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Jason Kidwell is able to purchase Toys'n Things, Inc. for $2.2 million. Jason estimates that after initiating his changes in the company's operations the firm's cost of goods sold are 55% of firm revenues and operating expenses are equal to a fixed compnonent of $350,000 plus a variable cost component equal to 10% of revenues.
a) Under the above circumstances, estimate the firm's net operating income for revenue levels $1 million, $2 million, and $4 million. What is the percentage in operating income if revenues change from $2 million to $1 million?
b) Assume that Jason is able to modify the firm's cost structure such that the fixed component of oerpating expenses declines to $50,000 per year, but the variable cost rises to 30% of firm revenues. Answer part a above under this revised cost structure. WHich of the two cost structures genertes the highest level of operating leverage? What should be the effect of the change in cost structure on the firm's equity beta?
Green sister has a dso of twenty days. The firm average daily sales are $20,000. What is the level of its accounts receivable? Suppose there are 365 days in a year.
Describe when economists with different political views do cost/benefit comparisons, they often reach different conclusions. If their analysis is based on objective costs and valid techniques, why wouldn't they reach similar conclusions, even if t..
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A recent McKinsey report concluded that 'If a price war occurs in a specific market-Critically examine this statement.
Best Buy and Circuit City are competitors in the customer electronics market. Both have relatively large margins on plasma TV's. Essentially,
Explain how does the Federal Reserve accomplish these goals.
A firm that has total fixed costs of $40,000 sells its output for $250 per unit and has an average variable cost of $150. If the firm's cost and revenue curves are linear, explain how much output must the firm produce to break even?
Indicate whether each of the following statements is true or false and explain why.
What is opportunity cost of producing a car in Canada? What is the opportunity cost of producing the tonne of wheat in Canada? Describe the relationship between the opportunity costs of two goods.
Elucidate the significance and implications of various economic theories pertaining to profit, consumer choice, demand and supply, forecasting and optimization.
Elucidate how the steepness of the short run aggregate supply curve affects the government's ability to use fiscal policy to change real GDP.
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