... Marginal CostofPublic Funds
Raising publicfunds to undertake investment projects involves
three types of costs:
•
collection costs: costs of running the tax office;
•
compliance costs: costs ...
Summary:
•
Cost to the economy of additional public funds:
Area ABDE + BCD;
•
Quantity of additional public funds:
Area ABDE - FGCB
•
Cost per additional dollar ofpublic funds:
MC = ABDE ... for the marginal costofpublic funds:
MC = 1 + FGCD
(ABDE - FGCB)
The costof an extra dollar ofpublicfunds is: $1 plus the additional
deadweight loss per dollar of extra funds.
Why does...
... 34.5%
Another way to think of this portfolio is that it is comprised of one-third
T-Bills and two-thirds a portfolio which is half Dell and half Microsoft.
Because the risk of T-bills is zero, the ... return also minimize the probability of
loss.
d. Beta is the sensitivity of an investment’s returns to market returns. In
order to estimate beta, it is often helpful to analyze past returns. ... different.
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CHAPTER 7
Introduction to Risk, Return, and the OpportunityCostof Capital
Answers to Practice Questions
1. Recall from Chapter 3 that:
(1 + r
nominal
)...
... decisions.
2.1.1 Product costing
The objective of determining the costof products is of prime importance in
cost accounting. The total product cost and cost per unit of product are important ... parameters, a cost accountant delves into details
on material, manufacturing and labor costs. He includes analyses of costs versus
profitability in all areas of operation. The finer points of his ... consists of only indirect product costs.
Indirect costs cannot be easily traced to specific products; however, they are part of
the costof getting a product ready to sell. Since period costs...