Answer:
The Company should undertake project A.
Explanation:
The finance of projects is usually done through pooling of funds, that is using <em>various sources</em> of finance. The WACC represents the return required by providers of this finance and also shows the risk of the company.
A company will always<em> accept projects</em> that provide a return higher that their weighted average cost of capital (risk) and r<em>eject any project</em> offering a return below the WACC.
Conclusion :
The Company should undertake project A as this gives a return higher than the WACC of 8.5%.
The following statement supply curve A is perfectly elastic and supply curve B is perfectly inelastic are correct.
Explanation:
If there is no response from demand to prices and supply curve is vertical then the supply is perfectly inelastic.If there is more change in demand and very less change in price and supply curve is horizontal then the supply is perfectly elastic.
If the elasticity is greater than one that indicates high change in price known as Elastic supply. if the Elasticity is less than one that indicates low change in price then it is said to be Inelastic supply.
Answer:
Externalities and market power.
Explanation:
Market failure is the economic situation defined by an inefficient distribution of goods and services in the free market.
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation
When a firm has market power, he usually sell above equilibrium price so that there is no equilibrium in the market. This can lead to inefficiency and market failure
Answer:
Return on investment=12.81%
Explanation:
<em>Return on investment for a stock comprises of the capitals and dividend earned on the stock.</em>
<em>The capital gain is the difference between he cost of the shares when it was bought and the value when it is sold.</em>
Capital gain = (24.50 -22)× 500= 1250
Dividend earned for a year = 0.32× 500 =160
Total return = 1250 + 160 =1,410
Total return = $1,410
Cost of the shares= 11,000
Return on investment = total return/cost of shares× 100
=1,410
/11,000 × 100= 12.81
Return on investment=12.81%
The type of account that would be best for Jorge is a checkings account