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Musya8 [376]
3 years ago
5

The market for household appliances in Richland is monopolistically competitive. Some firms in this market are incurring losses.

However, they have not stopped production. What is the reason behind such behavior?
Business
1 answer:
alina1380 [7]3 years ago
8 0

Answer:

Monopolistic competition exists in industries that have many firms offering similar products or services. In monopolistic competition, those similar products are not perfect substitutes for one another. Barriers in entry and exit of these industries are low and decisions made by one firm do not directly affect its competitors. In the short term, a monopolistically competitive industry can incur losses nut <em>only if those loses are higher than the fixed costs the organization will stop operations</em>.

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Artyom0805 [142]

Answer:

WJK's Unlevered Beta = 1.7

 Expected rate of return = 13%

Financial leverage = 0.25

Explanation:

given data

debt = $5000

equity = $20,000

interest = 5%

equity beta  = 2

market risk premium = 5.5%

risk free rate of return = 2%

marginal tax rate = 30%

solution

we find here Unlevered Beta that is

Unlevered Beta = \frac{Beta (Levered)}{{1 + [ (1- tax rate)* (\frac{Debt}{Equity})]}}    ...........................1

as that we can say  

WJK's Unlevered Beta = \frac{Beta of GH (Levered)}{{1 + [ (1- tax rate)* (\frac{Debt of GH}{Equity of GH})]}}

put here value we get

WJK's Unlevered Beta = \frac{2}{{1 + [ (1- 0.3)* (\frac{5000}{20000})]}}

WJK's Unlevered Beta = \frac{2}{1.18}

WJK's Unlevered Beta = 1.7

and

Expected rate of return on equity of GH using CAPM = Risk free rate + Beta of GH ×  (Market risk premium)

Expected rate of return =  2% + 2 × (5.5%)

 Expected rate of return = 13%

and

Financial leverage will be here

Financial leverage = \frac{Debt}{Equity&#10;}

Financial leverage = \frac{5000}{20000&#10;}

Financial leverage = 0.25

5 0
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Semmy [17]
I think it would be traffic accidents
4 0
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8 0
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damaskus [11]

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