A common method of controlling the cost of legal services is to refrain from consulting a lawyer until a serious legal problem absolutely requires it. Another approach is to hire or retain lawyers on an ongoing basis to provide advice as business decisions are made. Which approach is the most expensive? What should a business consider in making that choice?
In: Economics
At 110 units of output, marginal revenue is $6, the marginal cost is $6, and the average cost is $5. If consumers demand 110 units of output when the price is $9, what is the expected profit?
In: Economics
Which of the following is true?
The higher the cost associated with deposit outflows, the fewer excess reserves banks will want to hold.
One of the least costly ways for a bank to meet withdrawals if it runs short of funds, is to sell loans.
If a bank has sufficient excess reserves, deposit withdrawals will require no other changes in its balance sheet.
An increase in excess reserves reduces liquidity risk and raises a bank's return on its assets.
In: Economics
An Organization buys a machine for $25,000. The annual cost of maintaining the machine is $500 per year for the first 5 years (End of Year 1 thru End of Year 5) and then it increases to $750 for the next 5 years (Year 6 thru Year 10). Consider all cash flows to be end of year cash flows. For an interest rate of 8% per year compounded yearly, find the annual maintenance cost of the machine and the present worth of the total cost
In: Economics
In: Economics
The marginal cost of capital is determined by all of the following EXCEPT,
(a) corporate profit rate
(b) rate of depreciation
(c) interest rate
(d) price of capital and its rate of change
Firms find it profitable to add to their capital stock if,
(a) real cost of capital exceeds the marginal product of capital.
(b) marginal product of capital exceeds the real cost of capital.
(c) marginal product of capital exceeds the real interest rate.
(d) rental price of capital exceeds the marginal product of capital.
10. When the inflation rate is positive
i) Nominal GDP grows more than real GDP
ii) Nominal GDP grows less than real GDP
iii) Nominal GDP grows as much as real GDP
In: Economics
The initial cost of a machine is $2,400. The machine provides an annual revenue of $750. The salvage value of the machine is $50. If the machine has a life span of 5 years, what is the rate of return on this machine? Is the machine worth purchasing if the minimum attractive rate of return (MARR) is 18% per year?
In: Economics
what is responsible for cost and risk in FCA incoterm until which point of delivery ?
In: Economics
The private marginal cost of throwing a party in the San Francisco is $500.
The demand for parties in SF is characterized by P = 2500 – 50*Q, where Q is the number of parties held per semester.
Each party produces 150 decibels of noise, and each decibel generates $10 worth of pain and suffering among village residents.
A) What is the efficient number of parties provided?
B) The village taxes party hosts $10 for each decibel generated. Hosts respond by adding soundproofing equipment to their facilities so that each party produces only 50 decibels of noise. What is the new equilibrium number of parties provided?
C) The equilibrium quantity found in Part B is (Click to select) impossible to calculate inefficiently, high inefficiently, low efficient .
D) A pigouvian tax on parties would have led to an equilibrium quantity (Click to select) greater than, the same as, that is impossible to compare to, smaller than, the quantity resulting from the tax described in Part B
In: Economics
It is not uncommon to hear people say that because debt has a lower cost of capital than equity, a firm can reduce its overall WACC by increasing the amount of debt financing. If this strategy works, shouldn’t a firm take on as much debt as possible, at least as long as the debt is not risky? Explain your answer using M&M Proposition II
In: Finance