Explain what is meant by the "weighted cost of capital" and how it is used in capital budgeting
What will be an ideal response?
The proportion of each type of financing (debt, equity and retained earnings) in the firm's capital structure, and applying these percentages to the opportunity costs of capital associated with financing a prospective capital outlay. This weighted average of the opportunity cost of capital then is used to discount projected cash flows back to a net present value.
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Refer to Figure 10-3. Which of the following is consistent with the graph depicted above?
A) The government runs a budget deficit. B) An expected recession decreases the profitability of new investment. C) Taxes are changed so that real interest income is taxed rather than nominal interest income. D) Technological change increases the profitability of new investment.
Refer to above figure. While selling exports it would also maximize its domestic sales by equating its marginal (opportunity) cost to its marginal revenue of $5. How much steel would the firm sell domestically, and at what price?
What will be an ideal response?
Under U.S. commercial policy, the escape clause results in
A) temporary quotas granted to firms injured by import competition. B) tariffs that offset export subsidies granted to foreign producers. C) a refusal of the U.S. to extradite anyone who escaped political oppression. D) tax advantages extended to minority-owned exporting firms. E) tariff advantages extended to certain Caribbean countries in the U.S. market.
About ___________ of the U.S. population moves each year
a. 5% b. 10% c. 15% d. 35%