Answer:
cost of capital 16%
Explanation:
SML formula:
r_f = 3%
β = 1.3
r_m = 13%
0.03 + 1.3(0.13-0.03)
firm's required return = .16 = 16%
What pricing strategy is usually the rule in an oligopolistic industry that a few firms dominate, which might be in the best in
1 answer:
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Answer:
Option (a) is correct.
Explanation:
Contribution margin per marketing plan = Sales - Variable cost
= $3,000 - $2,000
= $1,000
A.
(1)
Break even in marketing plan = 400
(2) Break-even in dollars:
= Break-even in marketing plan × Average rate per plan
= 400 × 3,000
= 1,200,000
(3) Margin of safety = Actual sales - Break-even sales in dollars
= 1,500,000 - 1,200,000
= 300,000
= 20%
B.
(1) Contribution margin per marketing plan = Sales - Variable cost
= $4,000 - $2,000
= $2,000
Break even in marketing plan = 200
(2) Break-even in dollars:
= Break-even in marketing plan × Average rate per plan
= 200 × 4,000
= 800,000
(3) Margin of safety = Actual sales - Break-even sales in dollars
= 1,500,000 - 800,000
= 700,000
= 47%
Therefore, option (a) would achieve the margin of safety ratio more than 45%.