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1 year ago

In the circular flow model, households provide to firms. This is represented by the letter A.

Business

1 answer:

Lana71 [14]1 year ago

5 0

Households would provide factors of production to firms.

The circular flow demonstrates the movement of money in the economy.
The two-sector model of circular flow comprises households and firms.
Money first flows from producers to households in return for production services in the form of wages.
Finally, return to producers back in the form of payment for the purchase or expenditure made by households.

<h2>What do you mean by circular flow of money?</h2>

The circular flow model demonstrates how money moves through society.
Money flows from producers to workers as wages and flows back to producers as payment for products.
In short, an economy is an endless circular flow of money.

<h2>What are the two types of circular flow?</h2>

There are two types of circular flow:

Real flow: The term real flow means the flow of factor services from households to firms.
Similarly, the flow of goods and services from firms to households.
Money flow: The money flow refers to the flow of factor payments from firms to households for factor services.

Learn more about the circular flow of money here:

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2 years ago

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(a) Men and women aged 16 to 22

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3 years ago

Item 1Item 1 Weismann Co. issued 11-year bonds a year ago at a coupon rate of 11 percent. The bonds make semiannual payments and

Mamont248 [21]

Answer:

Price of the bond is $940.

Explanation:

Price of bond is the present value of future cash flows. This Includes the present value of coupon payment and cash flow on maturity of the bond.

As per Given Data

As the payment are made semiannually, so all value are calculated on semiannual basis.

Coupon payment = 1000 x 11% = $110 annually = $55 semiannually

Number of Payments = n = 11 years x 2 = 22 periods

Yield to maturity = 12% annually = 6% semiannually

To calculate Price of the bond use following formula of Present value of annuity.

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Price of the Bond =$55 x [ ( 1 - ( 1 + 6% )^-22 ) / 6% ] + [ $1,000 / ( 1 + 6% )^22 ]

Price of the Bond = $55 x [ ( 1 - ( 1.06 )^-22 ) / 0.06 ] + [ $1,000 / ( 1.06 )^22 ]

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2 years ago

Standard, Inc. reported EBIT of $35 million for last year. Depreciation expense totaled $20 million and capital expenditures cam

aleksandr82 [10.1K]

Answer:

$710.84 million

Explanation:

Net income = $35 million

Depreciation = $20 million

Capital expenditures = $7 million

Tax rate = 21%

D/E ratio = 0.4

Growth rate = 6%

Equity beta = 1.25

So, firm's asset beta = Equity beta/(1 + D/E*(1-T))

= 1.25/(1 + 0.4*(1-0.21))

= 0.94985

So, Free Cash Flow to the Firm= NI + Depreciation - Capital expenditures

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So, firm cost of capital using CAPM is Rf + Beta*(MRP)

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Kc = 12.1239

So, Firms value using constant dividend growth model:

FV = FCF*(1+g)/(Kc-g)

FV = 48*1.06 / 0.121239-0.06

FV = 50.88 / 0.061239

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Market Value of equity = FV - Debt

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Market Value of equity = $710.84 million

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