What does the “weight” refer to in the weighted average cost of capital?

Which of the following is an example of a value-added cost to a manufactured product?

A. the cost of storing inventory

B. the cost of handling inventory

C. the depreciation expense of robots that assemble the product

D. changing the setup of production-line operations

The cost of retained earnings

True or False: It is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders.

False

True

The cost of equity using the CAPM approach

The current risk-free rate of return (rRFrRF) is 4.67% while the market risk premium is 6.17%. The Monroe Company has a beta of 1.56. Using the capital asset pricing model (CAPM) approach, Monroe’s cost of equity is 15.015%   .

The cost of equity using the bond yield plus risk premium approach

The Kennedy Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company’s cost of internal equity. Kennedy’s bonds yield 11.52%, and the firm’s analysts estimate that the firm’s risk premium on its stock over its bonds is 5.89. Based on the bond-yield-plus-risk-premium approach, Kennedy’s cost of internal equity is:

21.76%

19.15%

20.89%

17.41%

The cost of equity using the discounted cash flow (or dividend growth) approach

Johnson Enterprises’s stock is currently selling for $45.56 per share, and the firm expects its per-share dividend to be $2.35 in one year. Analysts project the firm’s growth rate to be constant at 5.72%. Estimating the cost of equity using the discounted cash flow (or dividend growth) approach, what is Johnson’s cost of internal equity?

11.42%

13.60%

10.88%

14.69%

Estimating growth rates

It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF or DG approach. In general, there are three available methods to generate such an estimate:

Suppose Johnson is currently distributing 70% of its earnings in the form of cash dividends. It has also historically generated an average return on equity (ROE) of 20%. Johnson’s estimated growth rate is   %.

Bruges Industries is considering a project with an initial cost of $214,758 and with the following incremental after-tax cash inflows: Year 1, $65,079; Year 2, $79,532; and Year 3, $108,741. What is the internal rate of return (IRR) of this project?

What is a transfer cost and how is it different than transport costs?

Income and substitution effects in the analysis of a public policy.

A spike in the cost of electricity in Ontario has occurred (eg, one of the main power stations suffers a major accident, OR we could be considering a move to market pricing of electricity). The government is considering proposals to finance electricity costs for poorer families, to offset an expected sharp rise in the cost of electricity that is expected to occur next year. Briefly compare the following two proposals in terms of in terms of (i) the extent to which each program results in energy conservation and (ii) the likely size of public expenditure. Finally, (iii) predict which program recipients would prefer to see implemented.
a) The government pays the difference between a household’s electricity expenditure in the coming year (after the increase in price) and its expenditure in the prior year (before the price increase).
b) Each eligible household is given a voucher to be used only for paying for electricity. The value of the voucher is the expected cost increase for the same quantity(kilowatt hours) of electricity as the household consumed last year before the price increase took place.

Use indifference curve diagram(s) and explain your answers briefly. If you cannot reach a definite conclusion, briefly discuss the additional information that would be required to do so.

That's all the information provided for the question

If the marginal cost to make a good is $166 and the price elasticity of demand is -8, what price should be charged via the optimal markup rule? Enter as a value (round to two decimal places if necessary).

A company sells only one item with a marginal cost of $3 and there is a 50% probability of getting a high value customer who is willing to pay $8 and a 50% probability of getting a low value customer who is willing to pay $5. What is the expected profit? What about the expected profit if it was an auction? What about if it was an auction with three potential customers? What would be the important things to know to be able to compute the expected profit?