Answer:
The price of the stock today is $96.06
Explanation:
The price of a stock whose earnings are expected to grow at a constant rate forever can be calculated using the dividend discount model which bases the price of a stock on the present value of the expected future dividends from the stock.
As the required rate of return is changing, we will calculate the price in three stages.
The formula for price today under this model is in the given situation is,
P0 = D1 / (1+r1) + D2 / (1+r1)^2 + D3 / (1+r1)^3 + D4 / (1+r2)^4 + D5 / (1+r2)^5 +
D6 / (1+r2)^6 + [ D7 / (r3 - g) ] / (1+r2)^6
Where,
- D1, D2, ... D7 represents the dividend in year 1,2, ... 7 (till Year 7)
- r represents the required rate of return
- r1 is 12%
- r2 is 10%
- r3 is 8%
So, price of the stock today is,
P0 = 3.05 * (1+0.05) / (1+0.12) + 3.05 * (1+0.05)^2 / (1+0.12)^2 +
3.05 * (1+0.05)^3 / (1+0.12)^3 + 3.05 * (1+0.05)^4 / (1+0.10)^4 +
3.05 * (1+0.05)^5 / (1+0.10)^5 + 3.05 * (1+0.05)^6 / (1+0.10)^6 +
[3.05 * (1+0.05)^7 / (0.08 - 0.05)] / (1+0.10)^6
P0 = $96.06
Answer: $170,000
Explanation:
According to the historical cost concept, the original cost value of a asset (i.e. land) should be recorded in the books. The original cost refers to the cost of a asset at the time of purchasing. As per the principle of historical cost, assets are always recorded as a original cost or historical cost or acquisition cost.
But when a person sold the asset then he will consider the fair market value.
Answer: (D) Increase both competition and specialization
Explanation:
According to the given question, the trading between the different types of countries are trends to increase both specialization and competition in the market as it producing various types of products which increase the competition level with different types of organisation as well as Countries.
The specialization is also majorly affect the trading process between different types of countries by producing the specialized products by focusing on the efficiency.
The specialization is plays an important role in trade as by exchanging the various types of products then it automatically increase the production and the productivity.
Therefore, Option (D) is correct answer.
Answer:
<em>Net operating Income of the company 130,000</em>
Explanation:
![\left[\begin{array}{cccc}-&East&West&Total\\Sales&690,000&140,000&830,000\\Variable&352,000&56,000&408,000\\Contribution&338,000&84,000&422,000\\Fixed Cost&104,000&24,000&292,000\\Income&234,000&60,000&130,000\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bcccc%7D-%26East%26West%26Total%5C%5CSales%26690%2C000%26140%2C000%26830%2C000%5C%5CVariable%26352%2C000%2656%2C000%26408%2C000%5C%5CContribution%26338%2C000%2684%2C000%26422%2C000%5C%5CFixed%20Cost%26104%2C000%2624%2C000%26292%2C000%5C%5CIncome%26234%2C000%2660%2C000%26130%2C000%5C%5C%5Cend%7Barray%7D%5Cright%5D)
We have to arrange the values, and don't forget to add the common fixed cost of 164,000 in the total fixed cost line.
Net operating Income of the company 130,000
Answer:
the purchase of a foreign asset and a forward contract in the market for foreign exchange.
Explanation:
An arbitrage is a type of trade that is caused as a result of market inefficiency.
For example, if a stock is trading at $50 on the London Stock Exchange (LSE) while it is trading for $52 on the New York Stock Exchange (NYSE) at the same time. Philip buys the stock on the LSE and sells the same shares immediately on the NYSE and earns a profit of $2 per share, this is referred to as an arbitrage.
This ultimately implies that, arbitrage allows an individual to profit from the price difference between similar goods, commodity, securities or currency in different markets.
A covered interest arbitrage can be defined as trading strategy in which an investor minimizes his or her currency risk by using a forward contract to hedge against the interest rate difference between two countries i.e the exchange rate risk. Thus, it's considered to be the most common interest rate arbitrage around the world.
Hence, a covered interest arbitrage involves both the purchase of a foreign asset and a forward contract in the market for foreign exchange.
