Dusty Is Evaluating Three Bids to Supply Fence Hardware for the 5

question 12

Multiple Choice

Dusty is evaluating three bids to supply fence hardware for the 5 acres of pasture that need to be fenced.Breezy submits a bid of $40 per unit,Lady's bid is $50 per unit,and Spike's bid is $30 per unit.If a section of fence fails,it costs an average of $500 in losses and herding costs to round up all of the capybaras.Dusty believes it will take 500 units to fence in this pasture configuration.What defect rates for the three suppliers would make Dusty indifferent among them from a total cost standpoint?

• A) Breezy 5%, Spike 6%, Lady 2%
• B) Breezy 3%, Spike 5%, Lady 1%
• C) Breezy 1%, Spike 3%, Lady 2%
• D) Breezy 2%, Spike 3%, Lady 4%

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Definitions:

Retains

The portion of earnings that a company decides to keep or retain rather than distribute to shareholders in the form of dividends.

Dividend

A portion of a company's earnings distributed to its shareholders, typically in the form of cash or stock.

Shares Outstanding

The total number of a company's shares of stock that are owned by shareholders, including both public investors and restricted company insiders.

Cost of Equity

The return that investors expect for investing in a company's equity, considering the risk involved in holding the company's shares.