Homework Answers
Answer
Option D
D. the return that an entrepreneur can expect to receive on the
average;
it is the cost of a foregone alternative, which is running another
firm
The opportunity cost is equal to the benefit from the best alternative available and the revenue above accounting profit up to the benefit is called normal profit above it is called economic profit.
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Why is normal profit an opportunity cost? Normal profit is . Normal profit is part of a firm's opportunity cost bec...
What is economic profit? Economic profit is equal to total revenue minus the opportunity cost of...
What is economic profit? Economic profit is equal to total revenue minus the opportunity cost of production O A. O B. is equal to the return earned on average by an entrepreneur C. is equal to total revenue minus all of the costs of production that are paid either by cash or check O D. can never be a negative amount
HANDOUT ABOUT PRODUCTION -CH Z Note: An explicit cost is a cost paid in money. An...
HANDOUT ABOUT PRODUCTION -CH Z Note: An explicit cost is a cost paid in money. An implicit cost is an opportunity cost incurred by a firm when it uses a factor of production for which it does not make a direct money payment Normal profit is the return to entrepreneurship. The normal profit is part of a firm's opportunity cost because it is the cost of persuading the entrepreneur of not running another business. Chapter 7 Handout. Question 2: In...
What is Ben's opportunity cost of capital and excess profit? Ben Cartwright runs the Wild West...
What is Ben's opportunity cost of capital and excess profit?
Ben Cartwright runs the Wild West Wax Museum in Carson City, Nevada. The museum has been in business for 40 years and is a major tourist attraction. The total value of the museum's capital stock is $3.5 million, which Ben owns o This year, the museum earned a total of S1.4 million after out-of-pocket expenses. Without taking the opportunity cost of capital into account, this means that Ben is earning...
When calculating a project's NPV, cash flows are discounted at: O A) the opportunity cost of...
When calculating a project's NPV, cash flows are discounted at: O A) the opportunity cost of capital. OB) the risk-free rate of return. OC) a discount rate of zero. D) the internal rate of return. 0 1 4 5 2 + 5,600 3 + + -18,000 5,600 5,600 5,600 5,600 A firm with a 14% WACC is evaluating one project for this year's capital budget. After-tax cash flows, including depreciation are attached. What is the regular payback for this project?...
a,b,c,d,f? and e Concept of cost of capital Mace Manufacturing is in the process of analyzing...
a,b,c,d,f?
and
e
Concept of cost of capital Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: a. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 5.3% What recommendation do you...
3. Opportunity cost. Revolution Records will build a new recording studio on a vacant lot next...
3. Opportunity cost. Revolution Records will build a new recording studio on a vacant lot next to the operations center. The land was purchased five years ago for $460,000. Today, the value of the land has appreciated to $720,000. Revolution Records did not consider the value of the land in its NPV calculations for the studio project (it had already spent the money to acquire the land long before this project was considered). The NPV of the recording studio is...
23. Capital structure decisions refer to the: A. dividend yield of the firm's stock B. blend...
23. Capital structure decisions refer to the: A. dividend yield of the firm's stock B. blend of equity and debe used by the fim C. capital gains available on the firms stock D. maturity date for the firm's securities 24. If the line measuring a stock's historic returns against the market's historic returns has a slope greater than 1.0, then the: A. stock is currently underpriced B, market risk peemium is increasing. C. stock has a significant amount of unique...
2. 3. 4. 5. 6. 7. 8. A firm's average fixed cost (AFC) is 10 when...
2.
3.
4.
5.
6.
7.
8.
A firm's average fixed cost (AFC) is 10 when it produces Q=2. Then at Q=5, AFC is ... ОА. 8 Ов. 2 ос. 20 In a perfectly competitive market, the demand for a single firm's product is always O A. perfectly inelastic. O B. exactly as elastic as the market demand curve. O C. inelastic, but not perfectly inelastic. O D. perfectly elastic. As a firm's output increases: O A. average variable cost...
A firm's value depends on its expected free cash flow and its cost of capital. Distributions...
A firm's value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm's value and the investors in different ways. Some analysts have argued that a firm's value should solely be determined by its basic earning power and the business risk of the firm. Which of these concepts would support these analysts' argurment? O The clientele effect O The free cash flow hypothesis O Dividend...
Please answer all the questions, thanks! Concept of cost of capital Mace Manufacturing is in the...
Please answer all the questions, thanks!
Concept of cost of capital Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: a. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 6.9%. What...
What is economic profit? Economic profit is equal to total revenue minus the opportunity cost of production O A. O B. is equal to the return earned on average by an entrepreneur C. is equal to total revenue minus all of the costs of production that are paid either by cash or check O D. can never be a negative amount
HANDOUT ABOUT PRODUCTION -CH Z Note: An explicit cost is a cost paid in money. An implicit cost is an opportunity cost incurred by a firm when it uses a factor of production for which it does not make a direct money payment Normal profit is the return to entrepreneurship. The normal profit is part of a firm's opportunity cost because it is the cost of persuading the entrepreneur of not running another business. Chapter 7 Handout. Question 2: In...
What is Ben's opportunity cost of capital and excess profit?
Ben Cartwright runs the Wild West Wax Museum in Carson City, Nevada. The museum has been in business for 40 years and is a major tourist attraction. The total value of the museum's capital stock is $3.5 million, which Ben owns o This year, the museum earned a total of S1.4 million after out-of-pocket expenses. Without taking the opportunity cost of capital into account, this means that Ben is earning...
When calculating a project's NPV, cash flows are discounted at: O A) the opportunity cost of capital. OB) the risk-free rate of return. OC) a discount rate of zero. D) the internal rate of return. 0 1 4 5 2 + 5,600 3 + + -18,000 5,600 5,600 5,600 5,600 A firm with a 14% WACC is evaluating one project for this year's capital budget. After-tax cash flows, including depreciation are attached. What is the regular payback for this project?...
a,b,c,d,f?
and
e
Concept of cost of capital Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: a. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 5.3% What recommendation do you...
3. Opportunity cost. Revolution Records will build a new recording studio on a vacant lot next to the operations center. The land was purchased five years ago for $460,000. Today, the value of the land has appreciated to $720,000. Revolution Records did not consider the value of the land in its NPV calculations for the studio project (it had already spent the money to acquire the land long before this project was considered). The NPV of the recording studio is...
23. Capital structure decisions refer to the: A. dividend yield of the firm's stock B. blend of equity and debe used by the fim C. capital gains available on the firms stock D. maturity date for the firm's securities 24. If the line measuring a stock's historic returns against the market's historic returns has a slope greater than 1.0, then the: A. stock is currently underpriced B, market risk peemium is increasing. C. stock has a significant amount of unique...
2.
3.
4.
5.
6.
7.
8.
A firm's average fixed cost (AFC) is 10 when it produces Q=2. Then at Q=5, AFC is ... ОА. 8 Ов. 2 ос. 20 In a perfectly competitive market, the demand for a single firm's product is always O A. perfectly inelastic. O B. exactly as elastic as the market demand curve. O C. inelastic, but not perfectly inelastic. O D. perfectly elastic. As a firm's output increases: O A. average variable cost...
A firm's value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm's value and the investors in different ways. Some analysts have argued that a firm's value should solely be determined by its basic earning power and the business risk of the firm. Which of these concepts would support these analysts' argurment? O The clientele effect O The free cash flow hypothesis O Dividend...
Please answer all the questions, thanks!
Concept of cost of capital Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: a. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 6.9%. What...
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