Answer: The Firm should Continue to Operate
Explanation:
A firm should continue to operate in the market if a Firms generates enough total revenue to at least cover its total variable costs. This is known as the shut down rule, when a firm's total revenue is less than total variable costs or Selling Price is less than the Average Variable costs per unit the firm must shut down is firm is operating at a loss and producing more units will only increase losses.
Price = $10
output = 100
average total costs = 13
average variable costs = $7
Total Revenue = $10 x 100 = $1000
Total costs = $13 x 100 = $1300
The firm's Price of $10 is greater than average variable costs of $7. The firm is taking a loss of $300 (1000 - 1300). The firm should continue to operate, even though the firm is taking a loss of $300. The firm's revenue is enough to cover variable costs.
The firm will only shut down in the short run if the Price is less the average Variable costs and in this case the price is higher than Average variable costs so the firm should definitely continue to operate
Answer:
closed mindset
Explanation:
because he just want to finish his work only
Answer:
47,884.79 units of bonds
Explanation:
The units to be sold to arise $87.9 million will be equal to the
$87.9 million / divided by the bond price
The price of a bond is the present value (PV) of the future cash inflows expected from the bond discounted using the yield to maturity. These cash flows include interest payment and redemption value
The price of the bond can be calculated as follows:
Step 1
PV of interest payment
Semi-annual coupon rate = 5.92/2 = 2.96%
Interest payment =2.96%× 2,000= 59.2
Semi annual yield = 6.67%/2 = 3.335
PV of interest payment
= A ×(1- (1+r)^(-n))/r
= 59.2× (1-(1.03335)^(-2×20))/0.03335)
= 1,297.22
Step 2
PV of redemption value
PV = FV× (1+r)^(-n)
= 2,000 × (1+0.03335)^(-2× 20)
= 538.43
Step 3
Price of bond =
= 1297.22 + 538.43
= $1835.65
Step 4
Units to be used
= $87.9 million/ $1,835.65
= 47,884.79 units
