The present value of free cash flows is $15 million and the present value of the horizon value is $100 million. Calculate the pr
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Answer:
The answer is "$ 140".
Explanation:
The company produces the quantity MR = MC and if there is no quantity MR = MC, the amount throughout the case MR is just greater and closest to MC to maximize profit.
Here MR = marginal income and marginal cost =MC
MR =
In the above table, we could see that the amount MR = MC = 8 isn't available. Thus it produces the amount where the MR
is only larger but nearest to MC.
25 unit MR =
(Minimum and superior to MC)
MR of 30 units, similarly MR of 30 units.
Consequently, 25 units were produced and 12.5 units were produced.
Currently, XYZ breaks the agreement and produces three more so thus maximum quantity produced on a market = 25 + 5 = 30 and through the above table they see which if quantity = 30, price = 16.
XYZ produces 12.5 + 5 = 17.5 output from 30 units.
Cost Total = TVC + TFC
Total TVC = Total Cost for Variable TFC = Maximum Cost of TFC = 0.
If MC is stable, TVC = MC Q = 8
q, where Q = exposed to the real produced and XYZ produces 17.5 in this case.
Total expenditure (TC+) is TVC = TFC = 8 17.5.
Take control = TR - TC = TC = 16 17.5 - 8
17.5 = 150.
So the business XYZ is profiting = 140