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-Assume That Firm B Can Divest Itself of $20,000 of Firm

question 109

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 Firm A  Firm B  Firm C  Actual earnings $6,000$14,000$18,000r10%8%12%BVt1$100,000$150,000$190,000\begin{array}{lrrr}&\text { Firm A }&\text { Firm B }&\text { Firm C }\\\text { Actual earnings } & \$ 6,000 & \$ 14,000 & \$ 18,000 \\r & 10 \% & 8 \% & 12 \% \\B V_{t-1} & \$ 100,000 & \$ 150,000 & \$ 190,000\end{array}
-Assume that Firm B can divest itself of $20,000 of unproductive capital with earnings falling by only $3,000.Abnormal earnings are

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Definitions:

Higher Prices

An increase in the cost of goods or services.

Tax

A compulsory monetary fee or different form of levy required from a taxpayer by a governmental body, used to finance government operations and various public costs.

Sellers

Entities or individuals that provide goods or services in exchange for payment, crucial to the operation of any market.

Tax

A compulsory financial charge imposed by a government on individuals, corporations, or goods to finance government activities and public expenditure.

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