Calculate the Cost of Capital of Grantz Inc

question 45

Multiple Choice

Calculate the cost of capital of Grantz Inc.when the net and economic profits generated by the company are $180 million and $24 million,respectively,and the total invested capital is $940 million.

• A)24.3%
• B)20.5%
• C)12.2%
• D)8.5%
• E)16.6%

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Definitions:

Excess Demand

A situation where the quantity demanded of a good or service exceeds the quantity supplied at a particular price, often leading to upward pressure on prices.

Consumer Surplus

The disparity between the cumulative amount consumers are willing to pay for a product or service and the amount they actually pay.

Market Equilibrium

Market equilibrium is a state in a market where the quantity of goods supplied equals the quantity demanded, and there is no incentive for price to change, balancing the forces of supply and demand.

Producer Surplus

The difference between what producers are willing to sell a good for and the price they actually receive.