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natita [175]
3 years ago
13

The Pecking Order view on capital structure:

Business
1 answer:
irina1246 [14]3 years ago
4 0

Answer:

c. Argues that a firm's first choice for capital is retained earnings as there is no informational cost associated with using retained earnings.

Explanation:

The Pecking order theory states that a business should first of all seek for internal funds (retained earnings) as a first choice of capital.

When internal funds are depleted, it can now look to debt as a source of finance.

In turn when debt options have been exhausted the last resort is to look for funding from equity.

So the Pecking order argues that a firm's first choice for capital is retained earnings as there is no informational cost associated with using retained earnings.

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A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variabl
o-na [289]

Answer:

Cost Advantage of different locations:

b. $20,000

Phoenix certainly had a cost advantage over Atlanta and based on this factor, it should be chosen for the new plant instead of any other city.

Explanation:

a) Total Costs of different locations:

                        Atlanta       Phoenix

Fixed Cost      $80,000     $140,000

Variable cost  400,000      320,000

Total Costs  $480,000    $460,000

b) Variable costs

                                   Atlanta       Phoenix

Annual Demand        20,000        20,000

Variable cost/unit        $20              $16

Total variable cost  $400,000  $320,000

c) Cost Advantage is the competitive edge which location (or company) can have over another through reduced production or marketing costs or both so that it can offer cheaper prices or use excess profits to bolster promotion or distribution.   In this case, the comparison is on the total cost, which is made of variable and fixed costs.

4 0
3 years ago
Required information
Triss [41]

Answer:

1. Ending inventory = $3519

2. Cost of Goods Sold = $21030

3. Sales Revenue = $27279

4. Gross Profit = $6249

Explanation:

FIFO method of inventory valuation is whereby the stock that first comes into the business, leaves first. This is common in perishable inventory such as vegetables or fruits.

Jan 1. Beginning inventory: 53 units x $45 = $2385

Total

53 units x $45 = $2385

Apr 7. Purchase 133 units x $47 = $6251

Total

53 units x $45 = $2385

133 units x $47 = $6251

Jul 16. Purchase 203 units x $50 = $10150

Total

53 units x $45 = $2385

133 units x $47 = $6251

203 units x $50 = $10150

Oct 6. Purchase 113 units x $51 = $5763

53 units x $45 = $2385

133 units x $47 = $6251

203 units x $50 = $10150

113 units x $51 = $5763

1. Ending inventory = 502 - 433 = 69 hence,

69 units x $51 = $3519

2. Cost of Goods Sold =

[$2385 + $6251 + $10150 + (44 units x $51)] = $21030

OR $24549 - 3519 = $21030

3. Sales Revenue =

433 units x $63 = $27279

4. Gross Profit = Sales Revenue - Cost of Goods Sold hence,

$27279 - 21030 = $6249

4 0
2 years ago
How to disable recruiting in NCAA 13
Lorico [155]
Just reset your computer
8 0
3 years ago
The shape of your utility function implies that you are arisk-averse individual, and, therefore, youwould accept the wager becau
Furkat [3]

<u>Solution and Explanation:</u>

As the utility function is concave in shape, so person is risk averse.  Thus, he will not accept the gamvle.

The difference between utility at point A&C = 70 minus 65 = $5, is less than a the difference between A&B = 65 minus 55 = $10

<u>MCQ: </u>

Answer is option a&d  - risk averse people fear a lot for losing money, thus they overestimate the probability of loss

Since, shape of utility function is concave, hence the double derivative of utility with respect to wealth is negative, so utility falls at an decreasing rate , as wealth increases

8 0
3 years ago
The purpose of safety stock is​ to: A. eliminate the possibility of a stockout. B. control the likelihood of a stockout due to v
NeX [460]
<h3>Hello there!</h3>

Your question asks what the purpose of a safety stock is.

<h3>Answer: B). control the likelihood of a stock out due to variable demand​ and/or lead time.</h3>

The reason why answer choice "B). control the likelihood of a stock out due to variable demand​ and/or lead time" is the correct answer because companies have safety stocks to control the chances of having a stock out.

Safety stocks are also known as a "reserve" for a company, in other words, stocks that a company doesn't touch. It's to ensure that companies don't go through a time where there's an increase in demand while there is a "delay" in production.

If a companies stock demand goes up, but then they can't "produce" the amount that is needed to meet the demand, then they will go through "stock out" and have to go through what is called "stock out costs."

Safety stocks are also known as a "rainy-day" stock, due to the fact that safety stocks are used when a company are not having a great day with the "demand" / "value" of their stocks. It's just to "ensure" / "keep the company safe" from a huge stock out.

<h3>I hope this helps!</h3><h3>Best regards, MasterInvestor</h3>
6 0
3 years ago
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