Sheffield Corp. compiled the following financial information as of December 31, 2017:

Suppose you are a monopolist who faces a domestic demand curve given by Q = 1,000 –3P. Your domestic cost of production involves

Anuta_ua [19.1K]

Answer:399.17 ; 407.42

Explanation:

Given ;

Domestic cost per unit = 300

Foreign cost per unit = 150

Real exchange rate = 1.1

As a monopolist, aim is to maximize income:

Q = 1000 - 3P

THEREFORE,

Price (P) × quantity(Q) - domestic - foreign × exchange rate

P × Q - 300Q - 150Q × 1.1

P × Q - 300(1000-3P) - 150(1000-3P)×1.1

P× (1000-3P) - (300+(150×1.1))(1000-3P)

P× (1000-3P) - (465)(1000-3P)

(P-465) × (1000-3P)

1000P - 3P^2 - 465000 + 1395P

-3P^2 + 2395P-465000

P = 399.17

If real exchange rate increases by 10%,

10% of 1.1 = 0.1 × 1.1 = 0.11

0.11 + 1.1 = 1.21

simply change 1.1 to 1.21 in above equation

P× (1000-3P) - (300+(150×1.21))(1000-3P)

P× (1000-3P) - (481.5)(1000-3P)

(P-481.5) × (1000-3P)

1000P - 3P^2 - 481500 + 1444.5P

-3P^2 + 2444.5P-481500

P = 407.42

6 0

3 years ago

On January 1, GHI Corporation issued four-year bonds with a face value of $100,000. The bonds have a stated interest rate of 4 p

Eva8 [605]

Answer:

Year Cashflow [email protected]% PV

$ $

1 4,000 0.9524 3,809.60

2 4,000 0.9070 3,628.00

3 4,000 0.8638 3,455,20

4 104,000 0.8227 85,560.80

Market price of the bond 96,454

The amount that GHI received at issuance is $96,454.

Explanation:

In this case, we need to calculate the current market value of the bond. The annual coupon is calculated as R = 4% x $100,000 =$4,000, which is 4% of the face value. We will discount the annual coupon and face value of the bond at 5% market interest rate. The cashflow for year 4 is the aggregate of coupon and face value of the bond. The current market value of the bond calculated above is the amount that GHI received at issuance of the bond.

6 0

3 years ago

Which of the following is the term used to describe the excess of cash flows from operations over the amount of cash outflows us

horsena [70]

Answer:

C) Free cash flow

Explanation:

A free cash flow (FCF) is how much cash a company has left after paying all the expenses related to its operations and capital expenditures excluding depreciation.

FCFs are used to determine a company's value and to determine how profitable or not a new or existing project might be. The discounted FCF method is the most commonly used method to value a company.

6 0

3 years ago

Withdrawal is a far more important concept in treatment and recovery than relapse. True False

Sphinxa [80]

the awnser to the problem is true.

3 0

3 years ago

Prior period adjustments are reported as

matrenka [14]

Answer:

c. An addition to (or a deduction from) the beginning balance of retained earnings

Explanation:

A prior period adjustment is the correction of an accounting error that occurred in the past and was reported on a prior year's financial statement, net of income taxes. Prior period adjustment are reported in the statement of retained earnings as an increase or a decrease in the beginning retained earnings. Therefore, the adjusted beginning retained earnings balance is the amount that retained earnings would have been if the error had not been made.

6 0

2 years ago