Answer: Explanation:
The marginal rate of substitution of peaches for avocados is the maximum amount of avocados that a person is willing to give up to obtain one additional peach. When consumers maximize utility, they set their MRS equal to the price ratio, Pp/PA
where
,
P
p is the price of a peach and
PA is the price of an avocado.
In Georgia, avocados cost twice as much as peaches, so the price ratio is ½ , but in California, the prices are the same, so the price ratio is 1. Therefore, when consumers are maximizing utility (assuming they buy positive amounts of both goods), the marginal rates of substitution will not be the same for consumers in both states. Consumers in California will have an MRS that is twice as large as consumers in Georgia.
Answer:
11.07%
Explanation:
The formula to compute WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of common stock) × (cost of common stock)
= (0.25 × 8%) × ( 1 - 34%) + (0.75 × 13%)
= 1.32% + 9.75%
= 11.07%
We simply multiply the weighatge with its capital structure so that the correct weightage cost of capital can come.
Answer:
Commercial banks, required reserve, loans, deposits, create.
Explanation:
The main function of commercial banks is to accept deposits and then to lend the same money (minus required reserves) back out. Banks make a profit by charging a higher interest rate on loans than the interest rate they pay on deposits. Through the loan process, banks are actually able to create money.
The major function of commercial banks is
1. Accepting deposits from people and business organzations.
2. Giving loans to Customers to be paid at a specific period of time at an agreed interest rate.
Required reserve is the minimum amount of money which in required for a commercial Bank to hold/save out of every deposit. If the required reserve is 10% of every deposit, a customer customer deposited $100. The required will be $10 which the bank will hold. The remaining $90 is the balance which banks can loan out to Customers.
Commercial Banks make profit by charging a higher interest rate on loan and lower interest rate on deposits. For example: 7.5% interest rate on loan and 2.5% interest rate on deposits. The 5% difference is the bank Profit.
