Answer:
Option (B) is correct.
Explanation:
Given that,
Percentage increase in price = 5%
Percentage decrease in quantity demanded = 15%
Therefore,
= 3.0
Hence, elasticity of demand facing Billy Bob's Barber Shop is 3.0
Answer:
Project 2 should be accepted as it's net present value (NPV) is higher
Explanation:
Project 1
Year Cash Flows Discounting factor @10% Present Value(in $)
0 (5000) 1 (5000)
1 3000 0.909 2727
2 2000 0.826 1652
3 1000 0.751 <u>751</u>
NPV $130
Year Cash Flows Discounting Factor @10% Present value (in $)
0 (7000) 1 (7000)
1 5000 0.909 4545
2 3000 0.826 2478
3 2000 0.751 1502
NPV $1525
Note: Cash flows in brackets denote cash outflows or negative cash flows.
Answer:
C) undercapitalization
Explanation:
Clearly, Julia's cake business was undercapitalized, since she failed in the bare start. The undercapitalization issue is often associated with financial beginnings, when having the right sources of capital is crucial. Startups face significant initial costs and therefore need secure capital to cover them.
A cash flow issue is more common with businesses that are already up and running, but face challenges regarding paying debtors.
Answer:
$4,372.71
Explanation:
Here for reaching the difference in PV between the first and the second offer first we need to follow some steps which is shown below:-
Step 1
Total payment due = Per tire × Bought tires
= $80 × 600
= $48,000
Step 2
Present value factor of 8.4% for 1 year = 1 ÷ (1 + Rate of interest)^Number of years
= 1 ÷ (1 + 8.4%)^1
= 1 ÷ (1 + 0.084)^1
= 1 ÷ 1.084
= 0.92251
Step 3
First offer
Present value = Total payment due × Present value factor of 8.4% for 1 year
= $48,000 × 0.92251
= $44,280.48
Step 4
Second offer
One year payment = Bought tires × Per tire
= 600 × $45
= $27,000
Step 5
Present value = One year payment × Present value factor of 8.4% for 1 year
= 27,000 × 0.92251
= $24,907.77
Step 6
Total present value = Present value of second offer + Tires cost
= $24,907.77 + $15,000
= $39,907.77
Here we can see that first offer is higher than second offer
So,
The difference between the first and the second offer = First offer - Second offer
= $44,280.48 - $39,907.77
= $4,372.71
The cost of adding more options. Supply and demand: would the students want to have salad for lunch, or would it go to waste?
