The equity cost of capital for the Jumbuck Exploration is 22%
Explanation:
Equity cost refers to the return offered to the customers in place of their investment in the organisation stocks. It is calculated by the formula
Rₐ = (D₁/P₀)+g
Where Rₐ= cost of equity
D₁= dividends announced
P₀=share price (current)
g= growth rate
Now given details-
Dividend announced (D₁)- $ 0.26
Current market price (P₀) - $ 2.00
Expected price= $ 2.10
growth rate= expected price- current price
growth rate (g) =$ 0.10
Putting the values to find Rₐ
Rₐ=(0.26/2.00)+0.10
Rₐ=0.23 or 23%
Nearest answer is 22%
Hence the equity cost of the capital is 22%
Answer:
The correct answer here is cost based pricing strategy.
Explanation:
Cost based pricing strategy is that type of pricing method where selling price of a product is determined by the company by adding a certain percentage of profit element with the cost of a product . The cost here is often manufacturing cost , which is used a basis for setting the final price, which would be taken out by adding a fixed amount or certain percentage of total cost to be added as profit to the cost.
Answer:
Price ceiling binding
price floor binding
Price floor binding
Explanation:
A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.
Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price.
The maximum price ($2.50) is less than the equilibrium price($3) . So it is a binding price ceiling
The minimum price ($3.40) is greater than the equilibrium price($3) . So it is a binding price floor
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