Answer:
total output.
Explanation:
for example, a company manufactures 10,000 units of A. Its total variable costs are $50,000, and its total fixed costs are $25,000.
The average variable cost = $50,000 / 10,000 = $5 per unit of A
The average fixed cost = $25,000 / 10,000 = $2.50 per unit of A
The average total cost = $75,000 / 10,000 = $7.50 per unit of A
This is an example of a mental set, which can sometimes be a useful framework for solving problems. In Zelma's case though, her mental set is limited to certain words and she is unable to think of possibilities outside of that set.
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%.
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