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horrorfan [7]
3 years ago
11

Suppose that demand is perfectly inelastic at 20 million bags, so that consumers demand 20 million bags no matter what the price

is. What price should you charge if you want the firm to earn only a fair rate of return? Assume as always that TC includes a normal profit.
Business
1 answer:
ivanzaharov [21]3 years ago
8 0

Answer:

$1.50 per bag

Explanation:

The price that yields a fair rate of return is also the price that makes  economic profit = 0. That sales price = average total cost. So we first must determine total costs for producing 20 million bags:

  • total costs = fixed costs + variable costs = $10 million + (20 million x $1) = $30 million

Now we need to determine average total cost:

  • average total cost at 20 million bags = $30 million / 20 million bags = $1.50 per bag
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Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters
svet-max [94.6K]

Answer:

The production plan for Q3 is 208,000 units of supermix.

July 64,000

August 70,000

September 74,000

The Raw materials requirement for Q3 is 218 cc of solvent H300

July 23,000

August 111,000

September 84,000

The detailed presentation is in the attached document

7 0
3 years ago
Gonzales Company currently uses maximum trade credit by not taking discounts on its The standard industry credit terms offered b
ira [324]

Answer:

d.$38,448

Explanation:

The computation of the expected change in net income is shown below:

The net purchase for one day = $11,760

For 20 days excluding discount period i.e 10 days , it would be

= $11,760 × 20 days

= $235,200

The interest would be

= $235,200 × 10%

= $23,520

Now the gross purchase  is

= (Net purchase × total number of days in a year) ÷ (1 - discount rate)

= ($11,760 × 365 days) ÷ (1 - 0.02)

= $4,292,400 ÷ 0.98

= $4,380,000

The discount is

= $4,380,000 × 0.02

= $87,600

After tax rate, the change in net income would be

= ($87,600 - $23,520) × (1 - tax rate)

= $64,080 × 0.60

= $38,448

8 0
3 years ago
15 points) Assume the following information regarding U.S. and European annualized interest rates: Currency Lending Rate Borrowi
Masja [62]

Answer:

The Trainor Bank's dollar profit from speculating if the spot rate of the euro is in fact $1.10 in 90 days is $5,79,845

Explanation:

Bank Z borrow = €20 million

Spot rate 1€ = $1.13  

Convert € in to $

€20 million *1.13 = $22.60 million  

Lend $2,26,00,000 at interest rate of 6.73% for 90 days ( Assume total number of days in a year is 360)

= $2,26,00,000 + $2,26,00,000*(90/360)*6.73%

= $2,29,80,245

We need to find the euro to be repaid  = €2,00,00,000 + €2,00,00,000*7.28%*(90/360)

= €2,03,64,000

To be repaid in $:-

€2,03,64,000*1.10 = $2,24,00,400

Profit from speculating in $ = $2,29,80,245 - $2,24,00,400

                                             = $5,79,845

Therefore, The Trainor Bank's dollar profit from speculating if the spot rate of the euro is in fact $1.10 in 90 days is $5,79,845

5 0
3 years ago
Benjamin put together a committee that included his colleagues. This committee had the sole task of monitoring the effect of the
guapka [62]

Answer:

Benjamin put together a ad hoc committee

Explanation:

5 0
3 years ago
The Gecko Company and the Gordon Company are two firms whose business risk is the same while having different dividend policies.
choli [55]

Answer: 12.98%

Explanation:

The formula for pre-tax return for Gecko company can be calculated is the addition of the capital gains growth rate(g) and the dividend yield.

To get capital gains growth rate, we will use th e after-tax return formula which is:

= Capital Gains Growth Rate (g) + Dividend Yield × (1-Tax Rate)

Capital Gains Growth Rate (g) will now be:

= 12% - 3.5% × (1-28%)

= 12 - 3.5(72%)

= 12 - 2.52

= 9.48%

Pre-Tax Required Return will now be:

= 9.48% + 3.5%

= 12.98%

4 0
3 years ago
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