Answer:
A) They would be indifferent, as Sally's income net of costs equals $25,000.
Explanation:
Sally's economic profit = accounting profit - opportunity costs
- accounting profit = $12,000
- opportunity costs = $25,000 - $15,000 in lost salaries + $2,000 (lost investment revenue) = $12,000
economic profit = $12,000 - $12,000 = $0
Since the economic profit is $0, Sally should be indifferent between running her own business or working for someone else.
Answer:
GDP is not affected by Pete's production of the jewelry box.
Explanation:
Pete is a woodworker and works 20 hours to prepare a jewelry box to gift his wife. If Pete prepares this jewelry box to sell and earn revenue, this will be considered in GDP but in this case Pete prepares a jewelry box to give his wife as his wife's birthday gift.
All types of gifts received or given in kind are not included in Gross Domestic Production.
Answer:
Explanation:
a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=150,000/1.12+210,000/1.12^2+360,000/1.12^3
=557580.18
NPV=Present value of inflows-Present value of outflows
=557580.18-460,000
=$97580.18(Approx)=Value of factory
b.Hence since net present value is positive;factory is a good investment
(Yes)
Answer:
10.12%
Explanation:
Wacc = (D / V)rd (1 - t) + (E / V) re
(D/V) = 0.3
Rd = before tax cost of debt = 5.5%
T = tax rate = 30%
(E / V) = 0.7
Re = marginal cost of equity = 12.8%
= (0.3 x 5.5% × 0.7) + (0.7 x 12.8%) = 1.155% + 8.96% = 10.12%
I hope my answer helps you
Answer:
Shifts right
Explanation:
A rightward shift in the money supply curve indicates its increase. When the FOMC purchases Treasury bills, they purchase these securities with money, thus injecting more money into the economy and increasing the money supply.
