Answer:
b. 2.6
Explanation:
Price elasticity of demand measures how much quantity demanded changes in response to a change in price. The Midpoint Method uses the average percent change in both quantity and price.
The formula for calculating midpoint elasticity of demand is a below
PED=(Q2−Q1)÷(Q2+Q1)/2
(P2−P1)÷(P2+P1)/2
Where Q is quantity and P is price
PED=(15000−10000)÷(15000.+10000)/2
(60−70)÷(60+70)2
PED =5,000÷12,500
(10)÷65
PED =0.4
0.154
PED =2.5974
PED =2.6
Answer:
9.44%
Explanation:
Market price = Next dividend/(return on equity - growth rate)
Therefore, we have:
$75 = $7 / (Return on equity - 5%)
(Return on equity - 5%) * $75 = $7
(Return on equity * $75) - (75$ * 5%) = $7
(Return on equity * $75) - $3.75 = $7
(Return on equity * $75) = $7 + $3.75
Return on equity = $10.75 / $75 = 0.1433, or 14.33%
WACC = (50% * 14.33%) + [(50% * 7% * (100% - 35%)] = 9.44%