Answer: 9.81%
Explanation:
Cost of capital = (cost of debt * weight of debt) + ( cost of equity * weight of equity)
Cost of Equity = Risk free rate + beta * Market risk premium
= 8% + 0.59 * 6%
= 11.54%
Cost of capital = (8% * 49%) + (11.54% * 51%)
= 9.81%
General welfare, food stamps, and education
Answer:
a.
P = $3.50 per gallon
b.
Equilibrium Quantity = 165 million gallons
Explanation:
a.
The equilibrium price is the price at which Quantity demanded equals quantity supplied. To calculate the equilibrium price using the given equations for demand and supply, we need to equate both equations.
<u>Equilibrium Price (P) calculation</u>
QD = QS
200 - 10P = -10 + 50P
200 + 10 = 50P + 10P
210 = 60P
P = 210 / 60
P = $3.50 per gallon
b.
The equilibrium quantity can be calculated by inserting the value of Price (P) in any of the equation for demand or supply.
Equilibrium Quantity = 200 - 10(3.50)
Equilibrium Quantity = 200 - 35
Equilibrium Quantity = 165 million gallons
Answer:
1. Keynesian economists think that <u>_Income</u> is the key determinant of consumption and spending.
2. Classical economists think that the higher the _interest rates____, the more people will save, which means that they will consume less.
3. A person's _<u>expectations </u>about how much income he/she will earn in the future as well as future prices could shape how much he/she spends and saves today.
4. The more _<u>wealth</u> the person has, the less current consumption he/she undertakes.
5. A person's total income can be divided into three components: consumption, savings, and <u>household debt</u>.
6. Savings, which is total income minus consumption and taxes, can be used to create more __<u>taxes</u>.
Answer:
The equipment should not cost more than $6,318,545.68
Explanation:
The most that the land scrapping equipment could cost is the present of the 1.5 million annuity discounted at 6% p.a.
Present Value of Annuity = A × ( 1- (1+r)^(-n))/r
A- 1,500,000, n- 5, r- 6%
=1, 500,000 × ((1.06)^(-5))/0.06
= $6,318,545.68
The equipment should not cost more than $6,318,545.68
