I have looked at a more conservative estimates of $2 billion.

• The foreign reserves from most estimates, is expected to be reduced to about $900 million to the end of 2020. This reflects reduced receipts from tourism. Also, the fourth quarter there is usually a run of the reserves for Christmas shopping, even in an economy in recession, there will be draw downs.

• In calculating the GFS (based on Government Finance Statistics, IMF defined basis of calculating deficits), the government’s deficit of $1.064 billion, is based on tourism share of the economy of 65% (most estimates are closer to 70%, conservative estimate) and government’s share of the economy of circa 20%. Based on calculations, the loss by way of tourism expenditure based on arguably a return to some semblance of normalcy in August, 2020 is $1.152 billion. Using a factor of 2.98, equivalent to a proxy of a multiplier, considering that tourism with direct and indirect effects, government’s GFS fiscal deficit will widen from the 2019/20 projection of $377 million to $1.064 billion. The $1.064 billion is just the deficit attributed to the decline in economic activity, taking into account the $600 million thereabouts of subsidies to individuals and businesses, the GFS deficit is closer to $1.664 billion.

Table I: Key Metrics

Key Metrics	As at 2019 (Pre COVID-19)	Impact – Projected 2020
National Debt as at December, 2019 ($mils.)	$8,749	$10,413
Debt in Foreign Currency ($mils.)	$2,618	$4,282
Foreign Reserves as at Feb., 2020 ($mils.)	$2,001	$900
Gross Domestic Product (2019) ($mils.)	$12,900	$10,900
National Debt as % of GDP	67.8%	95.5%
Tourism Expenditure as at 2019 ($mils.)*	$2,817	$1,665
Unemployment as at November, 2019	11.0%	24.8%
Government GFS Deficit ($mils.)	($377.6)	($1,664)

The tourism expenditure of $1.665 billion does not take into account seasonal adjustments/variations, which may result in even a lower level of receipts from tourism.

In: Economics

On December 31, 2020, Pronghorn Inc. rendered services to Beghun Corporation at an agreed price of...

On December 31, 2020, Pronghorn Inc. rendered services to Beghun Corporation at an agreed price of $120,418, accepting $47,200 down and agreeing to accept the balance in four equal installments of $23,600 receivable each December 31. An assumed interest rate of 11% is imputed.

Prepare an amortization schedule. Assume that the effective-interest method is used for amortization purposes. (Round answers to 0 decimal places, e.g. 5,275.)

December 31, 2020 Schedule of Note Discount Amortization
Date	Cash Received	Interest Revenue	Discount Amortized	Carrying Amount of Note
12/31/20	$	$	$	$
12/31/21
12/31/22
12/31/23
12/31/24

eTextbook and Media

List of Accounts

Prepare the entries that would be recorded by Pronghorn Inc. for the sale on December 31, 2020. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

eTextbook and Media

List of Accounts

Prepare the entries that would be recorded by Pronghorn Inc. for the (a) receipts and (b) interest on December 31, 2021. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
(a)

(b)

eTextbook and Media

List of Accounts

Prepare the entries that would be recorded by Pronghorn Inc. for the (a) receipts and (b) interest on December 31, 2022. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
(a)

(b)

eTextbook and Media

List of Accounts

Prepare the entries that would be recorded by Pronghorn Inc. for the (a) receipts and (b) interest on December 31, 2023. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
(a)

(b)

eTextbook and Media

List of Accounts

Prepare the entries that would be recorded by Pronghorn Inc. for the (a) receipts and (b) interest on December 31, 2024. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

In: Accounting

What is the amount that Dan would have to pay Lachlan so that each received half of the total extra gains from chopping down the tree?

Lachlan has a Jacaranda growing in his yard. One of the tree limbs is growing over into Dan’s property. Dan does not like this and wants Lachlan to chop down the tree. Their respective benefits are shown below:

Keeping Tree Chopping Down Tree

Gains to Lachlan ($) 1000 500

Gains to Dan ($) 100 1,006

Total ($) 1100

What is the amount that Dan would have to pay Lachlan so that each received half of the total extra gains from chopping down the tree? Answer to the nearest whole number in dollars (with no decimal places, $ sign, spaces or commas).

In: Economics

You plan to take out a $700,000 mortgage for 30 years with monthly payments. If you...

You plan to take out a $700,000 mortgage for 30 years with monthly payments.
1. If you don’t have a down payment, they will offer you an interest rate of 5.7%. If you can make a down payment of at least $20,000 they will lower the interest rate to 5.2%. Calculate the monthly payment for each loan.
2. 1. You would like to see how long it will take you to come up with a down payment. You already have $6,000 and can put away $500 every quarter at 4% interest compounded quarterly. How long will it take you to save up to $20,000?

In: Advanced Math