When the market does not result in an efficient allocation of scarce resources, economists call this:

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next seven years, because

umka2103 [35]

Answer:

The price of the stock today will be $66.19

Explanation:

To calculate the price of a stock whose dividends will grow at a constant rate forever is calculated using the constant growth model of dividend discount model approach. To calculate the price of the stock today using this model, we use the following formula,

P0 = D1 / r - g

We will first calculate the price of the stock at t=8 using D9 because we use the next period's dividend to calculate the price of a stock. We will then discount back the price at t=8 to today's price.

P8 = 14.25 * (1+0.06) / (0.14 - 0.06)

P8 = $188.8125

The price of the stock today will be,

P0 = 188.8125 / (1+0.14)^8

P0 = $66.189 rounded off to $66.19

3 0

3 years ago

Your firm has net income of $245 on total sales of $1,080. Costs are $610 and depreciation is $120. The tax rate is 30 percent.

RSB [31]

Answer:

the operating cash flow is $365

Explanation:

the computation of the operating cash flow is shown below:

operating cash flow is

= Net income + depreciation expense

= $245 + $120

= $365

hence, the operating cash flow is $365

We simply added the net income and the depreciation expense to determine the operating cash flow

3 0

3 years ago

On October 15, 2018, Jon purchased and placed in service a used car. The purchase price was $25,000. This was the only business

Anika [276]

Answer: Total deduction= $2,528

Explanation:

25000*0.2*0.8=4,000

Auto maximum = $3,160

Total deduction = 3,160*0.8

Total deduction= $2,528

5 0

3 years ago

Dozens of companies produce plain white socks. Consumers regard plain white socks as standardized and don't care who manufacture

Dmitry_Shevchenko [17]

The correct answer is A) Yes, meets all assumptions.

Dozens of companies produce plain white socks. Consumers regard plain white socks as standardized and don't care who manufactures their socks: Yes, meets all assumptions.

What we are trying to do here is to define if the affirmation is about a competitive market. And the answer is yes, it meets all assumptions. The socks market is a competitive market because it has a large number of buyers and sellers that is not as big if compared to the size of the total market. The socks matter is offering barely the same product to customers. There is no differentiation at all. And in this case, companies can enter or leave the market whenever they want.

6 0

3 years ago

if, after one year, the yield to maturity on a multiyear coupon bond that was issued at par is lower than the coupon rate, what

maw [93]

When the YTM is lower than the bond's coupon rate, the bond's market value exceeds its par value (premium bond). Bonds are selling at a discount if their coupon rate is smaller than their YTM. A bond is trading at par if its coupon rate is equal to its yield to maturity (YTM).

<h3>What is the cost of a $1,000 par value, three year, zero-coupon bond?</h3>

(a) A three-year zero-coupon bond with a face value of $1,000 would have a present value (or price) of 874.69 with a yield of 4.564 percent.

<h3>What is the yield to maturity on a discount bond with a $1000 face value that will mature in a year and sell for $800?</h3>

The yield to maturity is determined using the following formula with the current price of $800: 800 = 1000 / (yield to maturity plus one) Yield to maturity Equals 1 plus yield. Yield until maturity equals 25%

To Know more about coupon rate

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5 0

1 year ago