As a handy tip, we were told that in order to convert the lease factor of a certain amount or transaction to interest rate, we just have to multiply the value by 2, 400.
interest rate = (0.00065)(2400) = 1.56%
Thus, the answer for this item is 1.56%.
State of being completely bankrupt
Answer:
A) Both NPV and going-in IRR to increase
Explanation:
The company's weighted average cost of capital (WACC) includes both equity and debt, and if the cost of equity is higher than the cost of debt, an increase in the percentage of debt will lower the company's WACC. The WACC is used as the discount rate to calculate the net present value (NPV) of the project.
If the discount rate is lower, then the present value of the cash flows will be higher, increasing the NPV. The internal rate of return (IRR) is the interest rate required for the NPV to be equal to $0, so if the NPV increases, then you need a higher interest rate to make it equal $0 (therefore the IRR is higher).
Answer:
a. Gain
b. Lose
Explanation:
a. The consumers in Importing country will gain in a perfect competition because imports by the country will increase the variety of products available and in a perfect competition every seller have the equal chance to sell its goods, so in order to increase sales the sellers may reduce prices which will result in a gain for the consumers.
b. The consumers in exporting country will lose in a perfect competition because the country is exporting the goods to another country and so the country exporting the goods will be left with limited goods and due to equal demand the prices will remain same or may increase if demand is increased which will result in a loss for the consumers of goods in a exporting country.
Answer:
a. More labor and less capital should be used to reduce cost.
Explanation:
Condition for profit maximization is where the Marginal rate of technical substitution = Ratio of factor-input prices. This condition is known as a Producer Optimum in Long Run. MRTS itself is the ratio of Marginal Productivity of Labor to Capital. Thus, MRTS > w/r implies that Relative marginal productivity of labor is greater than relative cost of labor. This means that labor comes cheaper than capital when both their productivities are compared. So it is profitable to employ more labor than capital. This will continue till wages increase up to the point where MRTS = w/r.
