Eco 372 Week 2 Assignment

INTRODUCTION Economic growth is defined as the increased capacity of an economy to be able to produce goods and services in comparison from one period of time to another. This is figured by the genuine Gross Domestic Product (GDP) and development, and is measured by utilizing genuine terms such as “Balanced Inflation”. These terms help to remove any distorted views on the perceived outcome of inflation on the cost of merchandises produced. Likewise, Economic growth is related to the high expectations in a person’s standard of living. If the standards are high, it wouldn’t be beneficial for the economy as the working class individuals will face a lot of trouble.

This means as employees’ nominal wages increase with inflation their real wage (purchasing power of nominal wages) may remain constant. Since inflation reduces the incentive for households to save, it causes a shortage of savings for firms to borrow. Firms finance investment (the purchase of new capital goods) by borrowing money. Therefore, if there is not saving funds for investment will

As a result of the lease, the company will be assessed an annual VAT amount of $ 93K on the annual lease payment. Additionally, St. John Mexico’s minimal taxable income will be increased by 44K due to the increase in the operating expense as a result of the inclusion of the rent expense. Consequently, St. John Mexico will incur an additional income tax liability of $13K. 3. Generally, Mexico imposes a 10% withholding tax on dividends paid to foreign parents.

This ratio is increased to 67.6% by 2015. Which are way higher than the industry average of 32.23% and sector average of 39.17%. This change is caused by the notes issuance and debts Costco entered. Firstly, Costco issued $3,500 million of Senior Notes in December 2012. Secondly, its Japanese Costco Subsidiary issued $102 million of promissory notes and got an approximately $102 three-year term loan.

When workers see that their wages have risen, they supply more labor, leading to a lower unemployment rate. Workers may not realize immediately that their purchasing power has fallen due to quickly rising prices, but over time, their expectations and understanding changes and they begin to supply less labor, thus resulting in the natural rate of unemployment and high inflation. Phelps illustrates this phenomenon in his expectations-augmented Phillips Curve. His contributions have better explained the relationship between unemployment

The increasing number of foreign investors in China will have negative impact on the economy without government’s intervention. Without government intervention infant industries will not benefit from low taxes and incentive for exports and will fail to compete in the free trade causing unemployment in the country. Secondly with resource allocation, Chinese government controls the resources based on comparative advantage helping domestic firms to specialize based on cheapest resource available. The availability of the resources increases the output of domestic firms; this will improves the balance of payment of a country because of the increase in value of export compared to the import. Lastly the dynamic mechanism states that growth can be sustained by introduction of new technologies, foreign investments and from imports.

The expansion will occur due to the change in the workers income caused by the federal minimum wage rise. When the income will grow the amount of spendings will grow as well. As the result, businesses’ profits will go up which will give them an opportunity to provide more workplaces.Thus people who seek jobs will be given a chance to find one. However, it would perfectly work this way only for a big businesses with higher profits level while small businesses will not feel the benefits that much. However, big businesses may collaborate with small businesses since they are able to produce and earn more than they did before.

Q3. How much value, if any, does Buffett derive from the credit agreement? There are two parts of the credit agreement, the 8-year term loan and the penny warrants. The $400 million term loan accompanying with a $45 million revolving credit facility will give Buffett a chance to earn at an interest rate of 10.5%. Based on the result of calculation, the NPV that Berkshire can gain is $51.2 million.

STEP 1: Subtract each discount from 100% 100% - 5% = 95% 100% - 10% = 90% STEP 2: Multiply them together. 95% X 90% 0.95 X 0.90 = 0.855 ( Net price equivalent rate ) Net price = List Price X Net Price Equivalent Rate = ( $1,000 X 6 fireplaces ) X 0.855 = $5,130 d) What are the steps to calculate the single equivalent discount rate and how to get the trade discount? Firstly, we must compute the complement of each rate. Next, multiply all the complement rate as decimal and write the product as a percent. Then, subtract the product from 100% to get the equivalent single discount rate.

2) CD Rates Wells Fargo Wells Fargo’s most popular CD rates require a minimal deposit of $1,000. Wells Fargo’s CD rates range from a 3 month 0.01% APY to a 6 month 0.01% APY to a 1 year 0.05% APY. In addition, the APY in 60 months is .35%. Bank of America Bank of America’s most popular CD rates require a minimal deposit of $10,000. Bank of America’s rates range from a 3 month 0.01% APY to a 6 month 0.03% APY to a 1 year 0.05% APY.