Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of
1 answer:
Answer:
slope of the resulting budget line = = 0.2
Explanation:
given data
price of product Y = $15
price of product X = $3
money income C = $60
to find out
absolute value of the slope of the resulting budget line
solution
we know here equation of resulting budget line is that is express as
AX + BY = C
here A and B are the quantity and X and Y are price and C is income
so
3 A + 15 B = 60
so
the slope of the resulting budget line is
slope of the resulting budget line =
slope of the resulting budget line = = 0.2
You might be interested in
Answer: B. There are two IRRs so you cannot use the IRR as a criterion for accepting the opportunity.
Explanation:
The Internal Rate of Return can be useful in capital budgeting to enable a company know if an investment will be profitable. It is defined as the discount rate that causes the Net Present Value(NPV) to be zero. If the IRR is greater than the required return then the project should be accepted as it will have a profitable NPV.
IRR has some problems however and one of them is reflected here. There can sometimes be two IRRs and when this happens, using IRR as a viability measure cannot be done because a single rate is needed for comparison with the required return.
