If honda (a japan-based firm) produces a car in ohio and exports it to japan, in which country's gdp will the car be counted?

to estimate its cost of capital. You obtained the following data: D1 = $1.75; P0 = $42.50; g = 7.00% (constant); and F = 5.00%.

PolarNik [594]

Answer:

11.33%

Explanation:

The dividend valuation model will be used here to calculate the cost of equity raised which can be calculated using the following formula:

r = D1 / (Po - F) + g

Here D1, Po, F and g are given in the question so by putting the values in the equation, we have

r = $1.75 / ($42.5 - 5% of Po) + 7%

r = 11.33%

5 0

3 years ago

A local tree farm is trying to decide which fertilizer to use to grow its trees. It can either buy the famous Greenwood Fertiliz

postnew [5]

Answer:

1. NPV calculation

Option 1 ( with Greewood fertilizer) : $2.256

Option 2 ( with Peter's Fertilizer) : $3.835

2. Rate of return calculation:

Option 1: 45.12%

Option 2: 95.875%

Option 2 should be chosen as it provides higher NPV.

Explanation:

1. The detailed calculation for each option is:

Option 1: Present value of sales proceed - initial cost = (8/1.05^2) - 5 = $2.256

Option 2: Present value of sales proceed - initial cost = (10/1.05^5) - 4 = $3.835.

2. The detailed calculation for each option is:

Option 1: NPV/Initial cost = 2.256/5= 45.12%

Option 2: NPV/Initial cost =3.835/10 = 95.875%

To assess which option should be picked with the assumption of infinite time horizon, NPV should be key driver. As Option 2 has higher NPV, Option 2 is chosen.

5 0

3 years ago

Current sales revenue is $5,000, total variable costs are $2,000, and total fixed costs are $1,000 (no data on units). a) Comput

adelina 88 [10]

Answer:

a) CMR= 0.6

b)CVP=0.6-$1,000

c) Profit= $5000

d) Sales $10,000

e) Break-even=$3000

f) Profit increases =$600

Explanation:

a) contribution margin ratio formula is

(Total revenue -variable cost )/Total revenue

=($5,000-$2,000)/$5,000= 0.6

b) CVP relation: profit as a function of sales revenue

Version 2:

Profit = CMR × Revenue – FC

where

CMR = contribution margin ratio (contribution per $ of sales)

Revenue = sales revenue in $

FC = fixed costs

That means

Profit = 0.6*Revenue-$1,000

c)profit = 0.6*$10,000-$1,000

profit = $6000-$1,000

profit =$5000

d)

profit = 0.6*Revenue-$1,000

Revenue =(profit +$1,000)/0.6

Revenue = ($5,000 +$1,000)/0.6= 10000

e)Break even is when sales are equal to the cost.

sales revenue=variable costs+fixed costs

sales revenue=$2,000+$1,000

Break-even=$3000

f)profit increases

profit increases =0.6*Revenue-$1,000

profit increases =0.6*$1,000=$600

8 0

3 years ago

If a country's money supply is $10 million, and there is only one bank where all of the people deposit their money. If the bank

Luden [163]

Answer:

The money multiplier of the economy is 20

Explanation:

Money multiplier is the term of economics which is defined as the maximum amount, the money supply could rise grounded on the increase in the reserve in the system of banking.

The formula used for computing the money multiplier is as:

Money Multiplier = 1 / r

where

r is the reserve ratio that is 5%

So, putting the same value above:

Money Multiplier = 1 / 5%

Money Multiplier = 20

7 0

3 years ago

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant ra

Crank

Answer:

0.6

Explanation:

Variable Expense Ratio is calculated by taking Variable Expense and dividing it by Sales. This ratio indicates how much of the variable expense is incurred by company for each $1 Sales.

So, variable expense ratio is .6 or 60% (33,000 / 55,000).

Such questions also require the calculation of Contribution Margin Ratio which is calculated by taking Contribution Margin and Dividing it by Sales. This ratio tells us how much the company generates after covering variables expenses when the sales are $1.

So, Contribution Margin Ratio is .4 or 40% (22,000 / 55,000).

7 0

3 years ago