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Bumek [7]
3 years ago
6

Suppose the economy's production function is ???? = ????K 0.3???? 0.7 . If K = 2000, N = 100, and A = 1, then Y = 246. If K and

N both rise by 20%, and A is unchanged, by how much does Y increase?
Business
1 answer:
densk [106]3 years ago
4 0

Answer:

Y=38.8

Y will increase by 38.8

Y=246+38.8

Y=284.8

Explanation:

Y=A. F(K, L)

Y=A. K^0.3, L^0.7

Then

Y=246

A=1

K=2000

N or L=100

Solutions

200=1(2000^0.3, 100^0.7)

Now the question says both k & N are increased by 0.20

Therefore

Y=1(2400^0.3, 120^0.7)

Y=1(10.3 + 28.5)

Y=38.8

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Public debt includes debt that is held by:________
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7 0
1 year ago
Sauer Milk Inc. wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financ
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Answer:

Plan A = 8.55%

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Plan A =7.9%

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Explanation:

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WACC = Cost of capital x Weights

PLAN A

                                Weights      Cost of capital      WACC

Debt                         3.0 %                    15 %                0.45%    

Preferred stock       6.0                        10%                0.6%

Common equity      10.0                      75%               7.5%

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PLAN B

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Debt                         3.2 %                  25%                0.8%    

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Common equity      11.0                      65%               7.15%

WACC                                                                         8.57%

PLAN C

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Debt                          4.0 %                   35 %                1.4%    

Preferred stock        6.7                        10%                0.67%

Common equity       10.6                      55%               5.83%

WACC                                                                          7.90%

PLAN D

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Debt                         7.0 %                   45 %                3.15%    

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Common equity       12.6                     45%                5.67%

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