Tutor profile: Nabiha M.
An individual seller’s monthly supply of downloadable e-books is given by the equation Qs = − 64. 5+ 37.5P -7.5W where Qs is number of e-books supplied each month, P is price of e-book, and W is the hourly wage rate paid by e-book sellers to workers. Assume that the price of e-books is €10.68 and the hourly wage is €10. Determine the slope of the supply curve for e-books.
Holding all other things constant, the wage rate is constant at €10, so we have Qs = − 64.5 + 37.5P - 7.5(10)= -139.5 +37.5P We now solve this for Peb: Peb = 3.72 + 0.0267Qeb
Subject: Corporate Finance
What is the company's weighted average cost of capital for a firm with a 70%/30% debt/equity split, 8% cost of debt, 15% cost of equity, and a 35% tax rate would be?
Wacc= % of debt*cost of debt*(1-T)+ %equity*cost of equity =(0.7*0.08*(1-0.35)+ (0.3*0.15) =0.0814 =8.14%
Anna is considering buying a house that is priced in the market at $85,000. she cannot afford it right now. However, she think she would be able to buy it after 5 years. If the expected inflation rate as applied to the price of this house is 6% per year, what is its expected price after five years?
The present value of the house, $85,000. Its price is going to increase at the rate of inflation, 6% per year for five years. FV = PV (1 + r)^n = 85,000(1.06)5 = $113,749.17
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