Q28 28Assume that a national restaurant firm called BBQ builds 15 new restaurants at a cost of $1 million per restaurant. It outfits eachrestaurant with an additional $300,000 of equipment and furnishings. To partially defray the cost of this expansion, BBQ issues andsells 300,000 shares of stock at $35 per share.Instructions: Round your answers to one decimal place.What is the amount of economic investment that has resulted from BBQ's actions?$OmillionWhat is the amount of financial investment that has resulted from BBQ's actions?$O million00

Assume that a national resturant firm called BBQ builds 15 new resturants at a cost of $1 million…

Answered: 28 Assume that a national restaurant…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 1.3P

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ADVANCED ANALYSIS A firm faces the following costs: total cost of capital = $1,000; price paid for labor = $12 per labor unit; and price paid for raw materials = $4 per raw-material unit. %3D Instructions: In parts a and b, enter your answers for total cost as a whole number. Round your answers for average total cost to 2 decimal places. In part c, enter your answer as a whole number. a. Suppose the firm can produce 5,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5,000 units of output? TC = $ %D ATC = $ b. Now assume the firm improves its production process so that it can produce 6,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 6,000 units of output? TC = $ ATC = $ c. If units of output can always be sold for $1 each,…
17) Assume that a national restaurant firm called BBQ builds 10 new restaurants at a cost of $1 million per restaurant. It outfits each restaurant with an additional $200,000 of equipment and furnishings. To help partially defray the cost of this expansion, BBQ issues and sells 200,000 shares of stock at $30 per share. Instructions: Enter your answers as whole numbers. a. What is the amount of economic investment that has resulted from BBQ’s actions? b. How much purely financial investment took place?
2. The company that you manage has already spent $5 million on developing a new product – a website that combines You Tube, Twitter, and Facebook – called You Twit Face. The development is not quite finished. It will cost an extra $3 million to finish development and complete the product. At a recent meeting, your salespeople report that the expected sales of your new product (if you finish) are $7 million total. If you do not finish developing the product you can sell the incomplete product to another company for $2 million. What is the MC of finishing the development? __________________ What is the MB of finishing the development? __________________ Should you finish the product? Why or why not? Use the idea of “thinking at the margin” to explain your answer.
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)…
Assume that a national restaurant chain called BBQ builds 20 new restaurants at a cost of $1 million per restaurant. It outfits each restaurant with an additional $200,000 of equipment and furnishings. To help partially defray the cost of this expansion, BBQ issues and sells 400,000 shares of stock at $30 per share. Instructions: Enter your answers rounded to 1 decimal place. a. What is the amount of economic investment that has resulted from BBQ's actions? million b. How much purely financial investment took place? $ million %24 %24
change as the capital stock increases? Why? 10.) Fill in the blanks in the following table: Total Total varjable Average fixed Average variable Average total cost Total fixed Marginal Output cost cost cost cost cost cost 100 260 60 200 0.30 300 0.50 400 1.05 500 360 600 3.00 700 1.60 800 2,040 ||
What are profits? O total money taken in by a corporation difference between revenues (the amount a business earns) and expenses (the amount a business spends for salaries and expenses) increases in income from year to year O increases in a corporation's stock price
With the use of an example, briefly explain the main difference between the ex-ante and the ex-post opportunity cost of capital. Why does this matter for the evaluation of an investment decision? In what ways can managers utilise the distinction between ex-ante and ex-post opportunity cost of capital when deciding on the firm’s strategy?
Assume that a national restaurant firm called BBQ builds 15 new restaurants at a cost of $1 million per restaurant. It outfits each restaurant with an additional $200,000 of equipment and furnishings. To help partially defray the cost of this expansion, BBQ issues and sells 300,000 shares of stock at $30 per share. Instructions: Round your answers to 1 decimal place. a. What is the amount of economic investment that has resulted from BBQ's actions? million b. How much purely financial investment took place? million
2.6 Isabel runs her family's small pineapple processing plant, which takes fresh pineapples and cuts them into pine- apple rings, spears, and chunks. The capital stock of the firm consists of three machines of various vintages, each of which can the pineapples into any of the three different forms. All of the machines are in excellent condi- process tion, and all machines can be running at the same time. Cost of Processing per Pineapple Maximum Total Capacity (Pineapples) per Day Machine 1 $ 0.10 250 Machine 2 0.25 400 Machine 3 0.50 500 a. Assume that “cost of processing" includes all labor and materials, including the owner's wages. Assume further that Isabel's family signed a long-term contract (20 years) with a service company to keep the machines in good repair for a fixed fee of $1,825 per year, or $5 per day. (1) Derive the firm's marginal cost curve. (2) Derive the firm's total cost curve. b. At a price of $0.40, how many pineapples would the company process? What would total…
1.4) You use RM40,000 of your own money to start a catering business. During the first year you earn a 5% return on that investment. If the current interest rate on savings is 8%, you earn an economic profit of ___________ 1.5) You use RM50,000 of your own money to start an espresso stand. During the first year you earn a 10% return on that investment. If the current interest rate on savings is 8%, you earn an economic profit of ___________ i need working calculation for this actually.. Plz help me
2. ABC company has to decide whether to build a new plant. ABC is contemplating whether to build the plant at a full scale or first build a pilot plant and based on the performance of the pilot plant, then build the full-scale plant. An estimated cost to build the full-scale plant is $400,000. If the new plant works, ABC could realize a profit of $850,000. If it fails due to a downturn of economy, ABC could realize a profit of only $200,000. You as a consultant estimates 45 percent chance the new plant would work. The other option is to build a pilot plant first and based on its success, then build a larger plant. The pilot plant would cost $30,000 to build. There is 60% chance the plant will work. If pilot plant works, there is a 70 percent that the larger plant, if it is built, will work. If the pilot plant does not work, there is a still 20 percent chance that the larger plant, if built, will work. You, as a consultant, know how to make a decision tree. Analyze this problem by…

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