Available options are:
A. All of the choices are correct.
B. Average fixed costs would increase.
C. Marginal costs would increase.
D. Average variable costs would increase
Answer:
Option B. Average fixed costs would increase.
Explanation:
As the variable cost is the same which means that the marginal cost (All variable costs) would neither increase nor the average variable cost (Average variable cost due to fluctuating variable cost) would increase. Hence both Option C and D are incorrect.
Option B is correct because:
Average Fixed cost = (Initial Value + Value Now) / 2
Average Fixed cost = ($100 + $150) / 2 = $125
This means that the average cost has been increased.
Answer and Explanation:
The preparation of the balance sheet is presented below:
Assets
cash $11,000
account receivable $15,000
equipment $10,000
buidlings $65,000
land $31,000
Total assets $132,000
Liabilities and stockholder equity
Account payable $11000
common stock $80,000
retained earnings $41,000
Total Liabilities and stockholder equity $132,000
Answer:
Component cost of preferred stock is 11.4583 %
Explanation:
Given Data:
Preferred stock selling=96 percent of par.
Annual Coupon =11 percent
Required:
What would be Marme’s component cost of preferred stock?
Solution:
The formula we are going to use is:
Where:
is 11 percent annual coupon
preferred stock selling for 96 percent of par
If we convert the above percentage to dollar using the scale $1=1% then:
=$11
=$96
Component cost of preferred stock is 11.4583 %
Answer:
The answer is B.
Explanation:
Working capital is current assets minus current liabilities. Working capital is a measure of liquidity. It is a very important metric.
In year 1:
Sales $1,000,000
30% of sales in net working capital is:
0.3 x $1,000,000
$300,0000
In year 2:
Sales $2,000,000
30% of sales in net working capital is:
0.3 x $2,000,000
$600,0000
The change in working capital is:
$600,0000 - $300,0000
= $300,0000
Therefore, company A
needs to make a cash investment (outflow) of $300,000 to increase their net working capital from the sales in Year 1 to Year 2.
