Answer:
Lancashire Railway Company (LRC)
Lancashire Railway Company (LRC) should reject the project. The basis for rejecting Division H's project is that its return (12%) is less than the risk-based cost of capital for the division (14%).
Explanation:
a) Data:
Division L's weighted-average cost of capital = 8%
Division H's weighted-average cost of capital = 14%
Weight of Division L = 50%
Weight of Division H = 50%
Company composite weighted average cost of capital = 11% (8% * 50%) + (14% * 50%)
Expected return from a proposed project for Division H = 12%
Being rational does not necessarily mean that you have to think what others might be thinking for rationality means you consider what is most beneficial and try to balance it out with the negative effects of a specific actions. The benefits and detriments of a certain act might be varied in each person.
The answer is $100. The consumer surplus is $100 because that is the difference between what Anna has set as her ceiling for the purchase of the bicycle, $500, and then subtracted by the amount that she actually does pay, $400, that difference is what is referred to as consumer surplus. What the consumer is mentally committed to paying minus what the consumer actually pays.
When the average price level rise in the USA relative the to the average price levels in other countries, American products become more expensive for those countries. Hence, there will a fall in imports level. On the other hand, countries with Lowe prices should experience a rise in the price exports because their products are more price-competitive.
