Westerville Company reported the following results from last year’s operations:
| Sales | $ | 1,500,000 |
| Variable expenses | 500,000 | |
| Contribution margin | 1,000,000 | |
| Fixed expenses | 700,000 | |
| Net operating income | $ | 300,000 |
| Average operating assets | $ | 1,000,000 |
At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ | 300,000 | |
| Contribution margin ratio | 60 | % of sales | |
| Fixed expenses | $ | 132,000 | |
The company’s minimum required rate of return is 10%.
What is the residual income of this year’s investment opportunity?
If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year?
In: Accounting
Suppose that there are only two small countries in the world: Ascot, with a population of 29,400 people, and Delwich, with a population of 21,000 people. Ascot's GDP is equal to $150 million while Delwich's GDP is $210 million. Delwich's GNP has been estimated to be equal to $240 million. The revenue earned by firms that operate in Delwich but are headquartered in Ascot is equal to $60 million.
Given the data above, Ascot's GNP is $___ million. (Enter your response as an integer.)
In Ascot, the per capita GDP is $___. (Enter your response rounded to the nearest dollar.)
In Delwich, the per capita GNP is $___. (Enter your response rounded to the nearest dollar.)
In: Economics
1-An asset leased under an operating lease will appear on the balance sheet as a long-term asset.
True
False
2-A tangible asset is one that lacks physical existence.
True
False
3-The units-of-activity depreciation method provides a good match of expenses against revenue.
True
False
4-A machine with a cost of $180,000 has an estimated residual value of $18,000 and an estimated life of 3 years or 18,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used 5,500 hours?
a.$5,500
b.$49,500
c.$31,500
d.$60,500
In: Accounting
2. Given a firm's demand function Q-90+2P=0 and its average cost
function
AC= Q2-39.5Q+120+(125/Q)
find the level of output (Q) which
a) Maximizes Total Revenue
b) Minimizes Marginal Cost
c) Maximizes Profits.
3. A monopolistic firm has the following demand functions for each
of its products X and Y:
X=72-0.5Px Y=120-Py
The combined cost function is C=X2+XY+Y+35. The maximum production
capacity is 40 and given by X+Y=40. Find the profit maximizing
levels of output, prices and profit.
In: Economics
The inverse demand function of specific commodity is given by ??(??) = ?20?? + 1400, where ?? and ?? are the price and quantity of the commodity, respectively.
a- Determine the maximum consumption.
b- If the price is $500 per unit, calculate consumption, consumers’ gross surplus, consumers’ net surplus, and the revenue collected by the producers.
c- If the price increases 40%, calculate change in demand and lost surplus for the consumers.
d- What is the consumers’ elasticity? Is it elastic or inelastic?
e- If the price rises by 3%, the quantity demanded falls by 1.5%.
f- If the elasticity of demand for a commodity were estimated to be 1.5, then a decrease in price from $2.0 to $1.90 would be expected to increase daily sales by how much?
In: Economics
Use the following information on the supply and demand for oil in the hypothetical country Olympus to answer the questions below. Assume that the demand and supply curves are linear.
Domestic Domestic
Price ($) Demand Supply
60 460 280
80 440 320
100 420 360
120 400 400
140 380 440
1. Assume that the world price of oil is $80 per barrel. Assume that Olympus is a small country and that Olympus imposes a $20 per barrel tariff on imported oil. Calculate the effect of the tariff on
a. The change in producer surplus
b. The change in consumer surplus
c. Government tariff revenue
d. Consumption distortion loss
In: Economics
Three mutually exclusive earth-moving pieces of equipment are being considered for several large building projects in India over the next five years. The estimated cash flows for each alternative are given below. The construction company's MARR is 18% per year. Which of the three alternatives, if any, should be adopted? Assume repeatability is appropriate for this comparison.
|
Caterpillar |
Deere |
Case |
|
|
Capital investment |
$22,000 |
$26,400 |
$17,500 |
|
Net annual revenue |
$6,500 |
$9,000 |
$5,200 |
|
Salvage value |
$4,500 |
$5,000 |
$3,750 |
|
Useful life |
4 years |
3 years |
5 years |
The AW of the Caterpillar is $____.(Round to the nearest dollar.)
In: Finance
Your consulting firm was just granted an exclusive contract for Vanda-Laye Corporation. You now must decide your pricing policy. The firm will encounter no fixed costs, and all revenue is after taxes. As your firm has been granted an exclusive contract, your pricing and output decisions will be those of a monopolist. Tasks: Analyze what a monopolist is and the effects it could have on the consulting firm. Evaluate if any antitrust policies need to be put into place. How will your pricing policy be justified? Explain the implications of increasing the price you will charge Vanda-Laye Corporation verses what it was previously charged. with references apa please
In: Economics
Electricity distribution in upstate New York is provided by only one firm, NYSEG. Demand for electricity is characterized by P=31-Q_D, and NYSEG has a total cost function TC(Q)=72+Q+2Q^2, and a marginal cost function MC(Q_D )=1+4Q.
a. What is NYSEG’s marginal revenue equation?
b. What is the quantity and price NYSEG will choose? Show your math for full credit.
c. Will NYSEG be able to operate in the market in the short run? What about the long run? Explain briefly.
d. What is the barrier that allows for NYSEG to operate as a monopoly? Explain briefly.
In: Economics
A municipality operates buses is considering updating its fleet. Managers want your recommendation to best meet the public transportation demand in the area. A consultant company estimated the revenue and cost functions appropriate to evaluate existing operations were TR = 215Q –3Q2and TC = 35Q + 1.5Q2. Construct an Excel spreadsheet using those equations with quantities between 1 and 25. Identify the number of buses you would recommend to meet those criteria and the optimum price of each bus. After you have constructed the Excel spreadsheet to do this analysis, identify a more straightforward process that you would suggest.
In: Economics