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Nthabiseng’s monthly disposable income increases from R3 000 to R3 400. As a result, her monthly savings increase from R400 to R560. This implies that her marginal propensity to consume is …
Why are IT resources described as a commodity?
to finally implement the long-awaited and much needed labor reforms. One of the most
crucial reform has been the enactment of the Minimum Wage Law. In accordance with the
law, the government of Gotham city decided to impose a minimum wage of 1000 Deltas
(Delta is the official currency), with an intent to earn the vote bank of the workers.
(a) Before the implementation of the minimum wage law, the market wage was 1200
Deltas. Critics say that the minimum wage law is nothing but a political gimmick,
as for the public it creates an impression that it is helping workers while at the same
time, it keeps the capitalists happy with absolutely no bearing on the free market
efficiency. Are they correct? Explain with the help of a diagram
You are a financial advisor at XYZ Stock Broking firm. Calculate the return as per CAPM for following company’s stock, identify whether the stocks are undervalued, overvalued or correctly priced and advise accordingly. Returns of T- Bill is 7%.
Stock Expected Return Beta
Tata 21% 1.7
Adani Power 16% 1.4
Ranbaxy 23% 1.1
PNB 19% 1.2
Sensex 18%
LT India Ltd has the following capital structure, which it considers optimal:
Debt 35%
Equity shares 65%
Total 100%
Applicable tax rate for the company is 25%. Risk free rate of return is 6%, average equity market investment has expected rate of return of 12%. The company’s beta is 1.10. Debt will bear an interest rate of 9% p.a.
Calculate
a. component cost of debt and equity shares assuming that the company does not issue any additional equity shares.
b. Weighted Average Cost of Capital (WACC).
Three partners choose to go the start-up way. They run a chain of Pet Spa across Mumbai and Pune. For the accounting year 2022, their business observes increasing prices for materials. Hence, while preparing their financial statements, the three partners had varying objectives behind the method they should adopt for pricing the materials.
Objective I: The partners wished to hypothecate inventory and take a loan. Hence, a higher pricing of ending inventory in the business’ balance sheet would be desirable.
Objective II: The partners would wish to attract lower taxes on the business’ profit and hence a lower profit before tax would be desirable.
Discuss in brief any five material pricing methods that businesses may adopt. Identify the pricing methods that would achieve objectives I and II.
Mr. Sharma, founder of Pioma Plastics desires to increase the profit of the business in the coming year. He calls for a meeting with the managerial-level personnel and explains them that the selling price of their product is based on the prevailing market prices of their competitors. He seeks their advice on whether they should work backward on optimizing their costs by determining a standard cost for each of the components. Explain the process of standard costing to the founder as one of the managerial-level personnel. Would following standard costing help the founder in increasing the profit of the business?
Suppose an economy has 10,000 people who are not working but looking and available for work and 90,000 people who are working. What is its unemployment rate?
Now suppose 4,000 of the people looking for work get discouraged and give up their searches. What happens to the unemployment rate? Would you interpret this as good news for the economy or bad news? Explain.
Suppose that a typical firm in a monopolistically competitive industry faces a demand curve given by:
q = 60 − (1/2)p, where q is quantity sold per week.
The firm’s marginal cost curve is given by: MC = 60.
- How much will the firm produce in the short run?
- What price will it charge?
The present value of an annuity of R pesos payable annually for 8 years, with the first payment at the end of 10 years, is 187, 481.25. Draw the cash flow diagram and find the value of R if money is worth 5%.
#339914 on Dec 2023