answer booklet. You should not write answers to part B on any other pages. 4. Materials Permitted A non-programmable calculator without text storage capability is permitted. Financial calculators may be used. Dictionaries may not be used. Mobile phones must be turned off and left at the front of the examination room. Bags must be left at the front of the room. 1 Part A (15 marks) Select the one best answer choice for each question. Question 1: A stock just paid its annual dividend of
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Accounting Rate of Return (ARR) ARR provides a quick estimate of a project’s worth over its useful life. ARR is derived by finding profits before taxes and interest. ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cash flows‚ and it does not account for the time value of money. ARR is most often used internally when selecting projects. It can also be used to measure the performance of projects and subsidiaries within
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1 Elasticity of Demand The demand of any product depends on the pricing strategy being followed by the company as well as other factors like nature of product i.e. necessity or luxury‚ availability of substitutes‚ switching cost etc. If the product is a necessity usually it has an inelastic demand. Inelastic demand refers to the situation where one unit increase or decrease in the product’s price cause less than one dollar change in the units demanded of that product (Kreps‚ D. M. 1990). If product
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LONG-RUN EQUILIBRIUM OF A FIRM UNDER PERFECT COMPETITION In the long run‚ a firm in the perfectly competitive market can earn only normal profit. So‚ the profit maximization under long run is: (1)Necessary condition P=LMR=LAR=LMC=LAC (2)Sufficient condition Slope of MC > Slope of MR We can establish this condition from the following analysis. In the above diagram for any market price OP1 the existing firms can earn supernormal profit as for the equilibrium output level OQ1. The average
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profit. Production can be divided into two types‚ that is short-run production and long-run production. Production in the short-run is the production period of time over which at least one factor is fixed as production in the long-run is the production period of time long enough for all factors to be varied. As mentioned by Sloman‚ (2004)‚ production in the short-run is subject to diminishing returns. The law of diminishing (marginal) return applies whereby there will be a point when each extra unit
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Long Run Equilibrium (A) Firm and Industry: A competitive market is made up of a large number of firms with complete freedom of entry. Such firms together are called competitive industry. An industry can be defined as a group of firms producing homogeneous products with freedom of entry and exit and which earn only normal profits. Hence the concept of an industry is applicable only under competitive conditions. There is no fixed size of an industry though the analytical stability of an industry
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today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year. 2) An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment? 3) Which of the following investments has a larger future value? A $100 investment earning 10% per year
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Investments in the Making A person oblivious to the world of business would stare at the CNN Money sector of news and would feel almost unaffected by the world’s financial movements. But you sit a businessman in front that television screen‚ he will watch and listen carefully to every word seeking for opportunities and to be informed on how his investments are doing. The life of a businessman or an investor for that matter‚ views the world differently. What the world perceives as the latest innovations
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their life and it shows life from a different point of view‚ a life that most people wouldn’t even think about or take into consideration. Readers learn that life is short‚ difficult‚ and sometimes has more challenges than one would think‚ but in the long run‚ it’s all worth it. Once Kear was diagnosed with her degenerative eye disease‚ she was determined to make changes‚ big ones. She changed her entire persona. Rather than being the quiet bookworm‚ she was now a spunky‚ free-spirited‚ wild card who
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Long-term investment decisions By Gregory Pearson Introduction In this paper I will outline long-term investment decisions‚ including the price elasticity of demand‚ how to make prices as inelastic as possible by using strategic plans‚ the difference between demand and elasticity‚ the economic impact of production and unemployment on our company‚ the reasons why the government will get involved in economic decisions‚ the capital project expansions and their complexities‚ some actions to prevent
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