Answer:
-$414,444.44
Explanation:
The computation of the net present value is shown below:
Net present value = Initial investment + net cash flows ÷ (required rate of return - projected growth rate)
= -$1,570,000 + $104,000 ÷ (12% - 3%)
= -$1,570,000 + $1,155,555.56
= -$414,444.44
Hence, the net present value is -$414,444.44
Since the net present value comes in negative so the project is rejected
Answer:
It means movies are relatively cheaper than working hours
Explanation:
In order to estimate the relativity of the two activities, there is a need to compare the changes over ten years
1. 10 years ago, Movie ticket= $5, 10 Years later Movie ticket= $8, the 10 year difference is $3
2. 10 years ago, average hourly wage = $10, 10 years later, average hourly wage = $20, the 10 year difference is $10
First, it means for the $3 change in movie ticket cost, there was a $10 change in the average hourly wage.
Put differently, while movie ticket got a 60% increase in price 3/5 x 100=60%
Average hourly wage got 100% increase 10/10 x 100= 100%
It means that working hours got more expensive and movie tickets got cheaper
Answer:
The maximum growth rate to my calculations is 8.32%, since it is closer to option E), I´d choose E) 8.37%
Explanation:
Hi, in order to find the growth rate given all the info of the problem, we need to use the following formula.

Where:
g = growth rate
b=retention ratio
R = return on equity
Since R = Earnings / Equity, and our dividend payout ratio (equals to 1 - b)our fromula changes to:

So, everything should look like this:

So, the growth rate is equal to 8.32% but this option is not available, therefore we´ll go for the closest one, that is E) 8.37%.
Best of luck.