Elinore Is Asked to Invest $5000 in a Friend's Business

question 7

Multiple Choice

Elinore is asked to invest $5000 in a friend's business with the promise that the friend will repay $5500 in one year's time.Elinore finds her best alternative to this investment,with similar risk,is one that will pay her $5400 in one year's time.U.S.securities of similar term offer a rate of return of 6%.What is the opportunity cost of capital in this case?

• A)6%
• B)8%
• C)9%
• D)10%
• E)7%

Identify examples of variable, fixed, and mixed costs in production.

Recognize the importance of selecting the proper activity base for costing purposes.

Understand how changes in cost behavior affect the break-even point and profit levels.

Calculate and interpret the contribution margin and its relation to fixed costs and operating income.

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Definitions:

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, emphasizing the effect of consequences on future behavior.

Albert Bandura

A prominent psychologist best known for his social learning theory and the concept of self-efficacy.

Acquisition

Acquisition refers to the process of gaining knowledge, skills, or qualities through experience, practice, or the receiving of information.

Performance

The act of carrying out or accomplishing an action, task, or function.