# Advantages of using the opportunity cost of capital as a discount rate are: a. it is easily understood by most investors. b. it permits direct comparison between projects of the same general risk category. c. it permits risk analysis to be incorporated into policy guidelines. d all of the above.

The correct option is D (all of the above)

Explanation:

Opportunity cost is the rate of return which can be earned from the next best alternative investment opportunity with similar risk profile. Also the meaning of opportunity cost doesnt change only the factors do.

This concept is not as simple as it may first appear. The person making the decision must estimate the variability of returns on the alternative investments through the period during which the cash is expected to be used.

## Related Questions

The Crestar Company reported net income of \$112,000 on 20,000 average outstanding common shares. Preferred dividends total \$12,000. On the most recent trading day, the preferred shares sold at \$50 and the common shares sold at \$95. What is this company's current price-earnings ratio?

Price earnings ratio = 19 times.

Explanation:

Price earning ratio is calculated as for the common equity, as the earnings on preference share is fixed.

Accordingly, the earnings for equity = Net income - preference dividend = \$112,000 - \$12,000 = \$100,000

Number of shares outstanding = 20,000

Earnings per share = \$100,000/20,000 = \$5 per share.

Selling price of the share = \$95

Thus, price earnings ratio = \$95/\$5 = 19 times.

This reflects that the 19 times of earnings is the price of share.

Alicia studies with her phone nearby so she can play her favorite music and keep up with what her friends are doing.In this case, how can Alicia make her studying environment more effective?

She can find a more comfortable chair.
She can have more resources available.
She can remove any possible distractions.
She can choose an area with more light.

In this case, Alicia makes her studying environment more effective as she can remove any possible distractions. The correct option is c.

### What is studying?

Studying is crucial for personal skill development in addition to educational advancement. Your confidence, skill, and self-esteem can all be increased by having effective study techniques. Additionally, it aids in lowering tension and worry related to tests and deadlines.

Take anything out of your study area that is not necessary for studying. To lessen auditory distractions, wear noise-canceling headphones, listen to white noise, or try utilizing earplugs. Eliminate electronic irritants. Put your phone in silent mode and away from your line of sight.

Therefore, the correct option is c. She can remove any possible distractions.

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C

Explanation:

edgen 2020

Critz Company was started on January 1, Year 1. During the month of January, Critz earned \$7,500 of revenue and incurred \$4,800 of expenses. During the remainder of Year 1, Critz earned \$86,000 and incurred \$51,000 of expenses. Critz closes its books on December 31 of each year. Required:

a. Determine the balance in the Retained Earnings account as of January 31, Year 1.
b. Determine the balance in the Revenue and Expense accounts as of January 31, Year 1.
c. Determine the balance in the Retained Earnings account as of December 31, Year 1, before closing.
d. Determine the balances in the Revenue and Expense accounts as of December 31, Year 1, before closing.
e. Determine the balance in the Retained Earnings account as of January 1, Year 2.
f. Determine the balance in the Revenue and Expense accounts as of January 1, Year 2.

a. \$2,700

b. Revenue   = \$7,500 and Expenses = \$4,800

c. \$37,700

d. Revenue = \$93,500 and Expenses = \$55,800

e.  \$37,700

f. Revenue   = \$0 and Expenses = \$0

Explanation:

a. Balance in the Retained Earnings account as of January 31, Year 1.

Revenue                    \$7,500

Less Expenses        (\$4,800)

Net Profit                   \$2,700

Retained Earnings Balance = Opening Retained Earnings + Profit - Dividends

= \$ 0 + \$2,700 - \$ 0

= \$2,700

b. Balance in the Revenue and Expense accounts as of January 31, Year 1.

Revenue   = \$7,500

Expenses = \$4,800

c. Balance in the Retained Earnings account as of December 31, Year 1, before closing.

Retained Earnings Balance = Opening Retained Earnings + Profit - Dividends

= \$2,700 + (\$86,000 - \$51,000) - \$0

= \$37,700

d. Balances in the Revenue and Expense accounts as of December 31, Year 1, before closing.

Revenue  (\$7,500 + \$86,000) = \$93,500

Expenses (\$4,800 + \$51,000) = \$55,800

e. Balance in the Retained Earnings account as of January 1, Year 2.

Retained Earnings of December 31, Year 1 = Retained Earnings of January 1, Year 2

= \$37,700

f. Balance in the Revenue and Expense accounts as of January 1, Year 2.

Revenue   = \$0

Expenses = \$0

Suppose the following statistics are available for the economy: CU = \$60 billion RES = \$100 billion DEP = \$1000 billion (a) Calculate the size of the monetary base, the money supply, the reserve—deposit ratio, the currency—deposit ratio, and the money multiplier.
(b) Suppose the currency—deposit ratio rises to .10, while the reserve—deposit ratio and monetary base remain unchanged. Calculate the money multiplier, the money supply, and the new values of CU, RES, and DEP.

a. 6.625.

b. C = 80 billion, DES = 800 billion and RES = 80 billion.

Explanation:

a) Monetary base = CU + RES = 160 billion. Money supply = CU + DES = 1060 billion. R-D ratio = 100/1000 = 0.10, C-D ratio = 60/1000 = 0.06, money multiplier = (1 + C-D)/(C-D + R-D) = (1 + 0.06)/(0.10 + 0.06) = 6.625.

b) Money multiplier = (1 + 0.10)/(0.10 + 0.10) = 5.5, money supply = monetary base x multiplier or money supply = 160 x 5.5 = 880 billion. CU + DES = 880 billion and C-D = 0.10. Hence C = 80 billion, DES = 800 billion and RES = 80 billion.

The marginal benefit from consuming another unit of a good: equals the total benefit obtained from the consumption of all prior units. equals the increase in total benefits from consuming the unit. must be less than the marginal cost or the unit will not be consumed. must equal the marginal cost or the unit will not be consumed.

Equals the increase in total benefits from consuming the unit.

Explanation:

This is defined as a maximum amount a consumer is willing to pay for an additional good or service.

It is also the additional satisfaction or utility that consumer receives when the additional good or service is purchased. The marginal benefit for a consumer tends to decreases as consumption of the good or service increases.

In the business world, the marginal benefit for producers is often referred to as marginal revenue.

Wren Pork Company uses the relative market value method/Value basis method of allocating joint costs in its production of pork products. Relevant information for the current period follows:Product Pounds Price/lb.
Loin chops 3,080 \$5.40
Ground 10,200 2.20
Ribs 4,120 5.05
Bacon 6,160 3.70
The total joint cost for the current period was \$45,400. How much of this cost should Wren Pork allocate to Loin chops?
A. \$0.
B. \$6,443.
C. \$9,134.
D. \$11,350.
E. \$45,400.

C. \$9,134

Explanation:

Product              Pounds     Price/Ib      Total Value

Loin chops          3,080        \$5.40           \$16,632

Ground                10,200       \$2.20           \$22,440

Ribs                      4,120         \$5.05           \$20,806

Bacon                   6,160         \$3.70           \$22,792

\$82,670

The Total Joint cost = \$45,400

Hence Joint cost to Lopin chops = \$45,400 * \$16,632 / \$82,670

Joint cost to Lopin chops = \$9,134