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nevsk [136]
2 years ago
14

The decision-making model includes which of the following steps?

Business
1 answer:
Otrada [13]2 years ago
8 0

Explanation:

I guess and got it right.

hope this helps

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"The company will pay a dividend of $15 per share 10 years from today and will increase the dividend by 5 percent per year there
statuscvo [17]

Answer:

Current Share price= $114.21

Explanation:

The Dividend Valuation Model is a technique adopted to detremine the value of an asset. According to this model, the value of an asset is the sum of the present values of the future cash flows that would arise from the asset discounted at the required rate of return (discount rate)

The model is premised on the concept of the time value of money. The idea that $1 today is not the same as $1 tomorrow. The $1 of today is worth more than that of tomorrow; because of the opportunity to earn interest. So to determine the worth of a future cash flow, we compute its worth today- its present value.

The Present Value of a future cash flow is the amount that needs to be invested today at a particular rate of return to equal the same cash flow in the future. Present value means the value in year 0 or now

The process of calculating the present value of a future sum is called discounting. So to calculate the current stock price in this question, we shall discount the future dividends using the required rate of return and then add them together.

So if an asset (e.g a stock) promises some cash flows in the future, those cash flows need to be brought to their present values and then be added to arrive at the value of the asset

In this question, the cash flows are the dividends as given and the rate of return (discount rate) is 15%

So we apply this model as follows:

Step 1 : PV of div from year 1 to 10  =  15× ((1-1.15)^(-10))/0.15)  =  75.282

Step 2:PV (in year 10)of div from year 11 onward=(15×1.05)/(0.15-0.05)=  157.5

Step 3:PV(in year 0) of div from year 11 onward =  157.5 × (1.15)^ (-10) =  38.93

Current Share price= $75.282 + $38.93 = $114.21

<em>Note:</em><em> step 3 is important because the the cash flows from year 11 onward were discounted to arrive at their values in year 10. Since we are interested in the current price i.e year 0 value, it is important that we re-discount again to bring them to their PV in year 0.</em>

8 0
2 years ago
Engineers for The All-Terrain Bike Company have determined that a 15% increase in all inputs will cause a 15% increase in output
Trava [24]

Answer:

the average cost to reduce

Explanation:

In this situation, when The All-terrain Bike Company increases input (capital and labor) and this causes a proportional increase in output, this scenario The All-terrain Bike Company experiences is called a constant returns to scale which gives rise to decreased average costs.

This happens because buying larger quantity of inputs gives rise to a reduced cost of purchase because these things are being bought in bulk.

7 0
3 years ago
Read 2 more answers
The Rule of 70 applies in any growth rate application. Let’s say you have $1000 in savings and you have three alternatives for i
AlekseyPX

Answer:

a. 7,000 years

b. 2,333 years

c. 875 years

Explanation:

Based on rule of 70, we can have the following formula to do the calculation:

Number of years to double = 70 ÷ Interest rate per year .................... (1)

We can now calculate as follows:

a. A savings account earning 1% interest per year.

Number of years to double = 70 ÷ 1% = 7,000 years

b. A U.S. Treasury bond mutual fund earning 3% interest per year.

Number of years to double = 70 ÷ 3% = 2,333 years

c. A stock market mutual fund earning 8% interest per year.

Number of years to double = 70 ÷ 8% = 875 years

Note:

It can be observed that the higher the interest rate, the lower the number of years it will take the investment to double.

3 0
2 years ago
The aggregate supply curve slopes a. downward because firms can sell more at lower prices. b. upward because firms can hire work
RideAnS [48]

Answer:

The correct option is (b)

Explanation:

Aggregate supply curve is upward sloping as output increase with the increase in price. In the short run, wage rate is fixed. As such, in the short run, firms can hire more workers at fixed wage rate. An increase in price indicates more profits, thereby increasing output.

This is the reason for upward sloping AS curve.

4 0
3 years ago
The artisans at Jewelry Junction in Phoenix are preparing to make gold jewelry during a 2-month period for the Christmas season.
SVEN [57.7K]

Answer:

The max revenue is "$32,300". The further explanation is described below.

Explanation:

(a)

The composition as well as response of models within 6 rows seems to be as described in the following:  

Maximum 1650B + 850N + 790P (B bracelets, N necklaces and P pins produce overall revenue)  

Yes of course,

The total gold ounces will be:

⇒  6.3B+3.9N+3.1P < = 125

The total labor hours will be:

⇒  17B+10N+7P < = 320

Integers B, N, P will become  

The response for LINDO is:

B=10.0.

N=0  

P=20  

Final Value of Maximization will be:

= 32,300

(b)

  • 10 bracelets, hardly any necklaces as well as 20 pins should always be made by the shop.  
  • These goods utilizing 125 ounces of gold simultaneously,  
  • It would use 310 hours of labor although 10 hours would then stay unused.  

The maximum salary will become:

= $32,300.

8 0
3 years ago
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