katie673

22.06.2021 • 

Business

A standard production possibilities model representing the trade-off between final goods (food and basic necessities) and intermediate goods (capital, farm equipment, etc.) can be used to model a source for economic growth. Specifically, when resources are reallocated from final goods in the form of savings or deferred consumption to intermediate goods through investment in capital equipment, the additional capital will lead to future increases in productivity and growth. Suppose, however, you are looking at an economy near subsistence, where all resources are needed to provide for the basic caloric and health needs of the population. In your opinion, should this country's economic policy promote the accumulation of capital, a requirement for more savings and investment

Ответ:

brebun4742

30.01.2020

Business

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Residual income = Operating income - (r x Asset invested)

            $8 million = $13 million - (r x  25 million)

             $8 million = $13 million - r25 million              

              r25 million = $13 million - $8 million

              r25 million = $5 million

              r                 = $5 million/25 million

              r                 = 0.2 = 20%

            Thus, required rate of return is 20%

Explanation:

In this case, we need to apply the residual income formula. Operating income, asset invested and residual income have been given with the exception of rate of return. Thus, rate of return becomes the subject of the formula.

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