Suppose Susan Can Wash Three Windows Per Hour or She

question 97

Multiple Choice

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

• A)Susan has an absolute advantage over Paul in washing windows.
• B)Susan has a comparative advantage over Paul in washing windows.
• C)Paul has a comparative advantage over Susan in ironing shirts.
• D)All of the above are correct.

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Definitions:

WACC

Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

NPV

Net Present Value is a financial metric that calculates the present value of an investment's expected cash flows minus the initial investment.

IRR

Internal Rate of Return; the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

WACC

Short for Weighted Average Cost of Capital, it measures a firm's cost of capital, considering the weighted costs of equity and debt financing.