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bearhunter [10]
3 years ago
7

Under what conditions does a​ Cobb-Douglas production​ function,

Business
1 answer:
Juli2301 [7.4K]3 years ago
6 0

Answer:

Exhibits increasing returns to scale.

Explanation:

Given that,

Cobb-Douglas production​ function:

q=10(L)^{0.71}(K)^{0.84}

If both inputs are doubled, then

q=10(2L)^{0.71}(2K)^{0.84}

q=10(2)^{(0.71+0.84)}(L)^{0.71}(K)^{0.84}

q=10(2)^{1.55}(L)^{0.71}(K)^{0.84}

Therefore, this Cobb-Douglas production​ function exhibits the increasing returns to scale because the power of 2 is greater than 1. Under the condition of increasing returns to scale, an increase in the output of the firm is greater than the increase in the input of the firm.

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On January 1, 2017, Culver Company issued 10-year, $2,140,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into
Dvinal [7]

Answer:

a) diluted earnings per share = 0

Explanation:

Diluted earnings per share (DEPS) is a recalculation of the basic EPS. The difference between DEPS and EPS is, EPS represents the current position of earnings per share. No changes in number shares and/or earnings in the future are incorporated in the basic EPS.

Whereas DEPS is a representation of  not only the current position of earnings and shares but also includes the commitments an entity has already made whose occurrence may result in an increase/decrease in the amount of earnings and/or number of shares. For example, in the question Culver Company has issued 10-year convertible bonds which right now have no impact on basic EPS but if in the future these bond holders exercise their right of conversion, this would result in an increase in number of ordinary shares hence decreasing/diluting the basic EPS. The entities use DEPS to show shareholders the impact of such commitments on the basic EPS to improve their decision making.

So in 2017 none of the bonds were converted therefore no diluted earnings per share is calculated in 2017.

If all of the bonds were converted in 2017 the DEPS would have been calculated as follows:

The formula for calculating DEPS is as follows;

DEPS = (Net income + interest savings) ÷ number of ordinary shares + increase in ordinary shares as a result of conversion.

Tax savings as a result of conversion=$128400 ($2140000×6%). Because if bond holders convert into ordinary shares then Culver company will not have to pay them interest and hence the amount of interest is saved.

Increase in ordinary shares upon conversion= 29960 ($2140000÷$1000=2140 bonds. Each bond is convertible into 14 shares therefore, 2140×14=29960).

Now Lets calculate DEPS as follows;

DEPS = ($296000+$128400) ÷ 91000+29960

DEPS =$424400÷120960

DEPS = $3.5

5 0
3 years ago
The purpose of a budget is to track your income and your spending. true or false?
skad [1K]
False we use it to save money
3 0
3 years ago
Read 2 more answers
The Baldwin company currently has the following balances on their balance sheet: Assets $180,506 Common Stock $11,365 Retained e
Amiraneli [1.4K]

Answer:

The total liabilities for the next year amount to 37163 $.

Explanation:

To calculate the liability we will use the simple equation given below.

Asset-equity=liability

Assets-RE=Liability

                        Current year      Change*        Next Year

Assets                  180,506.00    29,506.00        151,000.00  

Common Stock   (11,365.00)         0               (11,365.00)

Retain Earning  (92,472.00)  (10,000.00)      (102,472.00)

Liability- BaL figure   76,669.00                           37,163.00  

   

*Retain earning= Net profit- dividend  

Hence balancing figure that is 37,163 dollars is liabilty for next year,  

7 0
3 years ago
NewKirk Inc.., is an unlevered firm with expected annual earnings before taxes of $21 million in perpetuity. The current require
IrinaVladis [17]

Answer:

$11,895,000

Explanation:

Expected annual earnings before tax = $21,000,000

Debt issue = $30,000,000

Interest rate = 9%

Annual Interest expenses = $30,000,000 × 9%

= $2,700,000

EBT = EBIT - Interest expenses

= $21,000,000 - $2,700,000

= $18,300,000

Net income = $18,300,000 × (1 - 35%)

= $11,895,000

Cash flows available to equity holders after recapitalization will be $11,895,000.

8 0
3 years ago
How do I view my work schedule Six Flags?
Black_prince [1.1K]

Answer:

you should have an username and password and just log in with six flag . try going to https://six.flag.team

Explanation:

I hope that help you

5 0
3 years ago
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