The correct answer for the question that is being presented above is this one: "C. both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over." When the price level lower compared to its value prior to the crisis, then <span>C. both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over</span>
Answer:
$9,760
Explanation:
For computing the depreciation expense first we have to find out the depreciation rate which is shown below:
The computation of the depreciation per miles under the units-of-production method is shown below:
= (Original cost - residual value) ÷ (estimated miles)
= ($138,000 - $16,000) ÷ (1,000,000 miles)
= ($122,000) ÷ (1,000,000 miles)
= $0.122 per miles
Now for the first year, it would be
= Miles driven in first year × depreciation per miles
= 80,000 miles × $0.122 per miles
= $9,760
Answer:
.B) shutdown, because it cannot even cover all of its variable costs let alone its fixed costs if it stays in business.
Explanation:
In a competitive market, the firm maximize it's profit when the market price of the firm is equal to average variable cost of the firm so that the firm earns normal profits in the long run.
Therefore, if price is less than the average variable cost then the firm should shutdown because it cannot even cover all of its variable costs let alone its fixed costs if it stays in business.
Answer:
7.52%
Explanation:
First and foremost ,the yield to maturity on the old issue is computed using the rate formula in excel as calculated below:
=rate(nper,pmt,-pv,fv)
the nper is the number of times the bond would pay annual coupon interest of $106,which is 20 times
pmt is the amount of annual coupon payment which is $106
pv is the current price of the bond at $860
fv is the face value of the bond at $1000
=rate(20,106,-860,1000)=12.54%
The yield to maturity on the new issue is 12.54% as well
after-tax cost of debt=pretax cost of debt*(1-t)
pretax cost of debt is yield to maturity of 12.54%
t is the tax rate of 40% or 0.4
after-tax cost of debt=12.54%
*(1-0.4)=7.52%