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1 year ago

If expected return is less than required return on an asset, rational investors will ________.

1 answer:

6 0

Sell the asset, which will drive down the price and cause the expected return to reach the level of the required return.

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Suppose Boyson Corporation's projected free cash flow for next year is FCF1 = $150,000, and FCF is expected to grow at a constan

bearhunter [10]

Answer:

The total corporate value of the firm is $3,000,000

Explanation:

The total corporate value of the firm is computed as:

Total corporate value = FCF1 / (average cost of capital - Growth rate)

Where

FCF1 is $150,000

Growth rate is 6.5%

average cost of capital is 11.5%

Putting the values :

= $150,000 / (11.5% - 6.5%)

= $150,000 / 5%

= $3,000,000

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2 years ago

The demand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn

kramer

Answer: d. price control.

Explanation:

Price control is a mechanism used by government in order to control price, this is done when government sets a minimum and maximum price for certain goods and services, this is done in order to manage the purchasing power for such goods. Most times government adopt price control system for things like food, energy product, etc. Price control can lead to a situation where there will either be shortage or over supply.

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2 years ago

Read 2 more answers

According to Laudon and Laudon, which of the following is the most complete technical definition of an "organization"? Group of

dangina [55]

Answer:

Stable, formal social structure that takes resources from the environment and processes them to produce outputs

Explanation:

The technical definition of an "organization", according to Laudon and Laudon, focused on three elements of an organization which are stable, formal and social structures.

In terms of longevity and routineness, an organization is more stable than an informal group. Organizations are formal legal entities with internal rules and procedures that must abide by laws. Organizations are also social structures because they are a collection of social elements.

7 0

1 year ago

Q: Lisa sells 10 bottles of homemade ketchup for $10 each. The cost of the ingredients, the bottles, and the labels was $70. In

bija089 [108]

Answer:

Accounting Profit = $100

Economic profit = $80

Explanation:

Given that

Sales = 10

Cost = $10

The calculation of accounting profit and economic profit is shown below:-

Accounting Profit = Sales × Costs

= 10 × $10

= $100

For calculating accounting profit we simply multiply sales with costs.

Economic profit = Accounting profit - Opportunity cost

= $100 - 2 × $10

= $80

For calculating the economic profit we simply deduct the opportunity cost from accounting profit.

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1 year ago

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independe

lesantik [10]

Answer and Explanation:

The computation is shown below:

1. Given that

Break even point units 115000 units

Fixed cost = $349,600

As we know that

CM per unit is

= Fixed cost ÷ Break even units

= $349,600 ÷ 115,000

= 3.04 per unit

Now

Selling price = Variable cost +CM per unit

= $4.56 + $3.04

= $7.60 per unit

2. Given that

Net Income at 15600 units is $166,000

Fixed cost = $458,000

So,

Contribution is

= $458,000 + $166,000

= $624,000

Now

CM per unit is

= $624,000 ÷ 15,600

= 40 per unit

Selling price per unit: 120

So,

Variable cost per unit is

= $120 - 40

= 80 per unit

And,

CM ratio is

= CM per unit ÷ Selling price per unit

= $40 ÷ 120 × 100

= 33.33%

3. Given that

Net Operating income = $22,500

CM ratio = 25%

Actual revenue = $235,000

So,

Contribution earned is

= $235,000 × 25%

= $58,750

Now

Fixed cost = Contribution - Net income

= $58,750 - $22,500

= $36,250

4. Given that

Variable cost ratio = 56%

Fixed cost = $103,840

Break even units= 23600 units

So,

CM per unit is

= $103,840 ÷ 23,600

= $4.40

CM ratio = 100 - 56% = 44%

And, the Selling price per unit is

= $4.40 ÷ 44%

= $10 per unit

Now

Variable cost per unit is

= $10 × 56%

= $5.60 per unit

And,

Contribution per unit is

= $10 × 44%

= $4.40 per unit

5 0

1 year ago

If expected return is less than required return on an​ asset, rational investors will​ ________.

If expected return is less than required return on an asset, rational investors will ________.