Answer:
25%
Explanation:
Data provided
Risk free return = 3%
Beta = 2
Expected return on the market portfolio = 14%
Risk-free rate of return = 3%
The computation of cost of retained earnings is shown below:-
Cost of retained earnings = Risk free return + Beta × Risk premium
= 3% + 2 × (14% - 3%)
= 3% + 2 × 11%
= 3% + 0.22
= 25%
Therefore, for computing the cost of retained earning we simply applied the above formula.
Answer: Pure monopolists do not always realize economic profits.
Explanation:
Even though Pure Monopolies are the only sellers or makers of a good in a market and can therefore set their own prices, this does not mean that they will always make a profit talk more an economic one.
In the short run for instance, a Pure monopoly could see its average cost higher than its average revenue because some factors of production could not be varied. In this scenario, the monopolist would realize economic losses.
Answer: 44,000 square feet.
Explanation:
If we are assuming use of the direct method, we can find out how the building maintenance cost will be allocated using the following formula,
Building Maintenance cost square feet allocation = Square Footage of Machining + Square Footage of Assembly
Slotting in the figures we have,
= 18,000 + 26,000
= 44,000 square feet.
The Building Maintenance cost will be allocated over 44,000 square feet.
Answer:
Option (C) is correct.
Explanation:
Elasticity of demand refers to the responsiveness of change in quantity demanded with any change in the price level.
Elasticity of demand:
= (change in quantity ÷ old quantity) ÷ (change in price ÷ old price)
=[(12 - 8) ÷ 8] ÷ [($3 - $2.25) ÷ $3]
= 0.5 ÷ 0.25
= 2
Therefore, the price elasticity of demand is 2.
Answer: D) saving equals investment as long as NX = 0
Explanation:
The last option was incomplete as it should have said ...NX = 0.
The Income/GDP of a country that is open to international trade is calculated as follows:
Income = Consumption + Investment + Government spending + Net exports
Y = C + I + G + NX
If NX = 0 then the formula becomes:
Y = C + I + G
Investment in this scenario is therefore:
I = Y - C - G
This is the same as savings as savings is calculated by subtracting consumption and government spending from the total income. This is because government spending is derived from taxes so the cash that people get to save is their income less than their taxes and consumption expenses.
S = Y - C - G = Y
