Answer:
A. Market Capitalization rate = 13%
B. Intrinsic Value = $46.22
Explanation:
<em>A. Market Capitalization rate:</em>
CAPM should be used to calculate market capitalization from the given data. Following is the formula for CAPM
![CAPM=r+(MxB)](https://tex.z-dn.net/?f=CAPM%3Dr%2B%28MxB%29)
r = risk free rate
M = market portfolio return
B = beta
Solution:
![CAPM=0.04+(0.75x0.12)](https://tex.z-dn.net/?f=CAPM%3D0.04%2B%280.75x0.12%29)
CAPM = 13%
<em>B. Intrinsic Value of stock</em>
Gordon Growth Model (GGM) should be used to calculate intrinsic value of stock based on the given data.
Following is the formula for GGM
![GGM=Dx(1+g)/(r-g)](https://tex.z-dn.net/?f=GGM%3DDx%281%2Bg%29%2F%28r-g%29)
D = Current Dividend
g = Dividend Growth rate
r = market capitalization rate (CAPM calculated in part A)
Solution:
![DDM=4x(1+0.04)/(0.13-.04)](https://tex.z-dn.net/?f=DDM%3D4x%281%2B0.04%29%2F%280.13-.04%29)
DDM = $46.22
<em>Note: All values are rounded off to two decimal points.</em>
Answer: Convenience, Shopping, Speciality and Unsought
Explanation: Next time please be more specific Thanks
Tariffs can be helpful if the imports are unfairly cheaper than the domestic counterparts. This would level the playing field and help the domestic companies compete more effectively.
Tariffs can be harmful for consumers because there is strong possibility that the increased costs will raise consumer prices.
Answer:
$0.5 per share
Explanation:
Preference Share Capital = 1000 shares * $10 = 10,000
Annual Dividend in Total = 10000*5% = $500
Annual Dividend Per Share = $500/1000 = $0.5 per share