Answer:
rd+premium = 10.5%
using CAPM = 10.3%
Explanation:
Under bond-yield+ risk-premium approach
This method simply propose to add the bond yield with the estmated risk premium:
0.065 + 0.04 risk premium = 0.105
r_f = 0.055
β = 0.8
(r_m-r_f) = 0.06
0.055 + 0.8(0.06) = 0.103 cost of capital using CAPM
Answer:
Cost of machine =$ 15600
Explanation:
<em>According to International Accounting standards (IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.</em>
So we will add the purchase cost to the cost of delivery, tax and installation.
Note the discount is 4%
The purchase cost less discount = (100-4)% × 15,000= $14,400
The cost of the equipment = $14,400 + 900 + 300
=$ 15,600
If all firms only earn a normal profit in the long run, firms will develop new products or lower-cost production methods because they can innovate and possibly earn an economic profit in the short run.
Explanation:
Competition involves constant efforts by companies and executives to do more than the loss (normal gains) of new goods or by improving ways to manufacture current products at lower prices. Therefore, if businesses can invent, they will achieve short-term economic advantage.
Economic benefit encourages entry, economic losses lead to exit and firms in a highly profitable market earn little economic income in a long-term equilibrium. In an industry where inflation does not change the costs of materials (a market with a constant cost), the long-term supply curve is a horizontal line.
Answer:
The cost of underestimating the expenses is $240.
Explanation:
A flexible benefits program can be described as a spending plan in which an employee agrees to a lower cash compensation when the employer has also agreed to pay some costs which the employer can pay without the need for the employee to recognize gross income. Therefore, the medical expenses of the employee for the next year will be estimated by the employee and he or she will accept a deduction equal to the estimated expenses from his or her salary.
From the question, the following are given:
Amount put into flexible benefits account by Rosa = $4,000
Rosa's Actual expenses = $5,000
Marginal tax rate = 24%
Therefore, we have:
Amount by which the account is underestimated by Rosa = Rosa's Actual expenses - Amount put into flexible benefits account by Rosa = $5,000 - $4,000 = $1,000
Rosa's cost of underestimating the expenses = Amount by which the account is underestimated by Rosa * Marginal tax rate = $1,000 * 24% = $240
Therefore, the cost of underestimating the expenses is $240.
To negotiate a balance in costs between the tax on imported goods and the cost to the company for production.
