Acutron is a large securities dealer. Last year, the company made 240,000 trades with an average commission of $240. Because of the general economic climate, Acutron expects trade volume to decline by 20%. Fortunately, the average commission per trade is likely to increase by 10% because trades are expected to be large in the coming year. What are the estimated commission's revenues for Acutron in the coming year
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Estimated commission revenues is$$50,688,000.00
Explanation:
The estimated commission revenue for Acutron in the coming year reflects last year's volume of trade less 20% decline multiplied by the average commission for last year adjusted for 10% increase
volume of trade=240,000*(1-20%)
=240,000*0.80
= 192,000 trades
average commission per trade=$240*(1+10%)
=$240*1.1
=$264
Estimated commission revenue=quantity*price
=192,000*$264
=$50,688,000.00
The estimated commission's revenues for Acutron in the coming year will be $ 50,688,000.
Explanation:
In order to calculate the estimated commission's revenues for Acutron in the coming year we have to proceed first to following steps:
Step 1: We have to calculate the estimated trade
estimated trade= 240,000× 80%=192,000 Trade
Step 2: We have to calculate the estimated commission per trade
estimated commission per trade= 240×110%=264
Finally we can calculate the estimated commission's revenues
estimated commission's revenues=192,000×264= $ 50,688,000.