Refer to the Information Provided in Figure 7

question 6

Multiple Choice

Refer to the information provided in Figure 7.11 below to answer the question(s) that follow. Figure 7.11
-Refer to Figure 7.11. If the isocost line represents a total cost of $7,200, the firm's cost of capital is ________ per unit and its cost of labor is ________ per unit.

• A) $36; $72
• B) $144; $72
• C) $72; $36
• D) $200; $100

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Definitions:

Present Value Factors

The factors used to calculate the present value of a future amount of money or stream of cash flows, given a specific discount rate.

Long-term Lease Obligation

A financial commitment that involves leasing an asset for a long-term period, noted on the balance sheet as a liability.

Capital Lease

A Capital Lease is a lease agreement that has the characteristics of a purchase agreement for accounting purposes.

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.