Answer:
This lease is regarded and classified as Capital lease.
Explanation:
This lease is regarded and classified as Capital lease.
Here, Callaway Golf Co. is the body financing the leased asset but the right ownership is with Photon Company.
Now; the present value of future payment is calculated as:
Present value of future payment =[PVA 6%,5 × Annual payment ]+[PVF 6%,5 × Residual value]
=[4.46511 × 31000] +[0.74726 × 15500]
= 138418.27+ 11582.53
= 150000
However the present value of minimum lease payment is equal or more than 90% fair market value ,as such we therefore conclude that this lease is a capital lease.
Answer:
5.62%
13.75%
Explanation:
According to the DDM method,
the value of a stock = [dividend x ( 1 + growth rate)] / [cost of equity - growth rate]
67 = 0.4(1.05) / r - 0.05
multiply both sides of the equation by r -0.05
67(r - 0.05) = 0.42
divide both sides of the equation by 67
r - 0.05 = 0.006269
r = 0.0563
= 5.63%
b. the cost of equity using the capm method =
risk free rate of return + beta x ( expected return - risk free return)
5% + 1.25 x (12 - 5) = 13.75%
C aggregate demand shocks
Play little or no role in the economy in the short run