State whether the following statements are TRUE or FALSE. Give the reason, If a statement is true, explain why; if it is false, identify the mistake and try to correct it. Use the diagram for explanation if needed. (NOTE: Marks are based on your reasoning, not only for T/F marking)
(i). Change in quantity demanded and change in demand are the same things.
(ii). If the demand curve for good A is flatter, and if the demand curve for good B is highly
steeper, then for any same amount of price change for both goods, the total revenue for good A
will be more than total revenue for good B.
(iii). When the price ceiling and price flooring are imposed than both consumer and producer surplus
are Maximized.
(iv). The value of elasticity does not change along the demand curve when it vertical or horizontal.
(v). From a budget line, the change in real income is only affected due to change in nominal income,
keeping other things constant.
(vi). When marginal cost is above average total cost, average total cost must be falling.
In: Economics
1) A compant has 50,000 shares of common stock outstanding at a
market price of $20 a share. The common stock just paid a $1 annual
dividend and has a divided growth rate of 5 percent. What is the
total market value of common stock? What is the cost of equity
(common stock)?
2) There are 12,000 shares of 6 percent preferred stock outstanding
at a market price of $51 a share. What is the total market value of
preferred stock? What is the cost of preffered stock?
3) The outstanding bonds mature in 15 years, have a total face value of $750,000, a face value per bond of $1,000, and a market price of $1,050 each. The bonds pay 8 percent interest, semiannually. What is the total bond market value? What is the cost of debt?
4) Use the results from questions 1-3 to compute the weight of equity (common stock), the weight of preferred stock, and the weight of debt.
5) The tax rate is 15 percent. Computer WACC?
In: Finance
|
Great Eastern Inns has a total of 800 rooms in its chain of motels located in eastern Canada. On average, 55% of the rooms are occupied each day. The company’s operating costs are $39 per occupied room per day at this occupancy level, assuming a 30-day month. This $39 figure contains both variable and fixed cost elements. During February, the occupancy rate dropped to only 45%. A total of $484,800 in operating cost was incurred during February. |
| Required: |
| 1. | Estimate the variable cost per occupied room per day. (Assume 30 days in a month. Do not round intermediate calculations and round your final answer to 2 decimal places.) |
| 2. | Estimate the total fixed operating costs per month. |
| 3. |
Assume that the occupancy rate increases to 60% during March. What total operating costs would you expect the company to incur during March? (Assume 30 days in a month. Do not round intermediate calculations.) |
In: Accounting
A local clinic created the following static budget table for the year 2015. Complete the table below by filling the blanks and creating a profit & loss statement under section IV
Section I-Volume Assumptions
A-FFS (fee for service) 50,000 vists
B-Capitated lives 30,000 members
Number of member-months ?
Expected utilization per member-month 0.25
Number of visits ?
Total Expected Visits ?
Section II- Revenue Assumptions
A-FFS $30/visit (30x50,000 expected visits)=$1,500,000
B-Capitated lives $3 PMPM (3x 360,000 member-months)=$1,080,000
Total Expected Revenues ?
Section III-Cost Assumptions
A-Variable Costs:
Labor (60,000 hrs at $25/hr)=$1,500,000
Supplies (200,000 units at $1.5unit/hr)=$300,000
Total variable Cost $1,800,000
Variable cost per visit (1,800,000/140,000)=$12.8571429
B-Fixed Costs $500,000
C-Total expected costs ?
Section IV-Profit & Loss statement-create
In: Accounting
The market demand for a particular good in city A is given by QA = 32 − 0.5PA (for PA ≤ 64). This market is served by a single firm (monopoly) whose marginal cost of production is 4 dollars per unit (so total cost of producing Q units is 4Q). (a) Find the equation for the firm’s marginal revenue function. Graph the demand, marginal cost, and marginal revenue curves on one graph. (b) What are the profit-maximizing price and quantity for the monopolist? What is the profit margin (price minus marginal cost, divided by the price) of the monopoly? (c) Calculate the total monopoly profit in city A. (d) What is consumer surplus in this market? How large is the deadweight loss resulting from monopoly pricing?
In: Economics
Excluding the case when the government decides to create a
legally-enforced monopoly, which answer below describes the
condition under which a monopoly is likely to emerge through the
growth of a single firm outcompeting its smaller rivals?
a. When the market demand curve intersects with a downward sloping
region of a single firm’s average total cost curve.
b. When the market demand curve intersects with an upward sloping
region of a single firm’s average total cost curve.
c. When a single firm’s marginal revenue curve intersects with that
firm’s marginal cost curve.
d. When a single firm’s marginal revenue curve intersects with that
firm’s average cost curve.
In: Economics
The following equations represent a firm in a monopolistically competitive market.
Demand: Qd= 32 - P
Marginal revenue: MR = 32 -2Q
Total Cost: TC = 100 + Q^2
Marginal Cost: MC=2Q
1. Will this firm in a monopolistically competitive market continue to earn these profits in the long run? Briefly explain why or why not.
2. Sketch (no need for the sketch to be to scale) a graph that includes that includes the following curves in the appropriate relation to each other: - the firms demand curve - the firms marginal revenue curve - the firms marginal cost curve - the firms average total cost curve (Label the profit maximizing price, quantity produced, and area of profits if non-zero.)
In: Economics
Excluding the case when the government decides to create a legally-enforced monopoly, which answer below describes the condition under which a monopoly is likely to emerge through the growth of a single firm outcompeting its smaller rivals? a. When the market demand curve intersects with a downward sloping region of a single firm’s average total cost curve. b. When the market demand curve intersects with an upward sloping region of a single firm’s average total cost curve. c. When a single firm’s marginal revenue curve intersects with that firm’s marginal cost curve. d. When a single firm’s marginal revenue curve intersects with that firm’s average cost curve.
In: Economics
Susan Bromley, operations manager at Enviro-Tech, Inc., has collected data concerning three new plant locations. The fixed and variable costs for these three locations are as follows:
|
Location |
Fixed Cost per Year |
Variable Cost per Unit |
|
1 |
$500, 000 |
$1,000 |
|
2 |
$1,700,000 |
$200 |
|
3 |
$1,100,000 |
$500 |
In: Operations Management
Auto X firm spent $300 million in total to produce 40 000 cars
this year. The breaks
down of $300 milion as follows: The company spent $50 million on
fixed costs to run its manufacturing plants and $5000 of variable
costs to produce each car. Next year assuming
that, fixed costs and variable costs will increase 10%. It plans 50
000 cars.
a-What is the current average cost per car this year?
b- What is the total forcasted cost to produce 50 000 cars next
year?
c- What is the forcasted average cost per car next year?
d- What does the average cost per car vary between years?
In: Finance