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gregori [183]
2 years ago
12

Chris was the business manager for a real estate firm earning an annual salary of $40,000. Then Chris decided to become a consul

tant. Chris hired an administrative assistant at $15,000 per year and rents office space (utilities included) for $3,000 per month. Chris earned $100,000 in total revenue the first year as a consultant.In order for Chris to earn normal profit, accounting profit would have to be _______.
Business
1 answer:
Reptile [31]2 years ago
7 0

Answer:

The answer is: $40,000

Explanation:

Chris's opportunity cost of working as a consultant instead of working as a business manager (her old job) is $40,000. So in order for Chris to earn normal profit, the difference between his revenue and his combined explicit (e.g. rent, assistant's salary) and implicit costs (opportunity cost) is zero.

You might be interested in
Show that if the contribution to profit for trains is between $1.50 and $3, the current basis remains optimal. If the contributi
Dmitriy789 [7]

Answer:

210

Explanation:

Let us consider that x is the number of soldiers produced each week and y is number of trains produced each week.

Also, weekly revenues and costs can be expressed in terms of the decision variables x and y.

Then,

Hence the profit which we want to maximize is given by,

Now the constraints are given as,

Finishing Constraint:

Each week, no more than 100 hours of finishing time may be used.

Carpentry Constraint:

Each week, no more than 80 hours of carpentry time may be used.

Demand Constraint:

Because of limited demand, at most 40 soldiers should be produced each week.

Combining the sign restrictions and with the objective function  and constraints,and yield the following optimization model:

Such that,

First convert the given inequalities into equalities:

From equation (1):

If x=0 in equation (1) then (0,100)

If y=0 in equation (1) then (50,0)

From equation (2):

If x=0 in equation (2) then (0,80)

If y=0 in equation (2) then (80,0)

From equation (3):

Equation (3) is the line passing through the point x=40.

Therefore, the given LPP has a feasible solution first image

The optimum solution for the given LPP is obtained as follows in the second image

The optimal solution to this problem is,

And the optimum values are  .

Let c be the contribution to profit by each train. We need to find the values of c for which the current, basis remain optimal. Currently c is 2, and each iso-profit line has the form

3x +  2y = constant

y = 3x/2 +constant/ 2

And so, each iso-profit line has a slope of  .

From the graph we can see that if a change in c causes the isoprofit lines to be flatter than the carpentry constraint, then the optimal solution will change from the current optimal solution to a new optimal solution, If the profit for each train is c, the slope of each isoprofit line will be.

-3/c

Because the slope of the carpentry constraint is –1, the isoprofit lines will be flatter than the carpentry constraint.

If,

-3/c<-1

c >3

and the current basis will no longer be optimal. The new optimal solution will be point A of the graph.

If the is oprofit lines are steeper than the finishing constraint, then the optimal solution will change from point B to point C. The slope of the finishing constraint is –2.

If,

-3/c < -2 or

C < 1.5

Then the current basis is no longer optimal and point C,(40,20), will be optimal. Hence when the contribution to the profit for trains is between $1.50 and $3, the current basis remains optimal.

Again, consider the contribution to the profit for trains is $2.50, then the decision variables remain the same since the contribution to the profit for trains is between $1.50 and $3. And the optimal solution is given by,

z = 3× (20) + 2.5 × (60)

= 60 + 150

= 210

5 0
2 years ago
Upton Umbrellas has a cost of equity of 11.6 percent, the YTM on the company's bonds is 6.2 percent, and the tax rate is 40 perc
matrenka [14]

Answer:

WACC = 9.86%

so correct option is d. 9.86%

Explanation:

given data

cost of equity = 11.6 percent

bonds = 6.2 percent

bonds sell = 103.2 percent

debt book value = $408,000

total assets book value= $952,000

market to book ratio = 2.74 times

to find out

what is the company's WACC

solution

we get here first Total book value of equity that is express as

Total book value of equity = Total assets book value - Total debt book value   .................1

Total book value of equity  = 952000 - 408000

Total book value of equity = $544000

and here market to book ratio  is

market to book ratio  = \frac{market\ value}{book\ value}

so market value of equity = (2.74 × 544000) = $1490560

and  

After tax cost of debt = 6.2 (1 - tax rate)

After tax cost of debt = 6.2 (1 - 0.4)

After tax cost of debt = 3.72%

and

Market value of Debt = 408000 × 103.2%  

Market value of Debt   = $421056

so

Total market value = $1490560 + $421056

Total market value is =$1911616

and  

WACC will be

WACC = Respective costs × Respective weights

WACC =  \frac{1490560}{1911616}11.6 + 3.72\frac{421056}{1911616}

WACC = 9.86%

so correct option is d. 9.86%

4 0
2 years ago
You are buying and reselling items found at your local thrift shop. You found an antique pitcher for sale. If you need a 27% mar
GrogVix [38]

Answer:

The most you can pay for the pitcher is $17.32

Explanation:

A mark up is a percentage that is always applied on the cost to come up at a required gain over cost. The cost is always taken to be 100% when apply a mark up on cost.

If the mark up is of 27% and cost is 100% then a selling price of 22 will be equal to cost + markup.

Let cost be x.

Selling price = Cost + Mark up

22 = 100% * x + 27% * x

22 = 1x + 0.27x

22 = 1.27 x

22/1.27 = x

x = $17.3228 rounded off to $17.32

7 0
2 years ago
In response to the new employee end-of-shift policy Brianna proposes that Ollie pay its employees on their breaks instead of mak
mote1985 [20]

Answer: exchange

Explanation: Brianna is most likely to use the exchange influence tactic which is given as a tactic that suggests that making express or implied promises and trading favors. This is observed when she proposes that Ollie pay its employees on their breaks instead of making them clock out in response to the new employee end-of-shift policy. The tactics is especially useful for influencing peers and surbodinates.

6 0
2 years ago
Lauren's salary decreases from $34,000 to $30,000. She decides to reduce the number of outfits she purchases each year from 20 t
Kitty [74]

Answer:

8.08

Explanation:

Hi!

The income elasticity of demand is calculated by dividing the negative % change in demand by the % change in real income.

We calculate the negative % change in demand as:

19/20 = 0.95, a 95%

Then, the % change in real income as:

(34,000-30,000)/34,000 = 0.1176, an 11.76%

So the income elasticity of demand is:

0.95/0.1176 = 8.08

Hope it helps! :)

5 0
2 years ago
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