Answer:
The correct answer is letter "B": The LRAC curve represents the least-cost input combination of inputs for producing each level of output.
Explanation:
Presuming that all factors for production are available, the long-run average cost (<em>LRAC</em>) curve portraits the lowest cost per unit of the company at each output level. The approach also presumes that the company has selected the production optimal factor mix.
Answer:
13.05%
Explanation:
Using CAPM Equation, Ke = Rf+Beta*(Rm-Rf)
= 0.045+1.3*(0.07)
= 0.136
= 13.60%
Using Dividend growth model, Ke = (D1/P0) + g
= (D0*(1+g)/P0) = g
= (1.50*(1+0.08)/36) + 0.08
= 0.125
= 12.50
The cost of equity (Ke) = 0.136 + 0.125 / 2
The cost of equity (Ke) = 0.261/2
The cost of equity (Ke) = 0.1305
The cost of equity (Ke) = 13.05%
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