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

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.

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  

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