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Karolina [17]
3 years ago
10

According to the 2018 Value Line Investment Survey, the growth rate in dividends for Ralph Lauren for the next five years will b

e .5 percent. If investors feel this growth rate will continue, what is the required return for the company's stock?
Business
1 answer:
pantera1 [17]3 years ago
4 0

Answer:

Higher than 0.5%

Explanation:

Since the rate of return is calculated as dividend payment/stock price + dividend growth rate and since that growth rate for the next five years will be 0.5 %, than rate of return will be higher than 0.5 %.

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Answer:

<u>Break Even point </u>Q = 500000

<u>Shut Down Point </u> P < 5

Explanation:

<u>Break Even point</u> is where Total Revenue = Total Cost.

Total cost = 500000 + 5Q, price = 6 (Given) , Total revenue = Price x quantity  

So, TR = TC implies : 500000 + 5Q = 6Q → 500000 = 6Q - 5Q

Q = 500000

<u>Shut Down Point </u>is where firm's Price is < its Average Variable Cost .  

AVC is the variable cost on per unit output, is found out by average of variable component of cost function. C = 500000 + 5Q implies variable cost = 5Q , so AVC = 5Q / Q = 5

So, the firm would shut down if its price would go below AVC , ie if P < 5

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