Answer:
c. Inelastic demand
Explanation:
Inelastic demand means that the quantity ordered on a product is not affected by changes in price. The demand is relatively constant regardless of a change in price.
Coffee and sugar are complementary goods. Usually, price fluctuation in one of them should affect the demand of the other. In this case, changes in sugar prices have not affected the demand for coffee. If price changes do not affect demand, then the product has inelastic demand.
Answer:
b. The lower the WACC used to calculate it, the lower the calculated NPV will be
Explanation:
When calculating NPV the cash inflows and cash outflows arising at the duration of the life are discounted at WACC. Generally, present value of outflow is same as actual as no discounting is done, as that occurs at the initial time of the project.
Cash inflows arising at year end are discounted.
When, WACC is lower The present value of inflows is lower in comparison to higher WACC.
Therefore, there is lower NPV with lower WACC.
Thus, Statement b. is correct.
b. The lower the WACC used to calculate it, the lower the calculated NPV will be
Answer:
credit rationing
Explanation:
Credit rationing is a situation in which borrowers give out a fixed amount of loan to lenders for a specified time at a rate tied to the market interest rate. In this situation, loans do not exceed a certain amount from the borrower no matter what attractive offers are given by the lenders to be able to get a larger loan amount. This is done by the borrower becasue the borrower is earning maximum profits from interest rates and also is a means to maintain equilibrum between loan funds and loan demands.
Cheers.
Answer:
$12,500
Explanation:
Differential revenue = Alternative A revenue - Alternative B revenue
Differential revenue = $75,000 - $62,500
Differential revenue = $12,500
Thus, the differential revenue for this decision is $12,500
