Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 15, Problem 10P
The Delta Chemical Corporation is expected to have the capital structure for the foreseeable future as given in Table P15.10.
The flotation costs are already included in each cost component. The marginal income tax rate (tm) for Delta is expected to remain at 40% in the future.
- (a) Determine the cost of capital (k).
- (b) If the risk-free rate is known to be 6% and the average return on the S&P 500 is about 12%, determine the
cost of equity with β = 1.2 based on the capital-asset pricing principle. - (c) Determine the cost of capital on the basis of the cost of equity obtained in part (b).
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Microeconomics
Unit 4 Practice Sheet
Riya
Price
Part 1: Monopoly- Use the graph of a
non-price discriminating monopoly to
answer the following questions. Show
your work when asked to calculate.
$160
$140
1. Identify the profit maximizing price and
quantity.
$120
MC
2. Calculate the total revenue at the profit $100
maximizing price and quantity.
ATC
$80
3. Calculate the total cost at the profit
maximizing price and quantity.
$60
4. Calculate the profit or loss at the profit
maximizing price and quantity.
$40
5. Calculate the area of deadweight loss.
$20
6. Identify the socially optimal
MR
D
(allocatively efficient) price and
quantity.
7. Identify the price and quantity where
the total revenue is maximized.
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Quantity
8. At the price of $120, is the demand relatively elastic, relatively inelastic, or unit elastic? Why?
9. Identify the price and quantity if this monopoly's fixed costs increase by $140.
10. Identify the profit maximizing price…
Chapter 15 Solutions
Contemporary Engineering Economics (6th Edition)
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