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- A firm is considering an investment that will earn a 6 rate of return. If it were to borrow the money, it would have of pay 8 interest on the loan, but it currently has the cash, so it will But need to borrow. Should the firm make line investment? Show your work.3. Explain the reality of loss-making beginning and uncertainties in taking ECE ideas to market.Briefly explain different means of creating and capturing economic value out of technologypossibilitiesThe following is data for a manufacturing company:Begin Direct Materials $ 2,000 Direct Labor $ 5,000End Direct Materials 3,000 Begin Work-in-Process 4,000End Work-in-Process 6,000 Manufacturing Overhead 12,000Direct Materials Purchased 10,000 Cost of Goods Manufactured 24,000Cost Goods Sold ? End Finished Goods 9,000Gross Margin (Profit) ? Net Income ? Operating Expenses 6,000 What is the amount of Direct Materials used in production?
- Question 2 Lamya has initial investment of SR45, 000. If it were to be invested on stocks, the market interest rate would be 0.12 (12%).However, the industry uses capital and labor as inputs and sells 2, 800 belts per month at SR25 market price. If the cost of the machine that produces the belts is SR 30,000 and labor cost is 20,000. Calculate the following: a. Total revenue. b. Opportunity cost of capital c. Economic profit d. Accounting profit e. From your answer in (c), is the business profitable from the economic profit point of view? Explain your answer. Question 3 The table below gives some data on the population of Crescent Highland. Use the provided information to fill the table. YEARS 1 2 3 4 5 6 7 Population: 16 Years Older or Over (Millions) LabourForce (Millions) Employed (Millions) Unemployed (Millions)…Modified TRUE of FALSE. Write T if the statement is TRUE and CHANGE the underline word if the statement is FALSE._______________1. Legal segments cover inflation and interest rates._______________2. There is only one way to determine whether a business is going to be profitable or not._______________3. Social Service (Government) is the service provided or supported by a government or its agencies._______________4. In economics, a feasibility study determines whether certain goods and services become viable or not._______________5. Transportation and Communication are central to the development of any society and its economy. _______________6. Industry is a sector in the economy engaged in the process of producing goods and commodities using tools, machineries and various equipment._______________7. Storage refers to non-transitory, semi-permanent or long term, containment, holding or placement of goods and materials, usually with the intention of retrieving them…5d What is the relationship between accounting profit and economic profit? Which is relevant for a firm’s decision to continue production and why? Give examples as to what may cause a divergence between accounting and economic profit
- 1. Why 0% interest would rebuild ERI (Economic Responsibility Investing) economies? ... [3 lines max]Barbara's annual revenues are $234,000. She pays herself $109,000 as a salary and pays her helper a market rate salary of $30,000. Materials, insurance, etc. costs her $34,000 a year and she pays the market price for them. She has two job offers should she decide to sell her store. The first pays her $79,000 and the second would pay her $62,000. All salaries are annual salaries. Then, what are her economic profits as a store owner?1.During a year of operation, a firm collects $5,000,000 (TR) in revenue and spends $3,500,000 (EXPLICIT) on labor expense, raw materials, rent, and utilities. The firm’s owner has provided $1,000,000 of her own money instead of investing the money and earning a 12 percent annual rate of return. Show your work. a. The explicit costs of the firm are $_________. The implicit costs are $_________. Total economic cost is $__________. b. The firm earns accounting profit of $________. The firm’s economic profit is $_________.
- # 13 Aabir, a milk farmer, earns $300k per month in revenue. His monthly costs include Administrative costs $40k, Feed $60k, Equipment & maintance $40k, Labor $70k, Transportation $10k, Miscellaneous $20k. Foregone rent for the land used for the cattle grazing $10k. Value of his son's time that helps on weekends $2k, Owner's salary $ 10k, Aabir's accounting & economic profit respectively are: a.) 60k & 48k b.) 50k & 38k c.) 60k & 38k d.) 38k & 38kEXAMPLE 1.2 Consider the following data of a company for the year 1997:Sales = $ 1,20,000Fixed cost = $ 25,000Variable cost = $ 45,000Find the following:(a) Contribution(b) Profit1. Throughout this course, we have solved many optimization or profit maximizing problems. a. State the rules used for unconstrained (regular) optimization and for constrained optimization. b. Using your own words, explain the rationale behind each stated rule as if you were explaining them to someone who has not yet completed this course: c. What doe economist mean when they use the term marginal? d. State how to compute Profit and explain how account profit and economic profit provides different insights to a firm’s current operations.
