Answer:
Option (c) is correct.
Explanation:
Stephen can move 70 boxes or bake 28 cookies:
Opportunity cost of moving a box = (28 ÷ 70)
= 0.4 cookies
Opportunity cost of baking a cookie = (70 ÷ 28)
= 2.5 boxes
LeBron could move 24 boxes or bake 6 cookies:
Opportunity cost of moving a box = (6 ÷ 24)
= 0.25 cookies
Opportunity cost of baking a cookie = (24 ÷ 6)
= 4 boxes
Yes, trade is possible.
Stephen has a comparative advantage in baking cookies because of the lower opportunity cost than LeBron, so he is specialized in baking cookies.
On the other hand, LeBron has a comparative advantage in moving boxes because of the lower opportunity cost than Stephen, so he is specialized in moving boxes.
Answer:
The simple rate of return on the investment is closest to: C. 10.6%
Explanation:
In Hartong Corporation:
Increasing net income = Increase sales revenues - Cash operating expenses - Annual depreciation expense = $185,000 - $89,000 - $52,000 = $44,000
This is the net income from the equipment per year
Return on the investment (ROI) is calculated by using following formula:
ROI = (Net income/Cost of investment
)x 100%
Cost of investment = Cost of equipment = $416,000
ROI = ($44,000/$416,000) x 100% = 10.6%
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