c) Using the same logic as (b) So, output increases by about 3 percent. The change in the real rental price of capital is: The real rental price falls by 6.5% because there are diminishing returns to capital. The change in the real wage is: So, the real wage increases by 2.9% because the added capital increases the marginal productivity of the existing workers. (Notice that the wage and output have both increased by the same amount, leaving the labour share unchanged—a feature of the Cobb-Douglas production function.) d) Using the same
Why? Explain your answer. The consumer should pick a combination of goods that gives the consumer the same marginal utility per dollar spent for both good X and Y. This is the point where the budget line is tangent to IC curve ii. At this point, the consumer should consume 20 units of good X and 15 units of good Y. d) At the optimal consumption bundle, what is the Marginal Rate of Substitution?
These facts are best explained by: • Economies of scope • Diseconomies of scale • Diminishing marginal productivity • Economies of scale To download the complete answer check ECO 365 Week 1 knowledge check 3). Suppose that college tuition is higher this year than last and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that: • despite the increase in price, quantity demanded rose due to some other factors changing. • the demand for a college education is positively sloped. • the law of demand is invalid.
He has offered to pay you back $12,000 in a year. If the cost of capital of this investment opportunity is 10%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. 8.
And among all measurements, MIRR is the best one in this case. The details of my analysis are listed as below: 1. MIRR (Modified Internal Rate of Return) indicates the annual rate of return on an investment that assumes we reinvest the cash flow at the opportunity rate of return. My analysis shows MIRR is the best measurement for this case since both approaches have the same scale and cannot be duplicated. This ensures us to get the reinvestment return from the cash flow on the WACC without worrying about the scale problem.
After adding $15,300 to the $15,000 in savings, the cash flow for year 2 would equal $30,300. For year 3, the depreciation expense would equal $85,000 * .15, or $12,750. The tax on the year 3 deprecation would then be $12,750 * .40, which equals $5,100. After adding $5,100 to the $15,000 in savings, the cash flow for year 3 would equal
Using a flexible budget is more accurate in this instance as it captures the change in anticipated production from 10,000 to 10,800 bikes. Variance Analysis Implications and possible Causes Frame Assembly Department There is a favorable cost variance in the frame assembly department of approximately $82,663 when comparing actual costs to flexible budgeted costs. Steel tubing has a total unfavorable variance of $8,100. The original budget for 2004, estimated the cost of steel tubing at $30.00 / lb. Actual costs were $31.50 / lb., which may indicate unanticipated price increases (for example an increase in commodity prices since steel is a commodity), or higher costs for additional orders of steel required to meet the increased production demand.
Financial Analysis- Task 5 A. 1. Some key points of the company’s financial picture that could impact the bank officer’s decision are as follows: while there is an increase in gross profits from year 12 to 13, there is a decrease from year 13 to 14, also while the payroll and executive compensations steadily increases from year 12 to 14, advertising basically decreases, and services and utilities continue to increase as well as expenses in general. The operating income also has a major decrease from year 12 to 14, which is not good for the company as it indicates what is available to the company before a few other items need to be paid, such as preferred stock dividends and income taxes, which needs to be increasing for the company, not
Financial Securities Cases Chapter 2: Financial Advisor’s Investment Case 1. What is the percentage return earned by Darin if he acquires 100 shares, holds the stock for a year, and sells the stock for $80? Under the following conditions percentage earned by Darin is: 33.1% 2. What is the percentage return earned by Victor if he acquires 100 shares on margin, holds the stock for a year, and sells the stock for $80? What advantage does buying stock on margin offer Victor?
D. convex to the origin because of increasing opportunity costs. 20. Which of the following will shift the production possibilities curve to the right? A. an increase in the unemployment rate from 6 to 8 percent B. a decline in the efficiency with which the present labor force is allocated C. a decrease in the unemployment rate from 8 to 6 percent D. a technological advance that allows farmers to produce more output from given