Answer:
D0 = $1.22
Explanation:
Data provided in the question:
Required rate of return, r = 11.50% = 0.115
Selling price of the stock = $29.00
Expected growth rate = 7.00% = 0.07
Now,
Stock price =
here,
D1 is the current dividend
thus,
$29.00 =
or
D1 = $1.305
also,
D0 =
or
D0 =
or
D0 = 1.219 ≈ $1.22
Answer:
Income inequality ratio
Explanation:
The income inequality ratio is an incomplete picture because a single number cannot fully reflect the sources of the underlying differences in income.
Income inequality refers to the uneven distribution of income among the population of a particular place. It is the difference in the allocation of income in a particular country.
Income inequality occurs across different segments of the population such as gender(male and female), ethnic group, occupation, geographical location etc.
The Gini index is widely used to compare disparities in income.
Answer:
political risk.
Explanation:
political risk: This is risk or changes in government policy that adversely affect the fortune of companies operating in a country. Since Italian government expropriated the company paid only €80,000 as again €125,000 that the company worth. The company has suffered political risk.
Exchange rate risk or currency risk: It is a risk arising from frequent changes in exchange rate or amount in which a country's currency can be exchange for another currency. Since exchange rate remain the same i.e. $1.25 = €1.00, exchange rate risk did not occurred.
Answer: d. The firm's cash position in 2015 and 2016 would increase.
Explanation:
The financila statements had been calculated with the view that fixed assets would be depreciated over a 20 year period. However, it was discovered that the assest should be depreciated over 15 years instead. This reduction in the period would have the effect for increasing the depreciation payment.
For example, say the asset cost $20,000 and was originally to be depreciated over 20 years using Straight Line Depreciation. This means that the depreciation per year would be,
= 
= $1,000 a year.
If it was however discovered that it was supposed to be 15 years that figure would go to,
= 
= $1,333.33 a year
Notice how depreciation increased. Lucy's Music emporium will therefore see their depreciation cost rise. Depreciation is subtracted from revenue as it is tax deductible. When Lucy's Emporium deduct this new depreciation, they will have less profit. They will be taxed on this less profit and so pay a lower tax. This will thus increase their cash holdings because Depreciation is a non cash expense and does not actually require a cash payment.
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