Answer: Option (C) is correct.
Explanation:
While making decisions about the consumption, a person wishes to maximize their marginal utility drive from every unit rather than total utility.
Marginal utility refers to the satisfaction that a consumer can get from the consumption of one additional unit of goods and services.
So, consumer wants to maximize marginal utility from the products that he/she is buying with the limited level of income. They want to utilize their limited income in a best possible manner.
Answer:
$14.73
Explanation:
Given that, there is a 50 - 50 chance that a call option will either increase or decrease ;
Exercise price = $109
Increase price = $142
Decrease price = $76
Using the two state stock price model :
Increase price - exercise price ; 142 - 109 = $33
Decrease price - exercise price ; 76 - 109 - $33
We calculate the mean, expected value of winning after one year,
E(X) = Σx*p(x)
Since call won't be exercised if price decrease, then - 33 = 0
x : ___ 33 _____ 0
p(x) : _ 0.5 ____ 0.5
E(X) = (33*0.5) + (0*0.5)
E(X) = 16.5
The present value, PV = Expected winning / (1 + r)
PV = 16.5 / (1 + 0.12) = 16.5 / 1.12 = 14.73
Answer:
The NPV of the project is $974.
Explanation:
The net present value is the today's value of a stream of cash flows. The net present value will be the sum of all the expected future cash flows from a project less the initial investment required for the project and it is used to evaluate the investment decisions.
The net present value of an investment project will be:
NPV = CF1 / (1+r) + CF2 / (1+r)^2 + ... + CFn / (1+r)^n - Initial investment
or
If the cash flows are constant or of same amount through out, occur after the same interval of time and are for a defined period of time, they become an annuity and the NPV of such a project can be calculated by,
NPV = (Cash flow per period * Present value of Annuity factor) - Initial cost
The NPV of this project will be = (2000 * 2.4869) - 4000 = 973.8 rounded off to $974
Answer:
A. Total assets will increase at the same rate as sales.
Explanation:
<em>Option E</em> is wrong because dividends will not increase at the same rate; therefore, retained earnings will not increase at the same rate as sales.
<em>Option D</em> is incorrect because sales are increasing, which leads to a different profit margin.
As sales increases to a specific percent, owners' equity will not remain constant. So, <em>option C</em> is wrong.
<em>Option B</em> is wrong because long-term debt will not change.
Option A is correct because if sales are credit sales; therefore, total assets will increase at the same rate as sales.
Answer:
Earns net income by buying and selling merchandise.
Explanation:
A merchandising company is an enterprise that buys and sells goods to earn a profit.
First, wholesalers sell to retailers. Second, retailers sell to customers.
A retail company is a company that sells products directly to customers, where a wholesale company is a company that buys items in bulk from manufacturers and resells them to retailers or other wholesalers.
A merchandiser´s primary sources of revenue is sales.
So, merchandising companies resell products they previously bought from suppliers.
