On-Line Text Plc Has Four New Text Publishing Products That

question 37

Essay

On-line Text plc has four new text publishing products that it must decide on publishing to expand its services.The firm's WACC has been 17%.The projects are of equal risk,ßs of 1.6.The risk-free rate is 7% and the market rate is expected to be 12%.The projects are expected to earn as follows:

What projects should be selected and why?

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Definitions:

MC > MR

A condition where the marginal cost of producing an additional unit is greater than the marginal revenue earned from selling it, suggesting a decrease in production might increase profit.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

MC = MR

This abbreviation stands for the equality of marginal cost (MC) and marginal revenue (MR), a condition for profit maximization in perfectly competitive markets.

Profit

The profit achieved when the income from business operations surpasses all associated expenses, costs, and taxes.