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How sensitive is the return on capital to the forecast assumptions in case Exhibit 8?
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What are the assumptions of Harrod-Domar growth model?
It assumes that savings and investment are all that is needed for growth. No diminishing returns to capital is an implicit assumption.
What is Harrad domar model in economic development?
It is the idea that the economic growth is dependent on capital-output ratio (k, calculated as: Total output produced/total capital invested i.e. efficiency) and the saving ratio of the population. The assumptions it makes are: - Output is a function of capital stock - The marginal product of capital is constant. - Capital is necessary for output - The product of the savings rate and output equals saving which equals investment - The change in the capital stock equals investment minus the depreciation of the capital stock It states that Rate of growth of GDP = Savings ratio/ Capital output ratio.
Why is the harrod-domar growth model not widely used these days?
The reason why it is not formally taught as a viable growth model is due to its inherent weaknesses. The weaknesses lie in the assumptions of the model. When creating an economic theory, you can make any assumptions you want, regardless of how unrealistic they may be. If the model starts to fall apart when you rest the weakest assumptions, it loses credibility.One problem with the model is that the price for labor and capital (wage rate and interest rate) are fixed. Along with this assumption, the model assumes that each input is used in equal proportions. In reality we know that these assumptions don't hold.Another problem with the model is that is assumes investors (savers) are only influenced by changes in output. The greater the output, the more investors will invest capital which in turn increases output. This is known as the accelerator principle and it does not hold up in empirical studies. Investors are influenced by the amount of risk they must take given the expected rate of return they will receive on their investment.A model that rests the assumptions of the H-D model is the Solow Model (aka Solow-Swan Model). It uses some of H-D framework but then expands on it to allow for flexibility in the use of both capital and labor as flexible inputs to output. A great source for a more detailed but easy to understand explanation is Wikipedia. Check out the related link. After reading this, review the commentary on the Solow Model. Hope this help.
Why does the business cycle affect output and employment in capital goods and consumer durable goods industries more severely than in industries producing nondurables?
because capital goods and durable goods last, purchases can be postponed. this may happen when recession is forecast. capital and durable goods industries therefore suffer large output declines during recessions. In contrast, consumers cannot long postponed the buying of nondurables such as food; therefore recessions only slightly reduce non-durable output. Also capital and durable good expenditures tend to be "lumpy." Usually, a large expenditure is needed to purchase them, and this shrinks to zero after purchase is made
Types of capital?
There are different types of capital in economics. Some of the common ones include financial capital, human capital, natural capital, instructional capital and social capital.
What does case sensitive mean on swagbucks?
it means that capital and not capital letters are important to the code
Why is it advisable to start with sales the production and capital expenditure forecast in the budgeting process?
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Where can you find a Convention Exhibit?
There are quite literally hundreds of Convention Exhibit Centers located around the world. The Exhibit Centers can be rented out by any organization wishing to put on a convention. The Convention Exhibit Centers around the world are generally held in capital cities of the particular country or state/province.
Is the key ingredient in a firms financial planning the sales forecast?
yes Development of the key drivers that affect all other assumptions used in the forecast starts with an evaluation of the growth prospects based upon, among other things: 1. The addressable market size and competitive positioning of the business (that may influence expected market share). This is what drives volume sales estimates and therefore the manufacturing capacity needed for production. These assumptions will drive capital investment requirements. 2. Consumer preferences and distribution trends that effect the relative size of each segment (eg the beer industry segments - packaged versus on-premise, value priced versus premium brands, and beer styles / packaging formats) will influence product strategy decisions that determine appropriate assumptions used to estimate product pricing and manufacturing costs. These fundamental market assumptions will therefore affect the Company's strategic plans and decisions which will define virtually all assumptions concerning revenue growth, profitability, equipment costs, capital needs, return on investment, and valuation. Therefore, market evaluation must be the starting point and deserves a level of effort commensurate with its impact. Industry Consultants can provide advice and support in gathering data to enable the Company to make strategic decisions and plans and help you document the rationale for the business case assumptions.
How do you type your password case sensitive on club penguin?
Just please tell me a case sensitive password!
What are the assumptions of Harrod-Domar growth model?
It assumes that savings and investment are all that is needed for growth. No diminishing returns to capital is an implicit assumption.
does case sensitive mean I must have a capital letter?
No, case sensitive only means that the upper or lowercase characters will be remembered as such. For example, if your psword contains an uppercase letter, it will not be accepted if that letter is entered in lowercase. For something that is not case sensitive, this will not matter. In a case sensitive scenario, if your psword is Killjoy1, when typed killjoy1 it will not be accepted.
What are the assumptions of the modigliani and miller hypothesis in relation to capital structure?
Modigliani and Miller's capital structure theories assume a society where there are no taxes, no transaction or bankruptcy costs, equal borrowing for companies and investors, equal access to information for companies and investors, and that debt won't effect a company's earnings. This leads people to very critical of their hypothesis since those assumptions are far removed from the real world's actions.
Define Power Transition Theory?
power transition theory base on two assumptions, one is the relative power, the dominating power which owns the most capital and resources
What does not case sensitive mean?
It means it doesn't make a difference wether you write it in capital letters or lower case letters
Why is sales forecast a key element in a capital budget decision?
Sales forcast determines that how much production is required and then to meet that production level how much new investment and machinery etc required.
Why the NPV of a relatively long term project is more sensitive to changes in the cost of capital than is the NPV of a short term project?
due to the uncertainty
