Answer:
midpoint method for income elasticity of demand = {ΔQD / [(QD₀ + QD₁)/2]} / {ΔI / [(I₀ + I₁)/2]}
midpoint method for price elasticity of demand = {ΔQD / [(QD₀ + QD₁)/2]} / {ΔP / [(P₀ + P₁)/2]}
a) I will use the information from January and February to calculate the price elasticity of demand of Coke. I cannot use March instead of January because income increased during that month.
QD₀ = 14
QD₁ = 10
P₀ = 2.40
P₁ = 3
PED = {(10 - 14) / [(14 + 10)/2]} / {(3 - 2.4) / [(3 + 2.4)/2]}
PED = {-4 / 12} / {0.6 / 2.7} = -0.3333 / 0.2222 = -1.5 or |1.5| in absolute terms
Coke's PED is elastic since a 1% change in price will result in a larger proportional change in the quantity demanded.
b) I will use the information from January and March to calculate the income elasticity of demand of Coke. These are the two months where income changes but price of Coke remains the same.
QD₀ = 14
QD₁ = 20
I₀ = 300
I₁ = 500
PED = {(20 - 14) / [(14 + 20)/2]} / {(500 - 300) / [(300 + 500)/2]}
PED = {6 / 17} / {200 / 400} = 0.3529 / 0.5 = 0.71
Coke's IED is positive, therefore, Coke is a normal good.
Answer:
The two main financial statements are the income statement and the balance sheet.
In the income statement all the revenue and the expenses should be accounted for, resulting in net profits or net losses. The income statement shows how the restaurant has been performing over a given period (usually a year).
The balance sheet is like a photo of the restaurant itself at a specific point in time. The balance sheet shows what assets the restaurant has, how much money it owes and what percentage of the business really belongs to the owners.
The other two financial statements are the statement of owner's equity and the statement of cash flows, but they are more complicated to explain and not that basic for a small business.
Answer:
1. Andrew Carnegie
You probably recognize Andrew Carnegie’s name, since he’s one of the most famous and richest industrialists of all time. However, he didn’t accumulate his wealth as a result of formal education or a business-charged background. Instead, he dropped out of school at a young age and spent the major portion of his youth performing manual labor. He was a bobbin boy at a local cotton mill and then became a telegraph messenger. It wasn’t until he taught himself how to read and entered the railroad industry that he began to build the empire that would make him (and his family) a fortune.
2. John Paul DeJoria
You may not have heard of John Paul DeJoria, but you’ve certainly indulged in some of the beauty products attached to his name. Now a multi-billionaire and one of the most accomplished entrepreneurs in modern history, DeJoria got his start as a newspaper courier. To make ends meet, he worked as a tow truck driver and a janitor. Eventually, he found his way to working at a hair-care company, where he met his future partner, Paul Mitchell. With minimal experience and a $700 loan, the duo founded a company now known as John Paul Mitchell Systems. From there, DeJoria co-founded Patron Spirits and the House of Blues.
3. Harland Sanders
If someone asked you for a loan to start a restaurant, but had no formal culinary training or experience, would you make that loan? It seems crazy to think anyone could become a successful restauranteur without a background in the industry, but that’s exactly what Harlan “Colonel” Sanders was able to do. When he started his line of Kentucky Fried Chicken restaurants, the only experience he had was cooking for his siblings as a child and working at a number of odd jobs.
Answer:
0.2
Explanation:
The weighted average cost of capital (WACC) is calculated as below:
WACC = (D/A) x r_D x (1-t) + (E/A) x r_E , where:
A: Market value of company asset;
D: Market value of company debt;
E: Market value of company equity;
r_D: pre-tax cost of debt;
r_E: cost of equity;
t: tax rate
Rearrange above formula a bit, we get:
WACC = (D/A) x r_D x (1-t) + (1 - D/A) x r_E
Putting all the numbers together, we have:
10.9% = (D/A) x 8.9% x (1 - 38%) + (1 - D/A) x 12%
Solve the equation, we get D/A = 17% or D/E = 0.2
So, target debt−equity ratio is 0.2
A monopolist can produce at a constant average (and marginal<span>) </span>cost of<span> AC = MC = $5</span>
