The answer is marginal revenue (MR) curve above $22.
Explanation:
Jim and Lisa Groomers will maximize its accounting profit when taking it to 0 its economic profits when marginal revenue = marginal costs.
Economic profits are not the same as accounting profits because they include the opportunity costs of investing the money somewhere else. That is whythe long run firm is not able to make economic profits since as they exist, new competitors will enter the market. But in the case of the shoert run, the firms are able to make economic profit, but by doing so, they cannot maximize their accounting profit.
Economic profit = account profit = Opportunity profit
Opportunity cost are extra costs or benefitslost from choosing one activity or investment over another one.
Answer:
The ratio of flotation cost to funds raised is 20.13%
Explanation:
First of all, it is noteworthy that actual amount received per share by Deep Hollow Oil is the issue price minus the underwriting spread of $2.6565
(8.05% of $33),in other words the net issue price is $30.3435
The total amount raised is $ 4,096,372.50 (135000*$30.3435
),while total flotation costs are as follows:
Underwriting costs $ 358,627.50
Legal and accounting fees $418,000
Indirect costs $48,000
Total flotation costs $824,627.50
However, the flotation costs as a percentage of funds raised is given below:
$824,627.50 /$4,096,372.50=20.13%
Answer:
Increased responsibility for corporate officers
Explanation:
A review of eight thousand public companies, on the study of the impact of the Sarbanes-Oxley Act (SOX) of 2002 revealed that <u>SOX increased directors' workload and risk, and increased demand by mandating that firms have more outside directors. </u>
It was also revealed that both broad-based changes and cross-sectional changes (by firm size) occurred <u>because Board committees meet more often post-SOX</u> and Director and Officer insurance premiums have doubled.
Answer:
Project 1, 2 and 3 should be rejected.
Explanation:
This problem required us to tell which project we should not accept. To solve this we have to apply this rule that is accept the project with positive NPV.
The detail calculation are given below.
The discount factors to be used for CFO, CF1, CF2 and CF3 is 1, 0.74, 0.55 and 0.41 respectively. It is calculated by using following formula.
DF= (1 + i)^-n (n is period and i is 35%)
So now calculating NPV of each project by multiplying cashflow with discount factor.
Project 1 = -100+ (50*0.74 ) + (50*0.55) + (50*0.41) = -15 M dollars
Project 2 = -80 + (40*0.74) + (45*0.55) + (50*0.41) = -5.15 M dollars
Project 3 = -70 + (30 *0.74) + (40*0.55) + (50*0.41) = -5.3 M dollars
Project 4 = -60 + (30 *0.74) + (40*0.55) + (60*0.41) = 8.8 M dollars
Project 5 = -50 + (25 *0.74) + (30*0.55) + (70*0.41) = 13.7 M dollars
Answer:
$10.16
Explanation:
Calculation for What is the current value per share if the required return is 16.8 percent
Using this formula
Current value per share Decreased in Annual dividend/Decreased in future dividends +Required return
Let plug in the formula
Current value per share =$1.90/1.9 percent+16.8 percent
Current value per share =$1.90/0.187
Current value per share =$10.16
Therefore the current value per share if the required return is 16.8 percent will be $10.16
