Answer:
If the present bus is repaired, the present value of the annual cash operating costs associated with this alternative is calculated as follows;
Answer:
The expected price of the stock is $122.03
Explanation:
To calculate the expected price of the stock at the end of the year or at Year 1, we first need to determine the required rate of return on the stock. We will use the CAPM equation to calculate the required rate of return.
The required rate of return is calculated as,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
r = 0.05 + 1 * (0.14 - 0.05)
r = 0.14
We already have the price of the stock today, the D1 and the required rate of return. Using the constant dividend growth model of DDM, we calculate the growth rate in dividends to be,
P0 = D1 / (r - g)
115 = 9 / (0.14 - g)
115 * (0.14 - g) = 9
16.1 - 115g = 9
16.1 - 9 = 115g
7.1 / 115 = g
g = 0.0617 or 6.17%
Using the same formula and replacing D1 with D2, we can calculate the price of the stock at the end of the year or at start of Year 1.
P1 = 9 * (1+0.0617) / (0.14 - 0.0617)
P1 = $122.03
Answer: 10400 unfavorable
Explanation:
Firstly, we should note that the fixed overhead volume variance is the difference between the standard fixed overhead for actual output and the budgeted fixed overhead.
Budgeted fixed overhead = 780000
The standard fixed overhead for the actual output will be:
= Actual output × Number of hour per unit × the standard fixed overhead rate
= 14800 × 4 × 13
= 769,600
Then, the fixed overhead volume variance will be:
= 769600 - 780000
= 10400 Unfavorable
Answer:
Foreign Direct Investment - Opening a retail store in a foreign country
Foreign Portfolio Investment - Buying bonds issued by a foreign government
false
Explanation:
Foreign direct investment can be described as when a firm or an individual in one country makes an investment in a business interest in another country.
Foreign direct investment usually takes two form :
- the investor sets up a business in the foreign country
- the investor acquires foreign assets in the foreign country.
An example is when a US firm establishes a new business in another country.
foreign direct investment usually requires a lot of active management. As a result, an individual might not have the capacity or resources to effectively manage an FDI when compared with a corporation
Foreign Portfolio Investment is when an investor in one country purchases financial assets in another country.
For example, a resident of the US purchases bonds in Ghana
