Consider the following table of Actual earnings: Firm A Firm B Actual earnings S r BV₁-1 a. $1,000 • b. SO S c. $1,500 d. $(1,000) 6,000 10 100,000 % Firm C S S 14,000 8 150,000 % $ 18,000 12 Assume that Firm A can increase earnings $4,000 by cutting costs. Abnormal earnings would be: Multiple Choice $ 190,000 %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Consider the following table of Actual earnings:
Firm A
Firm B
Actual earnings $
r
BVt-1
a. $1,000
b. So
$
c. $1,500
d. $(1,000)
6,000
10
100,000
%
Firm C
S
0)
$
14,000
8
150,000
%
$ 18,000
12
$ 190,000
Assume that Firm A can increase earnings $4,000 by cutting costs. Abnormal earnings would be:
Multiple Choice
%
Transcribed Image Text:Consider the following table of Actual earnings: Firm A Firm B Actual earnings $ r BVt-1 a. $1,000 b. So $ c. $1,500 d. $(1,000) 6,000 10 100,000 % Firm C S 0) $ 14,000 8 150,000 % $ 18,000 12 $ 190,000 Assume that Firm A can increase earnings $4,000 by cutting costs. Abnormal earnings would be: Multiple Choice %
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