Answer:
Pure competition
Explanation:
Pure competition is a market structure characterized by many competitors selling similar products. Due to the high competition, market forces dertermine prices. Pure competition is also referred to as perfect competition. The other features of pure competition include.
- There many buyers and many sellers who have access to market information
- There are barriers no entry and exit in the market
- Firms sell homogeneous products
- Firms cannot influence the market price. Firms are price takers.
- The units of production such are homogeneous and are freely moving.
Answer: 20,000 lawn mowers
Explanation:
The formula for calculating the number of lawn mowers needed to reached the budgeted profit levels is:
= (Fixed costs + Budgeted profit) / Contribution margin
Contribution margin = Selling price - Variable cost
= 40 - (14 + 8 + 5)
= 40 - 27
= $13
Number of lawn-mowers required:
= (140,000 + 120,000) / 13
= 20,000 lawn mowers
Answer: 9.48%
Explanation:
Given Data
Debts ;
$7 billion
$2 billion
$13 billion
Beta of Fords stock = Beta = 1.50
Market risk premium = Rp = 8.0%
Risk free rate of interest = Rf = 4.0%
Equity rate = 1.7
Market risk rate = 0.8
Risk free rate = 0.03
Therefore;
Cost of Equity ( Re ) = Risk free rate + equity rate × market risk premium
= 0.03 + (1.7 × 0.8)
= 0.166
Preferred Stock Cost ( PSC)= Dividend ÷ stock price
= 4 ÷ 30
= 0.1333
Total debt = 13 + 6 + 2 = 21 billion
D% = 13 billion ÷ 21 billion
= 0.619
E% = 6 billion ÷ 21 billion
= 0.286
P% = 2 billion ÷ 21 billion
= 0.095
RD = debt capital at 8% maturity rate
Tc= 30%
Rwac =(w/ preferred stock)
= Re × E% + PSC × P% + Rd ( 1- Tc) D%
Rwac = (0.166)(0.286) + (0.1333)(0.095) + (0.08)(1- 0.3)*(0.619)
= 0.094803 * 100
= 9.48%
At 30% tax rate Ford weighted average cost is 9.48%
Answer:
The answer is: the following three should be used.
- net present value (NPV)
- traditional payback period (PB)
- the modified internal rate of return (MIRR)
Explanation:
First of all, the NPV of the four projects must be positive. Only NPV positive projects should be financed. If the NPV is negative, the project should be tossed away. This is like a golden rule in investment.
Now comes the "if" part. What does the company value more, a short payback period or a higher rate of return.
If the company values more a shorter payback period (usually high tech companies do this due to obsolescence), then they should choose the project with the shortest payback period.
If the company isn't that concerned about payback periods, then it should choose to finance the project with the highest modified rate of return. This means that the most profitable project should be financed.
Answer:
The new ownership position is A. 5.08
Explanation:
Current holding= 6%
current no. of shares= 2*6%=.12
new no. of shares issued =18/50=.36
total no. of shares become =2+.36=2.36 million
my holding in no. =.12 million
my holdinng in %=.12/2.36=.0508
or, 5.08%
