Answer: $2,625,000
Explanation:
From the question, we are told that
Gourmet Kitchen Products reported $22.5 million of sales and $17 million of operating costs which included depreciation and that the company has $15 million of total invested capital. We were also given the after-tax cost of capital as 10% and the federal-plus-state income tax rate as 25%.
The economic value added will be the difference between the net operating profit after taxes and the invested capital which will then be multiplied by the cost of capital. This can be written as:
= ($22,500,000 - $17,000,000) × (1 - 25%) - ($15,000,000 × 10%]
= ($5,500,000 × 0.75) - ($1,500,000)
= $4,125,000 - $1,500,000
= $2,625,000
The firm's firm's economic value added (EVA) will be $2,625,000
Businesses in the nation of Islandia have been accumulating cash because they have a pessimistic outlook of the national economy. Recent changes in the economic outlook of Islandia have caused business leaders to begin to invest some of their accumulated cash. Suppose that businesses in the country invest a total of $20 billion of this cash. (a) What would be the maximum expected change in GDP if Islandia's marginal propensity toconsume (MPC) is 0.75? (b) Suppose that the recent economic outlook in the country of Mountainia has been the opposite.Businesses have postponed planned investments and have begun to accumulate cash. Ifbusinesses in Mountainia postpone $10 billion of their planned investments, what would be themaximum expected change in GDP if its marginal propensity to save (MPS) is 0.25?
Answer:
Please see answer and explanation below.
Explanation:
A. Since MPC is 0.75, therefore MPS would be 0.25 (i.e 1-MPC, 1-0.75)
The multiplier will now be(1/MPS) 1/0.25=4
It therefore follows that if investment increases $20billion, aggregate demand will also increase by $80billion(i.e 20 × 4). This means $60billion in consumption and $20billion in investment.
B. Since MPS is 0.25, Multiplier would therefore be 1/0.25(1/MPS) = 4
It therefore follows that if $10billion planned investments is postponed, the aggregate demand would decrease by $40billion( i.e 10 × 4 )
Meaning that there would be $30billion in consumption and $10billion in investment.
your total debt from all loans should not exceed what percentage of your gross monthly salary?
a) 16%
b) 26%
c) 36%
d)40%
Answer: The answer is c) 36 percent
Explanation:
.WHAT ARE THE MERITS AND DEMERITS OF MNC
Explanation:
Merits1. it has created a competition through which large varieties of a single goods is available in the market.
2. for the home country, it has lessens the dependence on import and lead to economic development by providing new jobs opportunity .
Demerits1. in some host Nation, the appearance of MNC can regulate competition and main event create a monopoly .
2. workers in the MNCs are paid on an irregular bases and they are often laid off without any payment during the time of recession .
