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Blababa [14]
3 years ago
13

The Coase Theorem states that

Business
1 answer:
choli [55]3 years ago
7 0

Answer:B. if transaction costs are​ low, private bargaining will result in an efficient solution to the problem of externalities.

Explanation:

The coarse theorem:

If there is a conflict between parties this will lead to an effecient results irrespective of who won the right to the property as long as the transaction cost related to the price negotiation is insignificant.

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A firm is considering purchasing two assets. Asset L will have a useful life of 15 years and cost $4 million; it will have insta
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Answer:

Asset S has $103333 more depreciation expense per year than asset L

Option D is the correct answer.

Explanation:

The straight line depreciation method charges a constant depreciation expense per period throughout the estimated life of the asset. The depreciation expense per year is calculated as follows,

Depreciation expense per period = (Cost - Salvage value) / Estimated useful life of the asset

We first need to calculate the cost of each asset. The cost that is recognized should include all costs incurred to bring the asset to the place and condition of use as intended by the management.

Cost - Asset L = 4000000 + 750000   =  4750000 or 4.75 million

Cost - Asset S = 2000000 + 500000  =  2500000 or 2.5 million

<u>Depreciation expense per year </u>

Asset L = (4750000 - 0) / 15

Asset L = $316,666.67

Asset S = $420000

Difference = 420000 - 316666.67

Difference = $103333.33

Asset S has $103333 more depreciation expense per year than asset L

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