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Ket [755]
3 years ago
14

You and two partners start a company. However, your partners play no role in running the company. You spend all your time managi

ng the business. The time that you could have spent working for someone else and earning wages instead of running the business is your:
a. Explicit costs

b. Marginal cost

c. Sunk cost

d. Opportunity cost
Business
1 answer:
GalinKa [24]3 years ago
4 0

Answer:

The correct answer is letter "D": Opportunity cost.

Explanation:

Opportunity cost is described as the return of the choice selected over the potential return that could have been obtained from the choice left  behind. It represents the return of the option chosen compared to the choice forgone. Opportunity costs is also defined as the return of the best next available option.

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Lake Co. receives nonrefundable advance payments with special orders for containers constructed to customer specifications. Rela
klasskru [66]

Solution :

We calculate the advances form the customer to be reported as the current liability as on Dec. 31, 2009 in the balance sheet as follows :

          <u>  Particulars  </u>                                                               <u>  Amount ($)</u>

Customer advances the balance Dec 31, 2008                           110

Add : advances that is  received with 2009 orders is                 195

Less : advances applicable to the orders in 2009                      -180

Less : advances from orders that are canceled in 2009          <u>  -45  </u>

Advances from the customers liability Dec. 31, 2009                  80

Therefore, the advance from the customer to be reported in the balance sheet as the current liability is $80.

6 0
2 years ago
A company earned $2,880 in net income for October. Its net sales for October were $12,000. Its profit margin is:
snow_lady [41]

Answer:

profit margin = 23.33%

Explanation:

profit margin = net profit /  net sales

  • net profit = $2,800
  • net sales = $12,000

profit margin = $2,800 / $12,000 = 0.233333 = 23.33%

The profit margin is a profitability ratio used to compare how many cents different companies are able to make from selling $1. Different companies have different sales levels, but we can group companies by industries and then compare them in order to determine which ones are more efficient at generating income. E.g. Company A sells $100 million but only makes $2 million in profits per year (PM = 2%), and it is much less efficient than Company B that sells $10 million and makes $1 in profits (PM  = 10%). Company A's costs are too high compared to Company B's costs.  

5 0
3 years ago
The responsibility report for the Augusta Division shows budgeted contribution margin of $2,000,000 and budgeted controllable fi
Mumz [18]

Answer:

D) is 20% above expectations.

Explanation:

The Augusta Division was supposed to earn a net profit of $1,000,000 (= $2,000,000 - $1,000,000). Since the division's manager and his/her team were able to cut reduce fixed costs to $900,000 and increase contribution margin to $2,100,000 (either by increasing selling price or reducing variable costs), then the division earned a net profit of $1,200,000 (= $2,100,000 - $900,000). This net profit is 20% higher than expected, therefore the manager's (and his/her team's) overall performance was 20% above expectations.

5 0
3 years ago
Suppose your firm just issued a 20-year, $1000 par value bond with semiannual coupons. The coupon interest rate is 9%. The bonds
sergiy2304 [10]

Answer:

<em>4.78%</em>

Explanation:

<em>From the question given, we solve the issue</em>

<em>the calculation of he bond price is:</em>

<em>Price of bond = per value * (1- flotation cost)</em>

<em>$1000 *  (1- 0.05)</em>

<em>= $950</em>

<em>For the calculation of semi-annual coupon payments, </em>

<em>Semi -annual coupon payment  = Par value * Interest/2</em>

<em> $1000 * 0.09/2 = $45</em>

<em>Calculation of semi- annual yield to maturity</em>

<em>Let recall the following</em>

<em>YTM = yield to maturity</em>

<em>C = The semi-annual coupon payment</em>

<em>FV= Face value or par value </em>

<em>PV= Price of a bond </em>

<em>n = Maturity years of the bond </em>

<em>Therefore,</em>

<em> YTM= C + FV - PV/n/ FV + PV/2</em>

<em>which is</em>

<em>$45 + $1000 - $950/40/$1000 + $950 / 2 = 4.78%</em>

4 0
3 years ago
Turnbull Co. is considering a project that requires an initial investment of $570,000. The firm will raise the $570,000 in capit
ss7ja [257]

Answer:

WACC = 10.868%

Explanation:

The following data table will show the easiest way to calculate weighted average cost of capital.

Capital components       Investment ($)                Weight                

Debt Capital (Wd)              230,000       230,000 ÷ 570,000 = 0.40

Equity Capital (We)            320,000       320,000 ÷ 570,000 = 0.56

Preference capital (Wp)     20,000          20,000 ÷ 570,000 = 0.04

Total Investment               $570,000                                          1.00

We know,

WACC = [Wd × Kd (1 - T)] + [Wp × kp] + [We × ke]

Given,

Kd (1 - T) = 9.6% × (1 - 0.25) = 7.2%

kp = 10.7%

ke = 13.5%

WACC = [0.40 × 7.2%] + [0.04 × 10.7%] + [0.56 × 13.5%]

or, WACC = 2.88% + 0.428% + 7.56%

Therefore, WACC = 10.868%

8 0
3 years ago
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