A publicly traded firm has 4 million shares of stock outstanding, with a current share price of $50. The value of its plant and equipment is $250 million. Its profit annually is $50 million. The average rate of return on existing capital is
a) 5%
b) 10%
c) 15%
d) 20%
e) 25%
d) 20%
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The theories of economics, with surprisingly few exceptions, are extensions of which of the following assumptions about people?
A) People will do whatever earns them the most money. B) People will do whatever helps them to be "one up" on others. C) People will do whatever makes them popular. D) People will do whatever most effectively promotes the common good. E) People will do whatever yields them the largest net benefit.
A year ago a country reduced the tax rate on all interest income from 40% to 10%. During the year private saving was $600 billion as compared to $500 billion the year before the tax reform. Taxes collected on interest income fell by $150 billion. Assuming no other changes in government revenues or spending which of the following is correct?
a. the substitution effect was larger than the income effect; national saving rose b. the substitution effect was larger than the income effect; national saving fell c. the income effect was larger than the substitution effect; national saving rose d. the income effect was larger than the substitution effect; national saving fell
Charitable donations to the Red Cross
A) can be explained by the rational ignorance theory. B) can be explained by the rational self-interest theory. C) cannot be explained by the rational self-interest theory. D) prove that there is no scarcity in the United States.
The price of one currency in terms off another currency is called
A) foreign reserves. B) the foreign exchange rate. C) the foreign trade deficit. D) the balance of payments.