Answer:
D. there are reasonable substitutes for most goods.
Explanation:
A monopoly is when there is only one firm operating in the industry. There are also no subsituites for goods and services produced by the monopoly. The monopoly sets the price for his product and earns economic profit in the long and short run.
There aren't a lot of monopolies in the real world because most goods have substitutes. Therefore, consumers can substitute the monopoly product for another product and there isn't just one firm operating in the industry.
Answer:
Additional paid in capital decrease by 100 as a result of the acquisition
Explanation:
Treasury Stock 600 (100 shares x $6)
Additional Paid-In Capital 100 (100 shares x $1)
cash 1,000 (100 shares x $10)
Additional Paid-In Treasury Stock 300
Developing new menu offerings has been one of the commonly used marketing strategies by restaurants to address changes in competition to other competing restaurants. They advertise their menu by creating banners and using social media to inform the customers on their new menus.
Answer: B
Explanation: Engines for the cars is a cost directly related to the Ford cars being produced. The property taxes and the janitors rates are indirect costs because they are general costs needed to run the business but are not directly linked to the production of the ford cars
Answer:
WACC = 0.16637 OR 16.637%
Explanation:
WACC or weighted average cost of capital is the cost of a firm's capital structure which can comprise of debt, preferred stock and common equity. The WACC for a firm with only debt and common equity can be calculated as follows,
WACC = wD * rD * (1-tax rate) + wE * rE
Where,
- w represents the weight of each component based on market value in the capital structure
- r represents the cost of each component
- D and E represents debt and equity respectively
To calculate WACC, we first need to calculate the Market value an cost of equity.
The market value of equity = 30 million shares * $40 per share
MV of equity = $1200 million
The cost of equity can be found using the formula for Price today (P0) under constant growth model of DDM.
P0 = D1 / (r - g)
40 = 4 / (r - 0.07)
40 * (r - 0.07) = 4
40r - 2.8 = 4
40r = 4+2.8
r = 6.8 / 40
r = 0.17 or 17%
MV of debt = 40 million * 96.5% => $38.6 million
Total MV of capital structure = 38.6 + 1200 = 1238.6 million
WACC = 38.6/1238.6 * 0.08 * (1-0.33) + 1200/1238.6 * 0.17
WACC = 0.16637 OR 16.637%
