A firm in a perfectly competitive industry has a typical cost structure. The normal rate of profitin the economy is 6 percent. This firm is earning $15 on every $150 invested by its founders.Instructions: Enter your answers as whole numbers.a. What is its percentage rate of return?percent.b. Is the firm earning an economic profit? (Cick to select)If so, how large? O percent.c. Will this industry see entry or exit? (Click to select)d. What will be the rate of return earned by firms in this industry once the industry reacheslong-run equilibrium? O percent.

Solution:- a)Calculation of rate of return as follows:- Given data This firm is earning $15 on every…

A firm in a perfectly competitive industry has a typical cost structure. The normal rate of profit in the economy is 6 percent. This firm is earning $15 on every $150 invested by its founders. Instructions: Enter your answers as whole numbers. a. What is its percentage rate of return? O percent. b. Is the firm earning an economic profit? (Click to select) If so, how large? O percent. c. Will this industry see entry or exit? (Click to select)

A firm in a perfectly competitive industry has a typical cost structure. The normal rate of profit in the economy is 6 percent. This firm is earning $15 on every $150 invested by its founders. Instructions: Enter your answers as whole numbers. a. What is its percentage rate of return? O percent. b. Is the firm earning an economic profit? (Click to select) If so, how large? O percent. c. Will this industry see entry or exit? (Click to select)

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 4QE: Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its...

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