Answer:
C) slowly; stable
Explanation:
Velocity is defined as the rate of turnover of money.
Velocity = Nominal aggregate income / money supply
Irving Fisher posited that the factors that affect velocity are institutions that impact how transactions are conducted. According to him, institutional factors that affect the velocity of money change slowly. Therefore, in the short run, velocity is fairly stable.
Answer:
The required rate of return for Johnson and Johnson is 16.85%
Explanation:
Johnson and Johnson paid an annual dividend of $2.110 last year, the geometric growth rate was 13.04 percent during last ten years.
To find out the expected dividend to be paid be Johnson and Johnson this year.
= [$2.110(1.1304)]
= $2.385
Required Rate of Return is calculated by the following formula,
R = 
R = 2.385/62.55 + 0.1304
R = .1685, or 16.85%
Answer:
B. Cash, accounts receivable, inventories, prepaid items.
Explanation:
In the balance sheet, assets are presented in an orderly manner guided by the amount of time they take to convert into cash. Assets requiring the shortest time to convert into cash will appear first. Cash will always be on top as it does not require conversion.
Goodwill comes last as the business will have to be sold for it to turn into cash.
- In the list provided, cash will appear first.
- Accounts receivable is money a business expects to receive from customers for goods or services provided. In practice, the money should be received within 60 days
- Inventories in assets refer to finished goods in the store. They are awaiting sales. Inventories will take longer as stocks have to be sold and become account receivable before converting to cash.
- Prepaid items are expenses paid before their due date. They appear in the balance sheet as cash assets because they have not been consumed. The expectation is that they will be utilized within the current year. Converting into cash them will require getting a refund from the recipient of the funds, which could be a lengthy process.
Since there is no debt, all the capital that the company raises is in the form of common equity.
Since there is only equity (meaning the firm is a fully equity firm), the weighted average cost of capital (WACC) is nothing but the cost of equity
In this case the WACC represents the cost of equity
Therefore, cost of equity = WACC = 8%
