The answer to the first unknown is the "COST SIDE" while the answer to the second unknown in the problem is "PRODUCTION AND MARKETING COST". Hence, with a cost-oriented pricing strategy used and implemented by many companies, a price setter stresses the COST SIDE of the pricing problem and the price is set by looking at the PRODUCTION and MARKETING COST.
Answer:
0.33
Explanation:
Delta = (Cu – Cd)/(Su – Sd)Cu
= 62.50 – 55 = 7.50
Cd = 0
Delta = (7.50 – 0)/(62.50 – 40)
= 0.33
Answer:
Real income has increased by $720 in terms of dollar and 2% in percentage
Explanation:
<em>The real income is determined by adjusting the nominal income for inflation. The consumer price index (CPI) is used to measure the rate of inflation.</em>
R<em>eal income = Nominal income × CPI Base year/ CPI in current year</em>
Real Income = 32000 × 120/125
=$30,720
Change Real income
Change in real income ($) = 30,720 - 30,000
= $ 720
Change in real income (%) = (720/30,000) × 100
= 2%
Real income has increased by $720 in terms of dollar and 2% in percentage
Answer:
The solution as per the given problem is provided below throughout the explanation portion below.
Explanation:
The given values are:
Debt issued,
= 120
Pretax earnings,
= 80
Tax,
= 35%
All equity firm,
= $320
Number of common stock,
= 50
(a)
Balance sheet before the debt issue's announcement will be:
<u>Assets </u><u> 320</u>
<u>Debt </u><u> 0</u>
<u>Equity </u><u> 320</u>
then,
The total will be "320".
(b)
The per share price will be:
= 
= 
= 
or,
After tax, the net income will be:
= 
= 
= 
= 
(c)
The return on equity will be:
= 
= 
= 
or,
= 
(%)
