All categories

3 years ago

Choose the best answer:

Business

1 answer:

Juli2301 [7.4K]3 years ago

3 0

Answer:

Option B is correct.

Explanation:

Option A is incorrect because the expected return must be greater than the marginal cost of the capital which means that the Net Present Value must be positive.

Option B is correct because the increase in cost of debt or capital would increase the weighted average cost of capital. This is because weighted average cost of capital is directly proportional to cost of capital sources.

Option C is incorrect because its not the cost of one of the capital sources, actually it is the weighted average cost of capital which when starts increasing at a point due to increase in the level of financing is known as breaking point.

So the only statement that is correct is option B.

Kindly don't forget to rate the answer. Thanks

You might be interested in

In year 1, X Company recognized an impairment loss on the trade name for its beverage product, reducing the carrying value from

ziro4ka [17]

Answer:

The value of the intangible will remain at $350,000

Explanation:

The reason is that the International Accounting Standard IAS-36 says that once the impairment is recognized for the intangible assets it can not be reversed which means that the amount reported would be $350,000. The reason is that it is very rare that the asset gain its value and specially those which are intangible assets. Most of the management in the 1990s-2000 tried to recognize a gain on impairment which was unjustifiable to increase their profits for the period so the standard specifically didn't permitted gain on a previously impaired asset.

6 0

4 years ago

The following production data were taken from the records of the Finishing Department for July:

Studentka2010 [4]

Answer:

38,000 units

Explanation:

The computation of the total equivalent units for the direct material using the FIFO method is shown below:

= Completed and transferred units × completion percentage + ending work in process units × completion percentage

= (38,500 units - 4,000 units) × 100% + 3,500 units × 100%

= 34,500 units + 3,500 units

= 38,000 units

6 0

3 years ago

Suppose there is one firm in a market with linear demand function. The firm has a constant marginal cost of $9. The firm is curr

Paul [167]

Answer:

We employ the fact that Pprofit Maximizing Price = Marginal cost * (ed/ed + 1)

Price = $9 * (-3 / (-3 + 1))

Price = $9 * (-3/-2)

Price = $9 * 1.5

Price = $13.5

As we can see that the profit maximizing price is 13.5. Whereas, the current price of $15 which is not profit maximizing. So the firm should reduce the price to 13.5 per unit so as to be maximizing profit.

4 0

3 years ago

Why might a marketer choose Internet advertising over television advertising?

forsale [732]

Answer:

D. Because television advertising is more expensive

Explanation:

Advertisement on the TV involves making a video that has to be of specified standards. Making the video is costly. After making the video, a company has to buys advertising time with media houses which, is also expensive.

Online or internet advertising is cost-effective. Many popular social media sites allow users to post advertisement messages for free.

7 0

3 years ago

Read 2 more answers

A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the

Sati [7]

Answer and Explanation:

We will start from the point where the manager has three options over here we see that the payoffs for doing nothing is $110000, $160000 for subcontracting and $120000 for 2 machines bought, in this case subcontracting gives the best outcome of $160000.

Now if we move back on decision tree where two machines are bought and if demand is low then payoff is 0.2 * 80000 + 0.8 * 160000 for high demand = 16000 + 128000 = $144000.

Now if decide to buy only one machine then the payoff are 0.2 * 100000 + 0.8* 160000 (value for subcontracting)

= 20000 + 128000 = $148000

In case of event 1 we can see the benefits can be either $144000 or $148000 calculated above.

Se we see the best outcome is when the manager subcontracts and the benefit is $160000.

Best option is to buy no machines and the expected payoff is $160000.

4 0

3 years ago