Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
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Answer:
Fixed costs= $200
Explanation:
Giving the following information:
Output for a simple production process is given by Q = 2KL, where K denotes capital, and L denotes labor. The price of capital is $25 per unit and capital is fixed at 8 units in the short run. The price of labor is $5 per unit.
In this case, labor is a variable cost, the more you produce, the bigger it gets (total variable costs, unitary remains the same).
So, our only fixed cost is capital. We know that in a short run capital equals 8 units
Fixed costs= $25*8= 200
Answer:
The correct answer is letter "B": The contract has a financing component that is significant to the contract.
Explanation:
Time value of money is a principle that states that today's dollar is worth more than tomorrow's dollar. This is because the money that could be received today may be deposited in a savings bank account or invested which implies that the initial sum has the potential to grow. If the same amount is received in later dates, the sum it could grow is likely to be lower.
Therefore,<em> if in a contract there is a financing component which implies considering an interest rate, the time value of money is to be included.</em>