The correct answer is 2.4.
The simplest way to define elasticity of demand is by using the following formula:
Elasticity of Demand = Change in Demand / Change in Prices
Then, in our question we have:
Demand Elasticity = 12% / 5% = 2.4
Why is it called elasticity of demand?
An elastic product is one in which demand significantly shifts in reaction to price fluctuations. In other words, the product's demand point has expanded significantly from its earlier point. It is inelastic if the amount purchased fluctuates little when the price of the good or service changes.
What Does elasticity of demand tells us?
It reveals how much the quantity needed alters in response to pricing changes made by the company. The price elasticity of demand explains how the amount sought in the market changes when the price changes if we are evaluating a market demand curve.
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Answer:
The Key Concepts of Effective Operations Strategy is explained below in details.
Explanation:
Operations management includes preparation, coordination, and supervising methods, and make significant enhancements for tremendous profitability. The improvements in the everyday operations have to promote the company's strategic purposes, so they are introduced by deep examination and determination of the current processes.
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Answer:
a. 6.56%
b. 10.62%
Explanation:
Debt-equity ratio=debt/equity
Hence debt=1.2 equity
Let equity be $x
Debt=$1.2x
Total=$2.2x
WACC=Respective costs*Respective weight
a.
8.7=(x/2.2x*13)+(1.2x/2.2x*Cost of debt)
8.7=5.909+(1.2/2.2*Cost of debt)
Cost of debt=(8.7-5.909)*(2.2/1.2)
=5.1167%(Approx)
Hence pretax cost of debt=Cost of debt/(1-tax rate)
=5.1167/(1-0.22)=6.56%(Approx).
b.
8.7=(x/2.2x*Cost of equity)+(1.2x/2.2x*7.1)
8.7=(1/2.2*Cost of equity)+3.8727
Cost of equity=(8.7-3.8727)*2.2
=10.62%