Answer:
Bond Price= $121.27
Explanation:
Giving the following information:
Face value= $1,000
Coupon= 0.2*1,000= $20
Maturity= 35 years
Discount rate= 17%
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 20*{[1 - (1.17^-35)] / 0.17} + [1,000/(1.17^35)]
Bond Price= 117.16 + 4.11
Bond Price= $121.27
Rough-cut capacity planning: Multiple Choice Looks at specific products to be run in specific factories. Determines if the MRP is feasible or not. Analyzes both labor and equipment capacity throughout the organization. Examines total capacity by measuring average factory output.
Answer: Examines total capacity by measuring average factory output
Explanation:
Rough Cut Capacity Planning refers to the long-term plan capacity planning tool which is used for negotiation of changes to the available capacity or master schedule or for the balancing the available capacity.
Rough-cut capacity planning examines the total capacity by measuring average factory output. Therefore, the correct option is D.
You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 12.1 percent. Stock X has an expected return of 10.28 percent and a beta of 1.20, and Stock Y has an expected return of 7.52 percent and a beta of .80.
a. How much money will you invest in Stock Y? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the beta of your portfolio? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
a. Investment in Stock Y
b. Portfolio beta
Answer:
a. Amount to invest in Y
The amount that will be invested in Stock Y should be such that the expected return of the portfolio would equal 12.1%.
This would be determined by the weights of the stock.
Assume the weight to be invested in X is x.
Portfolio return = (weight of X * Return of X) + (weight of Y * Return of Y)
12.1% = (x * 10.28%) + ( (1 - x) * 7.52%)
0.121 = 0.1028x + 0.0752 - 0.0752x
0.121 - 0.0752 = 0.1028x - 0.0752x
0.0458 = 0.0276x
x = 0.0458 / 0.0276
= 1.6594
Weight in stock Y:
= 1 - 1.6594
= -0.6594
Amount to invest in Y:
= -0.6594 * 100,000
= -$65,940
b. Portfolio beta
It will be a weighted average of the betas of the two stocks:
= (Weight of stock X * Stock X Beta) + ( Weight of stock Y * Stock Y beta)
= (1.6594 * 1.20) + (-0.6594 * 0.80)
= 1.46
Information technology (IT) consists of all the hardware that a firm needs to use in order to achieve its business objectives, whereas information systems consist of only the software and business processes.
A. True
B. False
Answer:
B. False
Explanation:
Since information technology contains all the types of hardware that the firm should be required for attaining the objectives of the business and on the other hand, the information system contains the decision making that should be improved from time to time not the software & the business processes
So as per the given situation, the given statement is false
Hence, the correct option is b.
National Chemical Company manufactures a chemical compound that is sold for $52 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $73 per gallon. National expects the market for the new compound variant to be 8,800 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $132,000. Required: a. What would be the effect on total profit if National produces the new compound variant
Answer: $52,800
Explanation:
The effect on profit is:
= (Difference in selling price - Incremental cost per unit of producing the new variant) * Number of gallons of new gallons to be produced
= ((73 - 52) - (132,000 / 8,800) ) * 8,800
= ( 21 - 15) * 8,800
= $52,800
Profit is positive so they should produce the new variant.
Use the following information to compute the cost of direct materials used for the current year. Assume the raw materials inventory account is used only for direct materials. (Assume no indirect materials.)
January 1 December 31
Inventories Raw materials inventory $6,700 $11,000
Work in process inventory 12,400 11,600
Finished goods inventory 10,900 7,500
Activity during current year Materials purchased $127,000
Direct labor 103,200
Factory overhead 47,700
Answer:
Direct material used= $122,700
Explanation:
Giving the following information:
January 1 December 31
Inventories Raw materials inventory $6,700 $11,000
Activity during current year Materials purchased $127,000
To calculate the direct material used, we need to use the following formula:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 6,700 + 127,000 - 11,000
Direct material used= $122,700
Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be
Answer:
$12
Explanation:
Producer's surplus=1/2*Q*P( Just like the formula for the area of a triangle which is 1/2*base*height)
P is the price of the item which is $4
Q is the quantity bought and sold, which is 6 units in this case, hence, the producer surplus is shown thus
producer's surplus=1/2*$4*6
producer's surplus=$12
A consol is a bond that: a. Pays a fixed annual coupon amount, and when originally issued, is set to mature in 30 years. b. Pays a fixed annual coupon amount, and when originally issued, is set to mature in 50 years. c. Does not pay an annual co
Complete Question:
A consol is a bond that:
a. Pays a fixed annual coupon amount, and when originally issued, is set to mature in 30 years.
b. Pays a fixed annual coupon amount, and when originally issued, is set to mature in 50 years.
c. Does not pay an annual coupon (i.e., the annual coupon payment is $0) but when it matures pays out the par value of the bond.
d. Does not pay an annual coupon (i.e., the annual coupon payment is $0) and never matures.
e. Pays a fixed annual coupon amount forever.
Answer:
A consol is a bond that:
e. Pays a fixed annual coupon amount forever.
Explanation:
This debt instrument issued by the government does not have any scheduled date for the return of principal, but it pays perpetual interest payments without any maturity date. It is a perpetual annuity. The government determines when to repay the principal if it so chooses. This implies that the holders continue to receive annual interests.
A rich singer has donated $450,846 to endow a university professorial chair in Bohemian Studies. If the money is invested at 12.65%, how much can be withdrawn each year, ad infinitum (indefinitely), to pay the Professor of B.S.
Answer:
Annual withdrawal= $57,032.02
Explanation:
Giving the following information:
Initial investment (PV)= $450,846
Interest rate (i)= 12.65%
To calculate the annual withdrawal, we need to use the following formula:
PV= Cf / i
Cf= annual cash flow
450,846= Cf / 0.1265
450,846*0.1265 = Cf
Cf= $57,032.02
The following transactions occurred during July:
1. Received $900 cash for services provided to a customer during July.
2. Received $2,200 cash investment from Barbara Hanson, the owner of the business.
3. Received $750 from a customer in partial payment of his account receivable which arose from sales in June.
4. Provided services to a customer on credit, $375.
5. Borrowed $6,000 from the bank by signing a promissory note.
6. Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?
Answer:
$1,275
Explanation:
Calculation to determine the amount of revenue for July
Using this formula
Revenue=Cash received for services provided+Services provided customer on credit
Let plug in the formula
Revenue=$900 + $375
Revenue = $1,275
Therefore the amount of revenue for July is $1,275
(Perpetuities) What is the present value of the following? a. A $ perpetuity discounted back to the present at percent b. A $ perpetuity discounted back to the present at percent c. A $ perpetuity discounted back to the present at percent d. A $ perpetuity discounted back to the present at percent
Answer:
The present value of a perpetuity is calculated as follows:
= Cashflow / Discount rate
a. Present value of $400 perpetuity discounted at 15%
= 400 / 0.15
= $2,666.67
b. Present value of $3,000 perpetuity discounted at 19%
= 3,000 / 0.19
= $15,789.47
c. Present value of $110 perpetuity discounted at 16%
= 110 / 16%
= $687.50
d. Present value of $60 perpetuity discounted at 12%
= 60 / 0.12
= $500
The following is the data for Lauren Enterprises:
Selling and administrative expenses $75,000
Direct materials used 265,000
Direct labor (25,000 hours) 300,000
Factory overhead application rate $16 per DLH
Inventories
Beginning Ending
Direct materials $50,000 $45,000
Work in process 75,000 90,000
Finished goods 40,000 25,000
What is the cost of goods manufactured?
a. $1,115,000
b. $965,000
c. $955,000
d. $950,000
Answer:
b. $965,000
Explanation:
Calculation of Cost of Goods Manufactured
Particulars Amount
Direct material used $265,000
Direct labor $300,000
Factory overhead $400,000
Total manufacturing cost $965,000
Economists assume that individual decisions will be determined by the output or production costs they create. the output or production costs they create. the trade-offs they creates. the trade-offs they creates. the societal demands associated with them.
Answer:
the trade-offs they creates.
Explanation:
Trade-off is the opportunity cost of taking a particular decision
Opportunity cost of the next best option forgone when one alternative is chosen over other alternatives
For example, if there is a worker who values an hour of leisure at $10 and he is paid $20 per hour. If he has to choose between leisure and working. He would choose to work because the opportunity cost of not working (10) is lower when compared to the opportunity cost of leisure ($20)
A trade off is a situation that includes the decline or reduction n one quality and property for the sake of another. Only a certain value of objected can fit into the terms of multiple terms of the configurations.
An economics always assumes the individual decision making ability to determine the output or production costs they create.Hence the option A is correct.
Learn more about the assume that individual decisions will.
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The residual income valuation model is a rigorous and straightforward valuation approach, but the analyst should be aware of all of the following implementation issues that will hinder its ability to measure firm value correctly except: _________
a. common stock transactions
b. portions of net income attributable to equity claimants other than common shareholders
c. dirty surplus accounting items
d. positive book value of equity
Answer:
d. positive book value of equity
Explanation:
The residual income valuation model is the valuation approach that could have the issues when it is implemented that can create difficulties for measuring the firm value in an accurate way for transactions done for common stock, net income portion for equity other than common stock,, and dirty surplus for an accounting items but not for the positive equity book value as it does not create the difficulties
On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available:
Beginning inventory, January 1: $5000
Net sales: $79,000
Net purchases: $77,000
The company's gross margin ratio is 20%. Using the gross profit method, the estimated ending inventory value would be:_____.
A) $18,800.
B) $82,000.
C) $15,800.
D) $63,200.
E) $15,400.
The projected capital budget of Kandell Corporation is $500,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $500,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out
Answer:
the total dividend pay out in the case when the residual dividend policy followed is $300,000
Explanation:
The computation of the total dividend pay out is given below:
= Net income - (equity × capital budget)
= $500,000 - (0.40 × $500,000)
= $500,000 - $200,000
= $300,000
Hence, the total dividend pay out in the case when the residual dividend policy followed is $300,000
The following data are given for Stringer Company: Budgeted production 929 units Actual production 1,031 units Materials: Standard price per ounce $1.80 Standard ounces per completed unit 11 Actual ounces purchased and used in production 11,681 Actual price paid for materials $23,946 Labor: Standard hourly labor rate $14.47 per hour Standard hours allowed per completed unit 4.1 Actual labor hours worked 5,309.65 Actual total labor costs $80,972 Overhead: Actual and budgeted fixed overhead $1,040,000 Standard variable overhead rate $27.00 per standard labor hour Actual variable overhead costs $148,670 Overhead is applied on standard labor hours. Round your intermediate calculations and final answer to the nearest cent. The direct materials price variance is a.$2,920.25 favorable b.$7,300.62 unfavorable c.$7,300.62 favorable d.$2,920.25 unfavorable
Answer:
d.$2,920.25 unfavorable
Explanation:
Actual purchase price = Actual price paid for material / Actual ounces purchased and used in production
Actual purchase price = $23,946 / 11,681
Actual purchase price = $2.05
Direct materials price variance = Actual ounces purchased and used in production * (Actual purchase price - Standard price per ounce
Direct materials price variance = 11,681 * ($2.05 - $1.80)
Direct materials price variance = 11,681 * $0.25
Direct materials price variance = $2,920.25 Unfavorable
Sandhill Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,650 per month. One of the barbers serves as the manager and receives an extra $500 per month. In addition to the base rate, each barber also receives a commission of $5.50 per haircut. Other costs are as follows.
Advertising $260 per month
Rent $800 per month
Barber supplies $0.30 per haircut
Utilities $185 per month plus $0.20 per haircut
Magazines $20 per month
Determine the variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.)
Total variable cost per haircut $
Total fixed $
Answer:
the variable costs per haircut and the total monthly fixed costs is $6 per haircut and $13,315 respectively
Explanation:
The computation is given below:
The variable cost per haircut should be
= $5.50 + $0.20 + $0.30
= $6 per haircut
And, the fixed cost should be
= 7 × $1,650 + $500 + $260 + $800 + $185 + $20
= $13,315
So, the variable costs per haircut and the total monthly fixed costs is $6 per haircut and $13,315 respectively
Atlas Company provided the following information for last year: Operating income $ 92,000 Sales 235,000 Beginning operating assets 410,000 Ending operating assets 440,000 Calculate Atlas's margin for last year. (Note: Round your answer to two decimal places.) a.0.35 b.2.15 c.0.50 d.0.26 e.0.39
Answer:
e.0.39
Explanation:
The computation of the atlas margin for the last year is given below:
atlas margin for last year is
= operating income ÷ sales
= $92,000 ÷ $235,000
= 0.39
hence the atlas margin for the last year is 0.39
Therefore the correct option is e
And, the above formula should be used for the same
Assume a firm generates $2,500 in sales, has a $800 increase in accounts receivable and has a $500 increase in accounts payable during an accounting period. Based solely on this information, cash flow from operations will increase by:
Answer:
Cash flow from operations will increase by $2,200.
Explanation:
The amount of increase in cash flow from operations can be calculated as follows:
Increase in cash flow from operations = Sales - Increase in accounts receivable + Increase in accounts payable …………… (1)
Sales = $2,500
Increase in accounts receivable = $800
Increase in accounts payable = $500
Substituting the values into equation (1), we have:
Increase in cash flow from operations = $2,500 - $800 + $500 = $2,200
Therefore, cash flow from operations will increase by $2,200.
Enviro Company issues 10.50%, 10-year bonds with a par value of $430,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.50%, which implies a selling price of 127.875. The straight-line method is used to allocate interest expense. 1. Using the implied selling price of 127.875. what are the issuer’s cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date?
Answer:
1.
549,862.5
2.
$331,637.5
3.
$16,581.87
Explanation:
1.
Cash proceeds = Par Value of the bond x Price ratio to par value
Cash proceeds = $430,000 x 127.875%
Cash proceeds = $549,862.5
2.
Bond Interest expense = Total Coupon payment - Premium on bond
Bond Interest expense = ( $430,000 x 10.50% x 10 ) - ( $549,862.5 - $430,000 )
Bond Interest expense = $451,500 - $119,862.5
Bond Interest expense = $331,637.5
3.
Bond Interest expense = Coupon Payment - Premium on Bond amortization
Bond Interest expense = ( $430,000 x 10.5% x 6/12 ) - ( ( $549,862.5 - $430,000 ) / ( 10 x 2 ) )
Bond Interest expense = $22,575 - $5,993.13
Bond Interest expense = $16,581.87
Using the expanded accounting equation, calculate and enter the answers for each question. You will need to use the answers you calculate for beginning and ending retained earnings to answer the rest of the questions.
Assets Liabilities
Beginning of Year: $29,000 $16,000
End of Year: $63,000 $29,000
Required:
a. What is the equity at the beginning of the year? 13000
b. What is the equity at the end of the year? 34000
c. If the company issues common stock of $5,500 and pay dividends of $36,700, how much is net income (loss)?
Answer:
a. $13,000
b. $34,000
c. $10,200
Explanation:
a. Calculation to determine the equity at the beginning of the year
Asset = Liabilities + Equity
$29000 = $16000 + Equity
Equity=$29,000-$16,000
Equity = $13,000
Therefore the equity at the beginning of the year is $13,000
b. Calculation to determine the equity at the end of the year
Asset = Liabilities + Equity
$63000 = $29000 + Equity
Equity = $63000-$29,000
Equity=$34,000
c. Calculation to determine how much is net income (loss)
Opening Equity + Issued common stock – dividend + Net income = Closing Equity
$13,000 + $36,700 - $5,500 + Net income = $34,000
$44,200+ Net income = $34,000
Net income=$44,200-$34,000
Net income=$10,200
Therefore the net income is $10,200
Casey transfers property with a tax basis of $3,800 and a fair market value of $6,800 to a corporation in exchange for stock with a fair market value of $5,250 and $720 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $830 on the property transferred. Casey also incurred selling expenses of $461. What is the amount realized by Casey in the exchange
Answer:
$5789
Explanation:
Calculation to determine the amount realized by Casey in the exchange
Fair market value of stock $5250
Add Cash in transaction $ 720
Add Liability which is going to the buyer $ 830
Less Selling expenses ($461)
Amount realized $5789
($5250+$720+$830-$461)
Therefore the amount realized by Casey in the exchange is $5789
In The General Theory of Employment, Interest, and Money, Keynes rejected the idea that international trade always helps to achieve economic stability. the ultimate breakdown of the capitalist system is inevitable. budget deficits necessarily cause recessions and inflation. a capitalist economy always gravitates toward high levels of employment.
Answer:
A capitalist economy always gravitates toward high levels of employment.
Explanation:
John Maynard Keynes
This is a man commonly known as an English economist. He was known to be the one wrote a book called "The General Theory of Employment, Interest, and Money" in 1883-1946. It is said that he was most famous for The General Theory of Employment, Interest and Money in 1936. He was known to argued that the best way to deal with prolonged recessions was deficit spending. It was documented that He believed in free market and he is known as the father of modern economics.
The General Theory of Employment, Interest and Money by John Maynard Keynes (1936)
This is said to explains Keynes' theory which was that government deficit spending will help distribute or circulate money, create jobs and promote demand for products.
A software company is raising the prices on all of its products to increase revenue. For each price change described below, do the following: _____
State the percent change in the price.
State the number we can multiply the original price by to determine the new price.
Determine the new price (in dollars).
Answer:
%increase=increase+original number×100
Percent change, multiplying factor and new price are 5%, 1.05, $304.5 respectively.
Incomplete information;
Original price of software = $290
Increase rate = 5%
Find:
Percent change in the price Multiplying factor New price of softwareComputation:
Percent change in the price = Increase rate
Percent change in the price = 5%
New price of software = 290 + [290 × 5%]
New price of software = 290(1 + 5%)
New price of software = 290(1+0.05)
New price of software = 290 × 1.05
So, multiplying factor = 1.05
New price of software = 290 × 1.05
New price of software = $304.5
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Petty Cash Record and Journal Entries On May 1, a petty cash fund was established for $137.50. The following vouchers were issued during May: Date Voucher No. Amount $ 3.40 13.00 5 3 auto repair (miscellaneous) 40.00 23.00 8.00 24.00 3.10 4.00 18.00 Purpose May 1 1 postage due 3 2 office supplies 7 4 drawing (Joy Adams) 11 5 donation (Red Cross) 15 6 travel expenses 22 7 postage stamps 26 8 phone call 30 9 donation (Boy Scouts)
Required:
1. Prepare the journal entry to establish the petty cash fund. If an amount box does not require an entry, leave it blank. .
2. Record the vouchers in the petty cash record. Total each column to determine the balance before replenishing the petty cash fund. When equired, enter amounts in dollars and cents
3. Prepare the journal entry to replenish the petty cash fund. Then record the amount in the petty cash record in part 2. If an amount box does not ire an entry, leave it blank.
Answer:
1. Dr Petty cash $137.50
Cr Cash $137.50
2. Dr Postage due $ 3.40
Dr Office supplies $13.00
Dr Auto repair (miscellaneous) $40.00
Dr Drawing (Joy Adams) $23.00
Dr Donation (Red Cross) $8.00
Dr Travel expenses $24.00
Dr Postage stamps $3.10
Dr Phone call $4.00
Dr Donation (Boy Scouts) 18.00
Cr Cash $136.50(
3. Dr Petty cash $1.00
Cr Cash $1.00
Explanation:
1. Preparation of the journal entry to establish the petty cash fund.
Dr Petty cash $137.50
Cr Cash $137.50
(Being to establish the petty cash fund)
2. Preparation of the journal entry to Record the vouchers in the petty cash record. .
Dr Postage due $ 3.40
Dr Office supplies $13.00
Dr Auto repair (miscellaneous) $40.00
Dr Drawing (Joy Adams) $23.00
Dr Donation (Red Cross) $8.00
Dr Travel expenses $24.00
Dr Postage stamps $3.10
Dr Phone call $4.00
Dr Donation (Boy Scouts) 18.00
Cr Cash $136.50
($3.40+$13+$40+$23+$8+$24+$3.10+$4+$18)
(Being to Record the vouchers in the petty cash record)
3. Preparation of the journal entry to replenish the petty cash fund.
Dr Petty cash $1.00
Cr Cash $1.00
($137.50-$136.50)
(Being to replenish the petty cash fund)
Nền kinh tế Việt Nam đang vận hành theo:
Answer In English: Vietnam's economy is operating according to ...
Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.15 Direct labor $ 5.30 Variable manufacturing overhead $ 1.95 Fixed manufacturing overhead $ 8.00 Fixed selling expense $ 3.75 Fixed administrative expense $ 1.40 Sales commissions $ 0.60 Variable administrative expense $ 0.55 If the selling price is $26.00 per unit, the contribution margin per unit sold is closest to:
Answer:
$12.45
Explanation:
Calculation to determine what the contribution margin per unit sold is closest to:
First step is to calculate the Variable cost per unit using this formula
Variable cost per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + Sales commissions per unit + Variable administrative expense per unit
Let plug in the formula
Variable cost per unit = $5.15 + $5.30 + $1.95 + $0.60 + $0.55
Variable cost per unit = $13.55
Now let determine the Contribution margin per unit using this formula
Contribution margin per unit = Selling price per unit - Variable cost per unit
Let plug in the formula
Contribution margin per unit = $26.00 - $13.55
Contribution margin per unit = $12.45
Therefore the contribution margin per unit sold is closest to:$12.45
Which of the following is not a standard organizational structure
Answer:
sequential
Explanation:
organizational structures come in four general types – functional, divisional, matrix and flat
Sequential is not a standard organizational structure.
What are organizational structures?An organizational structure outlines how tasks are assigned, coordinated, and overseen in order to achieve organizational objectives. The basis upon which standard operating procedures and routines are built is provided by organizational structure.
Organizational structures come in four general types – functional, divisional, matrix, and flat.
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On January 1, 2021, Legion Company sold $260,000 of 8% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $200,356, priced to yield 12%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2021, in the amount of:_____.
a. $15,600.
b. $7,800.
c. $31,200.
d. $10,232.
Answer:
$12,021
Explanation:
Calculation to determine what Legion should report bond interest expense for the six months ended June 30, 2021, in the amount of:
Using this formula
Interest paid =[Bonds amount*(Priced to yield/2)]
Let plug in the formula
Interest paid = $200,356*( 12%/2)
Interest paid=$200,356*6%
Interest paid =$12,021
Therefore Legion should report bond interest expense for the six months ended June 30, 2021, in the amount of:$12,021
Consider a world in which there is no currency and depository institutions issue only transactions deposits and desire to hold no excess reserves. The required reserve ratio is
Consider a world in which there is no currency and depository institutions issue only transactions deposits and desire to hold no excess reserves. The required reserve ratio is 15 percent. The central bank sells $0.98 billion in government securities.
What happens to the money supply?
Give reasons to support your answer.
Answer:
The answer is below
Explanation:
Considering the situation described above, the result is that there will be a DECREASE in the money supply of $6.53 billion.
This is because the money multiplier is calculated as 1/rr, where RR is the reserve ratio.
Hence, in this case, we have 1/0.15 = 6.67
Therefore, 6.67 × $0.98 billion = $6.53 billion.
