Gourmet Pets is interested in computing the breakeven quantity for its new product, Prime Cuts. The annual fixed costs that must
1 answer:
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Answer:
$9,032,853
Explanation:
Given:
Net income = $5,411,623
Taxes rate = 34% = 0.34
Revenues = $20,433,770
Interest expense for the year = $1,122,376
Depreciation expense = $2,079,112
Now,
Earnings before taxes (EBT) =
or
Earnings before taxes (EBT) =
or
Earnings before taxes (EBT) = $8,199,428.78
EBIT = Earnings before taxes + Interest expenses
or
EBIT = $8,199,428.78 + $1,122,376
or
EBIT = $9,321,804.78
EBITDA = EBIT + Depreciation expense
or
EBITDA = $9,321,804.78 + $2,079,112
or
EBITDA = $11,400,916.78
Therefore,
The operating expenses = Revenue - EBITDA
or
The operating expenses = $20,433,770 - $11,400,916.78
or
The operating expenses = $9,032,853.22 ≈ $9,032,853
Answer:
Efficiency requires that one lighthouse is built since the willingness to pay of all the residents together is larger than the cost of providing the lighthouse
Explanation:
Since the lighthouse is a public good, according to the coase theorem, if the combined willingness to pay for the lighthouse of all of the people living on the islands is higher than the cost of the lighthouse, then a lighthouse should be built.
The total willingness to pay is:
The population willingness to pay is higher than the cost of building one lighthouse ($2000) but lower than the cost of building two lighthouses ($4000). Therefore, efficiency requires that one lighthouse is built since the willingness to pay of all the residents together is larger than the cost of providing the lighthouse.