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matrenka [14]
4 years ago
13

Which is TRUE regarding the trade-off a firm makes when it spends money on an investment project? A. The trade-off a firm faces

when using retained earnings or borrowed funds is the same. B. Borrowing money will always be more expensive than using retained earnings. C. Using retained earnings has a higher opportunity cost than does using borrowed money because retained earnings come from past profits. D. The cost of retained earnings is unrelated to the cost of borrowing money.
Business
1 answer:
luda_lava [24]4 years ago
3 0

Answer:

A. The trade-off a firm faces when using retained earnings or borrowed funds is the same.

Explanation:

  • A trade-off is based on the situational decisions that usually involve the loss of quality and a property that is set or designed to give a return in the other aspects.
  • As one part has to increase and the other has to decrease. The trade-off is commonly expressed as in the terms of opportunity costs which states the loss of the best alternative.
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A focus group is a free-form meeting of 6–10 customers where a moderator solicits their opinions about a company's and its competitors' products.

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A focus group is an interview with a small group of people that have similar features or contents, in addition to having a similar demographic. This is an informal gathering of six to ten customers, where a moderator asks them about the products of the company and its rivals.

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2 years ago
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth
ohaa [14]

Answer:

The current price per share is $84.16

Explanation:

The dividend discount model (DDM) estimates the value of a share/stock based on the present value of the expected future dividends from the stock. We will use the two stage growth model of DDM here as the growth in dividends of the stock is divided into two stages.

The formula for current price under two stage growth model is,

P0 = D0 * (1+g1) / (1+r)  +  D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n  +

[( D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n

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g1 is initial growth rate

g2 is the constant growth rate

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So, the price of the stock today will be,

P0 = 2.05 * (1+0.24) / (1+0.11)  +  2.05 * (1+0.24)^2 / (1+0.11)^2  +  

2.05 * (1+0.24)^3 / (1+0.11)^3  + [( 2.05 * (1+0.24)^3 * (1+0.07)) / (0.11 - 0.07)] / (1+0.11)^3

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Explanation:

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2 years ago
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