# Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost \$40, Jia typically leaves a 20% tip, and an Uber will cost \$5 each way. Jia values the restaurant meal at \$25. Jia enjoys her friend s company and is willing to pay \$30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her \$8.a. Calculate Jia's cost associated with going out to dinner with her friend.b. Calculate Jia's benefits associated with going out to dinner with her friend.

a. Jia's cost associated with going out to dinner with her friend

= \$58

b. Jia's benefit associated with going out to dinner with her friend

= \$47

Explanation:

a) Data and Calculations:

Expected cost of meal =  \$40

Tips (20%)                             8

Transport to & from =         10

Total cost of going out = \$58

Benefits with going out:

Value of restaurant meal =     \$25

Amount Jia is willing to pay = \$30

Less of eating at home            (\$8)

Total benefits with going out \$47

Jia's cost associated with going out to dinner is \$58 and her benefits are \$55.

To calculate Jia's cost associated with going out to dinner with her friend, we need to add up the cost of the meal, the tip, and the Uber rides. The meal cost is \$40, the tip is 20% of the meal cost (0.2 * 40 = \$8), and the Uber rides cost \$5 each way, so the total cost is \$40 + \$8 + \$5 + \$5 = \$58.

To calculate Jia's benefits associated with going out to dinner with her friend, we need to consider the value of the restaurant meal and the enjoyment she gets from spending time with her friend. The value of the meal is \$25, and Jia is willing to pay \$30 just to spend time with her friend, so the total benefits are \$25 + \$30 = \$55.

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## Related Questions

Pro Formas can be structured in many different formats; however, they all help forecast a company’s financial feasibility, breakeven, and profitability. How do you envision this knowledge and skill with pro formas will give you an advantage over other job candidates?

Pro Forma is a financial statement that facilitates comparison of historic data and projections of future predictions.

Explanation:

Pro Forma have different formats but they all do the same thing. They help forecast a company's financial feasibility, break even, and profitability. According to the present situations assumptions about the financial and operating characteristics can be identified.

The results can be assembled in profit and loss projections. Advantage over job candidates is that the past record can be taken into account.

How do you envision this knowledge and skill with pro formas will give you an advantage over other job candidates?

Explanation:

If you know about proformas, you are a specialist in companies that issue a profit announcement and make it available to the public, particularly to potential investors. Additionally, you are able to assess the potential value of a proposed change, such as an acquisition or a merger

Amy sets herself a goal and says. "I'd like to lose 10 pounds." Which of the following criteria of the SMART system is missing in Amy's goal?a. Specificity
b. time frame
c. measurability
d. realism

Letter b is correct. Time frame.

Explanation:

The SMART system is defined as an aid tool for achieving goals. It is a tool that can be used both by an individual and in corporations.

In order to achieve a goal, it is necessary to have the ideal planning of the set of actions that will contribute to the achievement.

Therefore, each letter of the word SMART corresponds to a meaning relevant to the effective implementation and achievement of a goal

S: specific. When drawing up a goal you must be direct and specific.

M: Measurable. To achieve goals, it is necessary to use a tangible indicator that assists the measurement.

A: Achievable. A goal must be planned according to the real possibility of being achieved.

R: Relevant. Goals must be relevant and create positive results for a person or organization.

T: Time. It is necessary to determine a time for the goal to be achieved.  In the question above, Amy lacked the planning for the deadline for achieving the goal, because without it there are great chances that the goal will not be taken seriously and not met.

Shen has plans to go to an opera and already has a \$100 nonrefundable, nonexchangeable, and nontransferable ticket. Now Valerie, whom Shen has wanted to date for a long time, asks him to a party. Shen would prefer to go to the party with Valerie and forgo the opera, but he doesn't want to waste the \$100 he spent on the opera ticket. From the perspective of an economist, if Van decides to go to the party with Amy, what has he just done?1. Incorrectly allowed a sunk cost to influence his decision

2. Made a choice that was not optimal

3 Correctly ignored a sunk cost

3. Correctly ignored a sunk cost

Explanation:

Sunk costs refer to those costs which have been incurred in the past, which are non recoverable and which have no current or future benefits.

Sunk costs are considered as irrelevant for decision making process as they do not relate to current period and have no future implications. For example, research and development expenditure incurred in the past represents a sunk cost.

In the given case, the ticket for opera was already purchased for \$100 which can now neither be recovered nor transferred. Thus this cost is irrelevant for decision making as expenditure has already been made. When Shen decided to go for a party instead of the concert, Shen has correctly ignored a sunk cost.

The end of the year is approaching, and Maxine has begun to focus on ways of minimizing her income tax liability. Several years ago she purchased an investment in Teal Limited Partnership, which is subject to the at-risk and the passive activity loss rules. (Last year Maxine sold a different investment that was subject to these rules and that produced passive activity income.) She believes that her investment in Teal has good long-term economic prospects. However, it has been generating tax losses for several years in a row. In fact, when she was discussing last year's income tax return with her tax accountant, he said that unless "things change" with respect to her investments, she would not be able to deduct losses this year.a. What was the accountant referring to in his comment?
b. You learn that Maxine’s current at-risk basis in her investment is \$1,000 and that her share of the current loss is expected to be \$13,000. Based on these facts, how will her loss be treated?
c. After reviewing her situation, Maxine’s financial adviser suggests that she invest at least an additional \$12,000 in Teal to ensure a full loss deduction in the current year. How do you react to his suggestion?
d. What would you suggest Maxine consider as she attempts to maximize her current year deductible loss?

Explanation:

a) What was the accountant referring to in his comment?

The accountant was referring to the fact that because passive activity losses can only offset passive activity income, she will not be able to deduct the losses in this year. However, she would be able to carry forward the loss to future years to offset any passive activity income generated in those years.

b) You learn that Maxine's current at-risk basis in her investment is \$1,000 and that her share of the current loss is expected to be \$13,000. Based on these facts, how will her loss be treated?

Based upon the fact that her basis in her investment is only \$1000, her losses will be of that amount because of the at-risk limitation, which limits the taxpayer’s deduction by the amount “at risk”. If there is no passive activity income, this would be carried forward to when Maxine would dispose of her entire interest.

c) After reviewing her situation, Maxine's financial adviser suggests that she invest at least an additional \$12,000 in Teal to ensure a full loss deduction in the current year. How do you react to his suggestion?

I believe that her financial adviser’s advice to Maxine is a good idea because if her current lossis expected to be \$13,000, by contributing \$12,000 in Teal, she would be able to deduct the full basis of \$13,000 invested into the company. If there is no passive activity income, this would be carried forward to when Maxine would dispose of her entire interest in Teal.

d) What would you suggest Maxine consider as she attempts to maximize her current year deductible loss? She should consider the advice given to her by her accountant.

Coronado Industries purchased a truck at the beginning of 2017 for \$108800. The truck is estimated to have a salvage value of \$3000 and a useful life of 132250 miles. It was driven 18000 miles in 2017 and 26000 miles in 2018. What is the depreciation expense for 2017?

The depreciation expense for 2017 is \$14,400

Explanation:

Coronado Industries uses the units-of-production depreciation method to calculate Coronado Industries by the following formula:

Depreciation Expense = [(Cost of asset − Residual Value ) x Number of Units Produced]/Life in Number of Units

In the company,

Depreciation Expense per mile = (\$108,800-\$3,000)/132,250=  \$0.8

The truck was 18000 miles in 2017, so the depreciation expense for 2017:

18,000 x \$0.8 = \$14,400

A bond has a modified duration of 8 and a price of 112,955 calculated using an annual effective interest rate of 6.4%. EMAC is the estimated price of this bond at an interest rate of 7.0% using the first-order Macaulay approximation EMOD is the estimated price of this bond at an interest rate of 7.0% using the first-order modified approximation Calculate EC EMOD A. 91 B. 102 C. 116 D. 127 E. 143

Option E (143) is the appropriate solution.

Explanation:

According to the question,

The modified duration will be:

=

=

=

The percentage change in price will be:

=

= (%)

Now,

The EMOD will be:

=

= (\$)

Or,

The EMAC will be:

=

= (\$)

Hence,