- Shut down, if the minimum possible average variable cost is $5
In the purely competitive market majority of the producers is price taker as there are many sellers of the same homogenous product. When in the situation of Marginal Cost (MC) of product at the current rate of production is equal to the market price. This shows that the firm isn’t in profit, it is selling at which they are producing. So, the Average Variable Cost AVC of product at this level indicates the shutdown of the firm production.
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Explanation:
service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last.
6000 to 14000 dollars is the amount that te should both expect to be the transaction cost of selling their home.
<h3>What is the cost of selling a home?</h3>
Several costs usually arises due to the fact that a person wants to sell the home that they own.
One of the costs is the commission fees that these sellers usually pay. The commission fees is usually 5 to 6 percent of the cost of sale.
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Answer:
c. 15.8%
Explanation:
The cost of equity is the WACC (weighted average cost of equity)
WACC formula = wE*rE + wD*rD(1-tax) , whereby
wE = weight of equity = 65%
rE = cost of equity = 20%
wD = weight of debt=35%
rD(1-tax ) = after tax cost of debt =8%
WACC = (0.65 *0.20) + (0.35*0.08)
= 0.13 + 0.028
= 0.158 or 15.8%
Therefore, the overall cost of capital is 15.8%
Answer:
The statement of cash flows is one of the most important financial statements of a company, since a company might be very profitable but if it doesn't have enough cash to function, then it will go bankrupt. This is normally more important when things are not going well, e.g. Ford didn't go bankrupt during the great recession because it had lots of cash, while GM and Chrysler ran out of cash and had to be bailed out.
Companies can survive without making any profits during many years and still be a success, e.g. Amazon, but no company can survive without cash. In finance and investing, cash is king.
The two ways to calculate cash flows are the direct and indirect method. The direct method is calculating through the differences between cash inflows and outflows. On the other hand, the indirect method starts with net income and is then adjusted for depreciation and amortization, increase in accounts receivables, etc.
Personally, I prefer the indirect method because it is much more simple to prepare and understand. Folks at FASB and IASB prefer the direct method because according to them it provides a clearer picture of the company's cash outflows and inflows. It sounds reasonable until you learn that companies that present the cash flows using the direct method must also present them using the indirect method. Or the companies can simply present the indirect method. So I'm not really sure that their argument is very solid.