Answer:
the annual financial advantage (disadvantage) for the company of eliminating this department is $18,500
Explanation:
the computation of the annual financial advantage (disadvantage) for the company of eliminating this department is as follows:
Annual financial Advantage (disadvantage) = $37000 - ($74000 - $18500)
= $37000 - $55,500
= $18,500
Hence, the annual financial advantage (disadvantage) for the company of eliminating this department is $18,500
Answer
a) Gordon's Constant Growth model : P0 = D1 / (r-g)
r = 3% =0.03
, g= -7% = -0.07
, D0 = $5.1
D1 = D0*(1+g)
D1 = 5.1*(1-0.07)
D1 = $4.743
P0 = 4.743/(0.03- (-0.07))
P0 = 4.743/0.10
P0 = $47.43
So, Stock M should sell at a price of $47.43 today
b) Price 8 years from now
==> P8 = D9/(r-g)
P8 = D0*(1+g)^9/(r-g)
P8 = 5.1* (1-0.07)^9 / (0.03- (-0.07))
P8 = 5.1*0.52041108298 / (0.03- (-0.07))
P8 = 2.65410
P8 = $26.54
c) Investor may want to buy the stock today for the Dividends. If the dividends paid are high enough, the present value of the dividends is also high and may more than compensate the fall in stock price. This type of stocks work and give cash flows like a project where the initial cashflows are higher and later cashflows are less because of market factors.
The main motive behind dealer incentives is to give the dealers a low price for stocking the companies products. The company that gives the biggest dealer incentive will attract more dealers to actively sell the product of that company. It can be seen in case of cars, the incentives given by the manufacturers to their dealers for stocking the cars.
Im pretty sure the answer is A but it might be C
but i think its A
hope this helps