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Why is the marginal cost of capital more relevant to making investment decisions than the historic cost of capital?
Wiki User
∙ 10y ago
because of deprecation
Wiki User
∙ 10y ago
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Do you agree that relevant costs for pricing decisions are full cost of the products?
Not essentially. The relevant costs are only those costs that will change as a result of accepting the order. In this case, full product costs will rarely be relevant. It is more likely that full product costs will be relevant costs for long-run pricing decisions.
Is capitalism compatible with social justice?
cost benefit analysis maybe regarded as the systematic thinking about relevant decision making is this approach not relevant to making decisions about the things valued very highly or that have infinite value such as life or health?
Difference between average revenue and marginal revenue?
"Average revenue", for a specific level of sales, is the total revenue divided by the number of units sold, or in other words, revenue per unit, or, simply, "price". This average is over the entire sales in a given time period, market, etc. "Marginal revenue" is "average revenue" evaluated at every possible level of sales. You see, the more you sell, the lower the price will be, according to the law of demand. If you sell 1,000 widgets, you may get $1 apiece for them, but if you sell 10,000 of them, you may have to lower the price to 90 cents to sell them all. Of course, if the market is perfectly competitive (you have lots of competitors selling widgets), then you alone can't affect the price very much with your change in output, and the Marginal Revenue is, essentially, constant, at least over the relevant range of level of sales. However, even in perfect competition, you could, theoretically, increase your sales so much that you dominate all of your competitors, and then you would have to lower your price to sell all of your widgets. The thing is, under perfect competition, everyone is operating exactly at the level of sales where marginal cost is equal to marginal revenue, so if your marginal revenue goes down, your marginal profit becomes negative. So you won't do that. In fact, this concept of marginal revenue (when compared to marginal cost) is exactly the mechanism that ensures you don't try to dominate a perfectly competitive market. (If the market is a monopoly, or oligopoly, however, all bets are off. For that matter, even if a market is otherwise perfectly competitive (large number of firms) but entry and exit are not free (say, large start-up costs), a firm with deep enough pockets can put everyone else out of business by over-producing for a while and driving the price down to where all firms are losing money, then raise the price back up, to even above the previous price, once it becomes a monopoly.)
Is it any good service or activity which does not eventually exhibit diminishing marginal utility per unit of time?
When the phrase 'insatiable appetite' is used to refer to any activity, and we are reasonable confident that it is relevant and applicable to that activity, then we could begin a critical investigation of whether the law applies to it or not. One activity that immediately comes to mind is the longer term quest that scientists, academics, researchers or simply, nerds demonstrate consistently is an 'Insatiable Appetite' for knowledge or information, over a long term. There cannot be any diminishing utility for such persons to the pursuit of knowledge. Pursuit of Knowledge, as an activity therefore presents a situation for some of us, where diminishing marginal utility may not apply. Sabdezar Ilahi
Is opportunity cost a relevant cost?
Yes, opportunity cost is a relevant cost because it can be used in something more productive.
What is the relevant tax rate for investment decisions?
Marginal Rate
In making financial decisions the relevant tax rate is the?
The relevant tax rate is the marginal tax rate in making finicial decisions.
Are marginal costs relevant costs?
If marginal costs are relevant for specific situation or specific decision making scenario then marginal costs are relevant costs otherwise marginal costs can be irrelevant.
How accounting provide relevant data?
Accounting provides the business with data such as debt, growth of the company and the effect of added investment. Accounting data can allow the decision makers in a company to make decisions that will not endanger the financial direction of the company.
Do you agree that relevant costs for pricing decisions are full cost of the products?
Not essentially. The relevant costs are only those costs that will change as a result of accepting the order. In this case, full product costs will rarely be relevant. It is more likely that full product costs will be relevant costs for long-run pricing decisions.
What is vanguard sheet?
Vanguard is a financial services company that offers a wide range of investment products, including mutual funds, ETFs, retirement accounts, and more. A Vanguard fact sheet typically provides details about a specific investment product, such as its performance, holdings, expenses, and other relevant information for investors to make informed decisions.
What are the advantages of relevant cost?
1.Relevant cost helps provide a consistent basis for the comparison of alternative proposal. 2.Relevant cost deal with the quantitative aspects of decisions.
What are the advantages of signing up to an investment newsletter?
Signing up for an investment newsletter can provide several advantages. Firstly, it can help you stay informed about market trends, investment opportunities, and potential risks. Secondly, it provides expert analysis and insights from experienced professionals in the field, which can help you make more informed investment decisions. Lastly, it can save you time and effort by curating relevant information and delivering it directly to your inbox.
How relevant is linear equation to a firm?
The line of best fit is used to predict future decisions.
Why is decision making relevant to planning?
When planning, there are different options that could be chosen. Decision making is relevant to planning because decisions as to the best options need to be made.
What is the tax implication upon exercise of a call option?
Claim the gain or loss, relevant to the holding period of the investment.
How do you know when an investment is successful?
An investment is considered successful when it generates a positive return on investment (ROI). This means that the income or profits generated from the investment exceed the initial cost. It is also important to compare the investment's performance to relevant benchmarks and industry standards to determine if it is outperforming its peers. Additionally, the investment should align with the investor's goals and risk tolerance.
