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3 years ago

A refrigerator is priced at $1,250. There are two options offered to reduce the price: either a 25% discount off the price

Business

1 answer:

Vlad1618 [11]3 years ago

3 0

Answer:

The 25% discount is better; it saves $12.50

Explanation:

A discount represents a straightforward reduction in price by the stated percentage. A rebate is a refund given after making payments.

For the 25% discount, the customer will make payments as follows.

25% discount deducted from the price of $1250

=$1250-( 25/100 x 1250)

=$1250- (0.25 x 1250)

=$1250 -312.50

=$937.50

For 300 rebate, the customer will pay $1250 and get a refund of $300. The net payment will be $1250 minus $300

=$1250-300

=$950

The 25% discount option is better because the customer pays less by $12.50( $950 - 937.50)

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Answer:

Book Value Market Value

Current Assets $14 m $14.95 m

Fixed Assets $18 m $27 m

Total $32 m $41.95 m

Explanation:

For book Value:

Net fixed assets=$18.00 million

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Formula:

Net working capital=Current assets-Current Liabilities

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Current Assets=$14 million

Total Assets=Net fixed assets+Current Assets

Total Assets=$18 m+$14 m

Total Assets=$32 m

For Market Value:

Net fixed assets=$27.00 million

Current Liabilities=$7.50 million

net working capital=$7.45 million

Formula:

Net working capital=Current assets-Current Liabilities

$7.45 million=Current assets-$7.50 million

Current Assets=$7.45+$7.50

Current Assets=$14.95 million

Total Assets=Net fixed assets+Current Assets

Total Assets=$27 m+$14.95 m

Total Assets=$41.95 m

Book Value Market Value

Current Assets $14 m $14.95 m

Fixed Assets $18 m $27 m

Total $32 m $41.95 m

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3 years ago

5-7 Short Run versus Long Run A firm sells 1,000 units per week. It charges $70 per unit, the average variable costs are $25, an

irina1246 [14]

a. The firm should carry out the activities.

b.The firm should carry out activities until it is covering the cost.

c. The firm should shut down business activities when the price of the product goes below $25 in short-run.

d. The firm should shut down business activities when the price of the product goes below $65 in long-run.

Further Explanation:

Steps taken by the firm in the long run:

The sales price of the product is $70. The total average cost of the product is $65. The firm can cover all its costs (variable and fixed) and generating a profit of $5. So it should continue to carry out its business operations in the short run.

Steps taken by the firm in the long run:

In the long run, all the costs of the firm are variable. In the current case, the fixed cost is around 60% of the total cost. So the firm should attempt to decrease this cost. If the firm can decrease the total cost, it should carry out the business activities. The firm can continue to carry out the operational activities until it is making the profit and covering all the product cost.

The appropriate price for shutting down the business in the short-run:

The firm can shut down the business in the short-run when the price of the product is below $25.

In the short run, the firm can only control the variable cost. The firm can not control the fixed cost of the product. In the given case, the variable cost of the product is $25. Therefore, the firm should shut down the business when the price of the product goes below the variable cost ($25).

The appropriate price for shutting down the business in the long-run:

The firm can shut down the business in the long-run when the price of the product is below $65.

In the long run, the firm can influence all the costs of the business. It can influence the variable cost and the fixed cost of the business. Therefore, it should cover the total cost of the product. Thus, the firm should shut down the business when the price of the product goes below the total cost ($65).

Learn more:

1. Learn more about the variable costing

brainly.com/question/9203162

2. Learn more about the overhead expenses

brainly.com/question/4612804

3. Learn more about the cost of the product

brainly.com/question/1757741

Answer details:

Grade: Senior School

Subject: Economics

Chapter: Decision making (Short-run & Long-run)

Keywords: Short Run, Long Run, sells, units, week, charges, average variable costs, average costs, long run, Why, price, consider, shutting down the long run.

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3 years ago