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DedPeter [7]
3 years ago
9

he long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of

output is $4. These numbers suggest that between 100 and 110 units of output, the firm producing this output has
Business
1 answer:
Firlakuza [10]3 years ago
4 0

Answer:

Constant Return to Scale

Explanation:

Based on the information given the numbers

suggest that between 100 and 110 units of output, the firm producing this output has CONSTANT RETURN TO SCALE.

Constant Return to Scale occurs in a situation where the proportional increase in all the inputs is as well equal to the proportional increase in output which means the returns to scale are constant , which is why RETURNS TO SCALE help to describe all what happens to long run returns when the scale of production increases.

Therefore Constant returns to scale often occur when the output increase in exactly the same way or the same proportion as the factors of production.

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The Drogon Co. just issued a dividend of $3.00 per share on its common stock. The company is expected to maintain a constant 6.2
Mars2501 [29]

Answer:

The company’s cost of equity is 11.51%.

Explanation:

Please find the below for detailed explanations and calculations:

The company's cost of equity need to be found is the discounted rate that will bring net present value of its projected future dividend to its current stock price.

Denote cost of equity need to be found is x.

We apply the formula to calculated the present value of growing perpetuity to find x as shown below:

[ 3 x ( 1+0.062) ] / ( x - 0.062) = 60 <=> 3.186 / ( x - 0.062) = 60 <=> x = 11.51%.

Thus, the company's cost of equity is 11.51%.

5 0
3 years ago
Spinning Wheels Co. is considering renting a new bike shop. The landlord has offered a number of alternatives for paying the ren
Vera_Pavlovna [14]

Answer:

The present value of the rent payments over the life of the lease is  $27,708

Explanation:

Year 1: $8,000

Year 2: $12,000

Year 3: $14,000

Rate of return: 10%

Option 1:

The present value of the rent payments over the life of the lease can be calculated in excel in the formula of NPV

= NPV(Rate, Cash in year 1, cash in year 2, cash in year 3) = NPV(10%,8000,12000,14000) = $27,708

Option 2:

NPV of cash in Year 1 after 3 years = $8,000/(1+10%)^1 = $7,273

NPV of cash in Year 2 after 2 years = $12,000/(1+10%)^2 = $9,917

NPV of cash in Year 3 after 1 years = $14,000/(1+10%)^3 = $10,518

So total NPV of cash in 3 years = $7,273 +$9,917+$10,518

= $27,708

4 0
3 years ago
Ian loaned his friend $30,000 to start a new business. He considers this loan to be an investment, and therefore requires his fr
xenn [34]

Answer:

Payment = Pmt(8%, 4, -30000) = $9,057.62

Interest Paid = Beginning amount * 8%

Principal paid = Payment - Interest Paid

End Balance = Beg Amount - Payment  

Payment  Beg Amount  Payment  Interest paid  Principal paid  End Balance

1                 30,000       $9,057.62    2,400           6,657.64            23,342.38

2                23,342.38  $9,057.62    1,867.39        7,190.23            16,152.14

3                16,152.14     $9,057.62    1,292.12         7,765.45           8,386.69

4                8,366.39     $9,057.62    670.94           8,386.69             -

7 0
3 years ago
Rally Quadcopters plans to sell a standard quadcopter (toy drone) for $45 and a deluxe quadcopter for $65. Rally purchases the s
Andrew [12]

Answer:

Rally must sell 1,080 units of Standard and 720 units of Deluxe

Explanation:

                                                  Standard       Deluxe        Total

Sales price per unit                      $45                $65

Less: Variable cost                      ($35)              ($45)

Contribution Margin per  unit       $10                $20

Sales Mix units  (A)                        $3                  $2                $5

Contribution margin                      $30                $40             $70

Weighted average Contribution                                              $14    

per unit C= B/A

Appointment of fixed cost between standard and deluxe

Total Fixed cost = 14,700

Break even point = Fixed cost / Weighted average Contribution  per unit

= 14,700 / 14

= 1,050

Apportionment of Break even point sales between Standard and deluxe in sales mix ratio (3:2)

Standard = 1,050 * 3/5 = 630

Deluxe = 1,050 * 2/3 = 420

Unit to be sold to get desired profit = Fixed cost + Desired profit / Weighted average Contribution per unit

= (14,700 + 10,500) / 14

= 1,800

Apportionment of Units to be sold to get desired profit between Standard and Deluxe in sales mix ratio (3:2)

Standard = 1,800 * 3/5 = 1,080

Deluxe = 1,800 * 2/5 = 720

To reach target operating income, Rally must sell 1,080 units of Standard and 720 units of Deluxe

4 0
3 years ago
Andrew is a financial planner and charges fees of 2% for every investment made. He made investments worth $500,000. What amount
eduard
Fees charge = 2%
Investment worth = $500,000
Amount due = 2/100 * 500,000 = 10,000
The amount Andrew will receive as compensation is $10,000.
7 0
3 years ago
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