The interest rate that should be used when evaluating a capital investment project is sometimes called the appropriate discount rate and cost of capital.
The cost of capital refers to the minimum rate of return needed from an investment to make it worthwhile, whereas the discount rate is the rate used to discount the future cash flows from an investment to the present value to determine if an investment will be profitable. Appropriate Discount Rate means, at any time, the real (i.e., not inflation adjusted) weighted average cost of capital (after taxes payable by the concession business).
Cost of Capital = (Risk-Free Rate of Return + Credit Spread) × (1 – Tax Rate)
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Answer:
C. Leniency Error
Explanation:
It is the tendency to give favorable ratings that are generally more lenient than true performance. In this case the manager does this to avoid conflict.
Answer: See explanation
Explanation:
AP = 4.15
SP = 4.0
SQ = 114000 × 2 = 228000
1. Direct Materials Price
= (AQ × AP) - (AQ × SP)
= (246000 × 4.15) - (246000 × 4.0)
= 1020900 - 984000
= 369000 U
2. Direct Materials Quantity
= (AQ × SP) - (SQ × SP)
where SQ = 114000 × 2 = 228000
= (220000 × 4.0) - (228000 × 4.0)
= 880000 - 912000
= 32000 F
3. Direct Labor Price
= (AH × AR) - (AH × SR)
= (58700 × 9.8) - (58700 × 10)
= 575260 - 587000
= 11740
4. Direct Labor Quantity
= (AH × SR) - (SH × SR)
where, SH = 114000 × ½ = 57000
= (58700 × 10) - (57000 × 10)
= 587000 - 570000
= 17000 U
5. Total Overhead Variances
= 352000 - (57000 × 6)
= 352000 - 342000
= 10000 Unfavorable
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Answer:
(a) $332,000
(b) $312,000
(c) $760,000
Explanation:
(a) Her realized gain or loss
Mathematically, Realized gain or loss = Amount realized - Adjusted Basis = (120000 + 780000 + 192000) - 760000.
= 1092000 - 760000
= $ 332000
(b) Her Recognized gain.
Mathematically, her recognized gain = Amount received in cash + Amount received in Mortgage = 120,000 + 192,000 = $312,000
(c) Basis of newly acquired office Building.
Mathematically:
Basis of newly acquired building = Fair market value of building - (realized gain - recognized gain) = (780,000)-(332,000-312,000) = 780,000-20,000 = $760,000
Answer:
The correct answer is letter "C": the firm is at the bottom of its short run average cost curve.
Explanation:
Competitive firms are companies that accept the equilibrium price of a given good or service within a market. If they try to raise the price, they will not be able to sell their products. It is said that <em>in the long term a competitive firm is at the bottom of its short-run average cost curve because it portraits the most efficient level of production</em>. That curve shows the optimal least-cost input combination for producing output.
