Table 10.2 -Given the Information in Table 10.2 and 15 Percent Cost

question 142

Essay

Table 10.2
-Given the information in Table 10.2 and 15 percent cost of capital,
(a) compute the net present value.
(b) should the project be accepted?

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Definitions:

Long Run

A period in economics sufficient for all markets to reach equilibrium, where all inputs and outputs can be varied by firms, not constrained by existing physical capital.

ATC

Average Total Cost; the total cost per unit of output incurred when producing goods or services.

AVC

Average Variable Cost, the cost that varies with the level of output, divided by the quantity of output produced.