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Deffense [45]
3 years ago
6

Recently, Verizon Wireless ran a pricing trial in order to estimate the elasticity of demand for its services. The manager selec

ted three states that were representative of its entire service area and increased prices by 5 percent to customers in those areas. One week later, the number of customers enrolled in Verizon’s cellular plans declined 4 percent in those states, while enrollments in states where prices were not increased remained flat. The manager used this information to estimate the own-price elasticity of demand and, based on her findings, immediately increased prices in all market areas by 5 percent in an attempt to boost the company’s 2016 annual revenues. One year later, the manager was perplexed because Verizon's 2016 annual revenues were 10 percent lower than those in 2015—the price increase apparently led to a reduction in the company’s revenues. Did the manager make an error
Business
1 answer:
Anettt [7]3 years ago
8 0

Answer:Yes, the Manager made an error.

Explanation:

Increasing the revenue of a firm depends on two factors which are price and effective demand. An increase in price without a fall in demand will increase revenue, an increase in demand without a fall in price will equally increase revenue.

However when manipulating price only in order to increase revenue care must be taken to ensure same or higher level of demand for an increase in price which lead to a fall in demand may boomerang for the firm.

E.g

Year. $ Price. Demand. Revenue$

1. 5. 100. 500

2. 6. 80. 480

The above illustrate an increase in price without a rise or maintaining the same level of demand leads fall in revenue.

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Based upon acquiring equity or wealth, purchasing a car is to purchasing a home as leasing a car is toa. improving a house.b. re
abruzzese [7]

Answer:  

renting an apartment

                           

Explanation:

A lease refers to a business agreement that allows for a resource to be used by the lessee (user) to compensate the lessor (owner). Land, houses, and automobiles are commonly leased assets. In addition, manufacturing or business machinery is rented.

A lease agreement , generally speaking,  relates to a contract around two sides, the leaseholder and the tenant. The lessor is indeed the rightful holder of the commodity; in exchange for periodic rental pays, the lessee gets the opportunity to use the resource.

The lessee, therefore, intends to comply with different conditions with respect to their being the estate or facilities. Thus, from the above we can conclude that the correct option is E.

7 0
3 years ago
The cost of plant in use with Hand Sanitizer Ltd (Hand Sanitizer), a manufacturing firm on 1 st April 2018 was GH₵375,000 agains
Savatey [412]

Answer:

Hand Sanitizer Ltd

Relevant Accounts for the year ended 31st March 2019:

1. Plant Account:

Debit Balance on 1st April 2018 = GH₵375,000

Credit: Disposal of Plants on 31st December 2018   = GH₵40,500 (GH₵22,500 and GH₵18,000)

Debit: New Plants on 31st December 2018 = GH₵52,500

Debit Balance on 31st March 2019 = GH₵387,000

2. Accumulated Depreciation - Plant:

Credit Balance on 1st April 2018 = GH₵157,500

Debit: Disposal of Plants on 31st December, 2018 = GH₵27,427.10

Credit: Depreciation Expense ( 100,350 + 3,937.50) = GH₵104,287.50

Credit Balance on 31st March 2019 = GH₵234,360.40

3. Depreciation Expense:

Debit: Accumulated Depreciation for old plant GH₵100,350

Debit: Accumulated Depreciation for new plants GH₵3,937.50

Total = GH₵104,287.50

4. Disposal of Plants Account:

Debit: Plants = GH₵40,500

Credit: Accumulated Depreciation = GH₵27,427.10

Credit: Cash = GH₵16,500 (12,000 + 4,500)

Debit: Gain from Sale = GH₵3,427.10

Balance = GH₵0

Explanation:

a) Accumulated Depreciation for the disposed plants on reduced balance:

October 2015 to March 2016 for 6 months (30% of GH₵40,500 for 6 months) = GH₵6,075

March 2017 for 12 months = GH₵10,327.50

March 2018 for 12 months = GH₵7,229.25

December 2018 for 9 months = GH₵3,795.35

Total = GH₵27,427.10

b) Reduced Balance for Disposed Plants

October 2015 Cost = GH₵40,500

March 2016 less Depreciation = GH₵6,075

Reduced Balance = GH₵34,425

March 2017 less Depreciation = GH₵10,327.50

Reduced Balance = GH₵24,097.50

March 2018 less Depreciation = GH₵7,229.25

Reduced Balance = GH₵16,868.25

December 2018  less Depreciation = GH₵3,795.35

Reduced Balance = GH₵13,072.90

The depreciation charge for 2016 was for 6 months while the 2018 charge was for 9 months.

4 0
3 years ago
Khfhggjjv,gkjbmmjhbb.l
loris [4]

Answer: um i need you to ask the question so we can answer it

Explanation:

5 0
3 years ago
Stock in Daenerys Industries has a beta of 1.3. The market risk premium is 7 percent, and T-bills are currently yielding 4.5 per
vesna_86 [32]

Answer:

13.05%

Explanation:

Using CAPM Equation, Ke = Rf+Beta*(Rm-Rf)

= 0.045+1.3*(0.07)

= 0.136

= 13.60%

Using Dividend growth model, Ke = (D1/P0) + g

= (D0*(1+g)/P0) = g

= (1.50*(1+0.08)/36) + 0.08

= 0.125

= 12.50

The cost of equity (Ke) = 0.136 + 0.125 / 2

The cost of equity (Ke) = 0.261/2

The cost of equity (Ke) = 0.1305

The cost of equity (Ke) = 13.05%

7 0
3 years ago
HCC, Inc., expects its dividends to grow at 25 percent per year for the next seven years before levelling off to a constant 3 pe
Minchanka [31]

Answer:

a. $43.21

Explanation:

Find <u>dividend (D) per year;</u>

D1 = D0(1+g)

D0= current dividend = 1.05

g= growth rate = 25% or 0.25 as a decimal

therefore;

D1 = 1.05(1.25) =1.3125

D2 = 1.3125 (1.25) = 1.6406

D3 = 1.6406(1.25) =2.0508

D4 = 2.0508 (1.25) = 2.5635

D5 = 2.5635(1.25) = 3.2044

D6 = 3.2044(1.25) =4.0055

D7 = 4.0055 (1.25) = 5.0069

Terminal dividend: D8 = 5.0069(1.03) = 5.1571

Next , find the <u>present values</u> of each dividend (at t=0) at 11% discount rate;

1.3125 / (1.11) = 1.1824

1.6406 / (1.11^2) = 1.3315

2.0508 / (1.11^3) = 1.4995

2.5635 / (1.11^4) = 1.6887

3.2044 / (1.11^5) = 1.9017

4.0055 / (1.11^6) = 2.1415

5.0069 / (1.11^7) =  2.4116

Price of growing perpetual at (t= 0) = \frac{5.1571 /(0.11-0.03)}{(1.11)^{7} }  = \frac{64.46375}{2.07616} = 31.0495

Next, sum up all the Present values to get the current stock price;

=43.2064

Therefore, the current price = $43.21

5 0
3 years ago
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