Coral Has a Profit Margin of 16% Based on Revenues

question 39

Multiple Choice

Coral has a profit margin of 16% based on revenues of $400,000,and investment turnover is 2.What is the residual income when the cost of capital is 10%?

• A)$44,000
• B)$20,000
• C)$40,000
• D)$64,000

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Definitions:

Constant Costs

Costs that remain unchanged regardless of the level of output or activity within a certain range.

Corncob Pipes

Pipes made from the dried cob of a corn plant, often used for smoking tobacco.

Cournot Reaction Function

A mathematical representation in economics that shows how one firm reacts to the quantity choice of another firm in a duopoly market setting.

Inverse Demand Function

Represents the relationship between the price of a good and the quantity demanded, showing how price must adjust to maintain equilibrium between supply and demand.