- A curve showing the lowest cost at which a firm is able to produce a given level of output in the long run is
a) a long-run average total cost curve.
b) a minimum efficient scale curve.
c) a long-run production function.
d) a long-run marginal cost curve.
- The slope of an isocost line determines the marginal rate of substitution.
a) True
b) False
- The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.
a) True
b) False
In: Economics
Calculate the weighted average cost of capital for a firm with the following information:
Marginal corporate tax rate: 25%
Bonds with $1,000 face value with a 6% coupon rate
with semi-annual payments matures in 10 years now sells for $928.94
Preferred stock dividend $5.50
Preferred stock price $55.00
Current common stock dividend per share $1.50
Price per share of common stock $12.00
Floatation cost to sell new common stock 10%
Forecast rate of growth for corporation 4%
Risk free interest rate 4%
Market rate of return 12%
Beta for firm 1.4
Long-term debt $30,000
Preferred stock 10,000
Retained Earnings 30,000
Common Stock 40,000
$100,000
1 What is the cost of new funds raised by issuing debt?
2 What is the cost of new funds from new preferred stock?
3 What is the cost of retained earnings? (no floatation costs)
1.) Using dividend growth model
2.) Using CAPM model
What is the cost of funds from issuing new shares of common stock
(has floatation costs) with the dividend growth model?
What is the weighted average cost of capital using the dividend growth model?
In: Finance
If a representative firm with the total cost given by TC = 20 + 20q + 5q2 operates in a competitive industry where the short-run market demand and supply curves are given by ??=1,400−40? and ??=−400+20?, the number of firms operating in the short run will be:
a. 140
b. 200
c. 280
d. 100
In: Economics
list the three major problems in using the CPI as a measure of the cost of living.
In: Economics
With an aid of a diagram, discuss the concept of scarcity, opportunity cost and unemployment for a hypothetical economy producing cars and potatoes
In: Economics
Use the following information on the U.S. dollar value of the euro.
Spot Rate | Forward Rate for April 30, 2021 Delivery | |
October 30, 2020 | $ 1.250 | $ 1.254 |
December 31, 2020 | 1.258 | 1.256 |
April 30, 2021 | 1.260 | 1.260 |
On October 30, 2020, a U.S. company forecasts that it will purchase
merchandise from an Italian supplier at the end of April 2021, in
the amount of €100,000, and will pay the supplier on delivery. On
October 30, the company enters a forward contract to buy €100,000
on April 30, 2021 and classifies it as a cash flow hedge of the
forecasted purchase. On April 30, 2021, the company receives the
merchandise, closes the forward contract and pays the supplier. The
company's accounting year ends December 31.
When the merchandise is sold by the company, what is the cost of
goods sold?
| A. | $125,000 | |
| B. | $126,600 | |
| C. | $125,400 | |
| D. | $126,000 |
In: Accounting
Compute the average hourly cost to a contractor of a boilermaker involved on a project. The boilermaker works on the second shift of a three-shift job and works six 10-hour days per week. Under the shift pay agreement, the boilermaker works 7 hours and is paid for 8 hours. Additional PL and PD insurance for $50,000/$100,000 coverage is required. Use 6.2% for FICA and 5.0% for unemployment insurance.
In: Operations Management
Which of the following is an example of a variable cost for a firm?
Property tax
Insurance
Rent Raw materials
Machinery depreciation
In: Accounting
Which of these is a variable cost for a restaurant?
a. Rent for dining space
b. Insurance against damages on the rental space
c. Tax accountant’s salary
d. Wages for the servers
In: Economics
Explain the effect of Federal tax policy on the cost of health insurance.
In: Economics