Answer:
The value of the firm or worth of the firm is $147058.82 rounded off to 2 decimal places
Explanation:
We first need to calculate the required rate of return for this firm that will be used as the discount rate in the valuation of the firm using the discounted cash flow methods.
Using the CAPM we can calculate the required rate of return as,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on Market
So,
r = 0.04 + 0.4 * (0.11 - 0.04)
r = 0.068 or 6.8%
As the cash flows the firm can generate are expected to remain constant through out and they are generated after equal interval of time, this can be treated as a perpetuity.
The present value of a perpetuity is calculated as follows,
Present Value of perpetuity = Cash Flow / r
Present value of perpetuity = 10000 / 0.068
Present value of perpetuity = $147058.8235
So, the value of the firm or worth of the firm is $147058.82 rounded off to 2 decimal places
Answer:
$20,000
Explanation:
The income statement shows the revenue and expenses of an entity for a period. The difference between the entity's revenue and expenses gives the net income.
The balance sheet on the other hand shows the company's assets and liabilities, the difference of these is the owners equity.
Hence Dynamic's net income for the year,
= $100,000 - $80,000
= $20,000
The statement that is true among the choices given is option C. The presentvalue of money is greater than its future value. This statement is a fact and is always true. The present worth of a money is greater than its future value due to inflation. This is the principle called the time value of money.
Answer:
Engaging, Listening, and Analyzing.
