Answer:
b. Hilton should purchase the resort, but Marriott should not.
Explanation:
given data
Resort sale = $400 million
free cash flow = $45 million
time = 20 year
return = 8%
risk-free rate = 2%
Hilton beta =1.1
Marriott beta = 1.3
solution
we get here first NPV of the resort when the cost of capital is
Re = risk-free rate + beta( Rm - Rf) ........................1
Re = 2 + 1.1 ( 8 - 2 )
Re = 8.6%
and
The NPV will be as
cash flow to free cash flow is = 45 million
so NPV is $22.767
and
as that at cost of capital of 9.8%,
The NPV will be
NPV = $11.6011
so we can say that Hilton should pursue the project due to the positive NPV
but due to the negative NPV here Marriott should not pursue the project.
The answer is $7 because Marginal revenue is the change in total revenue from 10 customers ($400) to 11 customers ($407) How a monopolist maximizes profits
How does a monopolist determine its profit-maximizing level of output How does it determine the price that it charges?
The monopolist will select the profit-maximizing level of output where
MR = MC
and then charge the price for that quantity of output as determined by the market demand curve. If that price is above average cost, the monopolist earns positive profits.
How a monopolist maximizes profits
Because Chuck, a sole commercial airplane operator in small isolated town, has no competition, he has complete control of market price of air travel in his small tone
Reduced price → increase in ticket sales
Monopoly maximizes profit by choosing an amount of profit in which marginal revenue equals marginal cost (MR= MC) Since Chuck must reduce his price to sell more units, he has an incentive to sell a smaller quantity than a perfective competitive company
Learn more about Marginal revenue :
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Answer and Explanation:
The classification are as follows
(a) Payment of interest on notes payable = Operating activities as cash outflow
(b) Exchange of land for patent = Non cash investing activity as it does not involve cash transactions
(c) Sale of building at book value = Investing activities as cash inflow which is represented in a positive sign
(d) Payment of dividends. = Financing activities as cash outflow which is represented in a negative sign
(e) Depreciation = It is added to net income and shown in operating activities
(f) Receipt of dividends on investment in stock = Operating activities as cash inflow
(g) Receipt of interest on notes receivable = Operating activities as cash inflow
(h) Issuance of common stock = Financing activities as cash outflow
(i) Amortization of patent = Operating activities as cash inflow and added to the net income
(j) Issuance of bonds for land = Non cash investing activity as it does not involve cash transactions
Answer:
Explanation:
The cost equation is shown below:
Y = Constant + Volume × Independent variable
where,
Y = operating costs
And, The other items values would remain the same
Now put these values to the above formula
So, the value would equal to
= $170 + 2,300 units × $260
= $170 + $598,000
= $598,170
Hence, the cost equation is displayed above and the operating costs are $598,170
