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3 years ago

With only two goods, if the income effect is in the same direction as the substitution effect then the good is ____.

Business

1 answer:

Leya [2.2K]3 years ago

7 0

Answer:

Normal good

Explanation:

Income effect Is change in quantity demanded when the consumers purchasing power change as a result of a change in real income.

Substitution effect is when quantity demanded falls as a result of rise in price of a good which leads consumers to purchase cheaper alternatives.

A normal good is a good whose demand increases as income increases.

If the price of a normal good falls, the real purchasing power of the consumer increases and the consumer buys more of the good. Also, the consumer substituites from more expensive alternative goods to the more cheap normal good. The income and substitution effect both move in the same direction.

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Which of the following statements is NOT CORRECT? a. An important step in applying the corporate valuation model is forecasting

KIM [24]

Answer:

E. The corporate valuation model discounts free cash flows by the required return on equity.

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3 years ago

Avicorp has a $10 million debt issue outstanding, with a 6% coupon rate. The debt has semiannual coupons, the next coupon is due

rjkz [21]

Answer:

Explanation:

Pretax cost of debt is the annual rate(YTM) of the bond. Using a financial calculator, input the following to calculate it;

N = 5*2 = 10

PV = -(95% *10,000,000) = -9,500,000

Coupon PMT = (6%/2)*10,000,000 = 300,000

FV = 10,000,000

then compute semiannual rate; CPT I/Y = 3.604%

convert to annual rate = 3.604*2 = 7.21%(this is the pretax cost of debt)

After tax cost of debt is calculated because interest payable on debt has tax shield. The formula is as follows;

Aftertax cost of debt = pretax cost of debt (1-tax)

AT cost of debt = 7.21% (1-0.40)

AT cost of debt = 4.33%

8 0

3 years ago

The Impulse Shopper recently paid an annual dividend of $1.13 per share. The company just announced that it is suspending all di

vivado [14]

Answer:

Stock value today = $1.21

Explanation:

Current Dividend = D ${_0}$ = $1.13

After 5 years that is D ${_6}$ = $0.50

Since expected growth = 0

Therefore

P ${_5}$ = D ${_6}$ / Ke = 0.5/18% = $2.77

Its present value will be $\frac{1}{(1 + 0.18){^5}} X 2.77$ = $1.21

Stock value today = $1.21

5 0

3 years ago

A certain store sells all maps at one price and all books at another price. On Monday the store sold 12 maps and 10 books for a

solong [7]

Answer:

(B) $0.50

Explanation:

The total cost is a function of the number of maps sold and the number of books sold. To determine the cost of each, a set of equations have to be solved simultaneously.

Let the cost of a map be m and that of a book be b

12m + 10b = 38

20m + 15b = 60

6m + 5b = 19

4m/3 + b = 4, b = 4 - 4m/3

6m + 20 - 20m/3 = 19

2m/3 = 1

m = 3/2 = 1.50

b = 4 - 4m/3

b = 4 - 2 = 2

The cost of a book is $2 while that of a map is $1.50

Hence a map sell for $0.50 less than a book.

7 0

3 years ago

What are some actions people may take when preparing for a career fair

Ber [7]

I would say to think about what you may or may not be interested in. If you know there are any jobs in particular that you are already interested in, or are put off by, keep that in mind so that you have some idea of where you want to flock to during the fair.

Another thing to keep in mind is that even though a particular subject may seen very off putting to you, do not just put it aside and never look further into jobs around that area. Just because you hate math doesn't mean that there are no mathematical jobs you may find interest in. Keep an open mind to all fields of study.

8 0

3 years ago