Answer:
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to <u>rise and the equilibrium quantity to stay the same</u>.
Explanation:
Perfectly inelastic demand curve indicates the quantity demanded for the life-saving medicine remains the same or does not change in response to a change in price.
Since a part of the law of supply states that the lower the quantity supplied, the higher the price; a reduction in the supply of the life-saving medicine will increase its price.
The combining effect of the two above will lead to an increase in the equilibrium price while the equilibrium quantity will remain the same as it will not respond to the change in price.
The attached graph explains this more clearly. In the graph, the demand curve DD is used to represent the perfectly inelastic demand curve for the life-saving medicine. Therefore, the quantity remains at q no matter the changes, either increase or decrease, in price. Movement from the supply curve S1 to S2 indicates a reduction in supply of the life-saving medicine which causes an increase in the equilibrium price from Po to P1 while the equilibrium quantity stays at q.
This therefore shows that if the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to <u>rise and the equilibrium quantity to stay the same</u>.
Answer:
$290,000
Explanation:
Calculation for what is the net income using a contribution margin income statement
Using this formula
Net income=(Product sells-Variable manufacturing overhead --Direct materials -Direct labor -Variable marketing and administrative)*Units sold
Let plug in the formula
Net income=($100 – $25 – $20 – $19 – $7) ×$10,000
Net income=$29×$10,000
Net income= $290,000
Therefore the net income using a contribution margin income statement will be $290,000
Answer:
The present worth of aircraft = $29137.82
Explanation:
Given the cost of money (r ) = 10%
The initial cost of small aircraft = $35000
Annual repair and maintenance costs (A) = $20000
Salvage valaue = $10000
Now calculate the present value of aircraft by adding the initial cost of annual maintenance and salvage value and subtracting the initial cost.
![Present worth = initial cost + \frac{A[1-(1+r)^{-n}]}{r} - \frac{Salvage \ value}{(1 + r)^{n}} \\= 35000 + \frac{20000 [1 – (1+ 0.01)^{-2}]}{0.01} - \frac{10000}{(1 + 0.01)^{2}} \\= $29137.82](https://tex.z-dn.net/?f=Present%20worth%20%3D%20initial%20cost%20%2B%20%5Cfrac%7BA%5B1-%281%2Br%29%5E%7B-n%7D%5D%7D%7Br%7D%20-%20%5Cfrac%7BSalvage%20%5C%20value%7D%7B%281%20%2B%20r%29%5E%7Bn%7D%7D%20%5C%5C%3D%2035000%20%2B%20%5Cfrac%7B20000%20%5B1%20%E2%80%93%20%281%2B%200.01%29%5E%7B-2%7D%5D%7D%7B0.01%7D%20-%20%5Cfrac%7B10000%7D%7B%281%20%2B%200.01%29%5E%7B2%7D%7D%20%5C%5C%3D%20%2429137.82)
Answer:
Consider the following calculations
Explanation:
A. Dividend per Share = Dividend Payout Ratio * Earnings Per Share
Putting the values given to calculate dividend per share we get,
Stages DPS = Payout Ratio * EPS DPS
Stage 1 =0.00*$0.30 $0
Stage 2 = 0.13*1.95 $0.25
Stage 3 =0.31 * $ 2.80 $0.868
Stage 4 = 0.56*$3.40 $1.90
b. Calculation of Investors After Tax Income from Cash Dividend:-
Cash Dividend = Number of Shares * DPS in Stage IV
= 290 * $ 1.90
= $552.16
After Tax Income = DIvidend ( 1 - Tax Rate)
= $ 552.16 ( 1- 0.15)
= $ 469.34
C:- In Stage II and Stage III for Growth & Expansion respectively, the firm is likely to utilise stock dividend or stock split.
