Answer:
D.unemployment that is due to normal turnover in the labor market.
Explanation:
Frictional unemployment occurs as as result of normal movement of workers in an economy due to changing of jobs. It is also called transitional employment.
This type of employment can occur even when there is full employment in the economy and people want to move from one job to the other.
Frictional unemployment could be due to quitting, termination, seasonal employment, or term employment.
Answer:
cost of common equity = 14.46%
WACC = 11.29%
accept = Project A
Explanation:
Cost of common equity is the return that is required by Holders of Common Stock.
The available details can be used to calculate the cost of common equity using the Dividend Growth Model as follows :
Cost of common equity = (Next year`s Dividend / Current Market Price of a Stock) + Expected Growth
= ($2.20/$26)+6%
= 14.46%
WACC is the minimum return that a project must offer before it can be accepted.It shows the risk of the company.
Cost of Debt = Market Interest Rate × (1 - tax rate)
= 9.00% × (1-0.40)
= 5.40%
Capital Source Weight Cost Total
Debt 35% 5.40% 1.89%
Common Equity 65% 14.46% 9.40%
Total 100% 19.86% 11.29%
Therefore WACC is 11.29%
When evaluating projects, Compare the Project`s Internal Rate of Return (IRR) to the WACC.
<u>Project A</u>
IRR 12% > WACC 11.29%
Therefore Accept
<u>Project B/S</u>
IRR 11% < WACC 11.29%
Therefore Do Not Accept
High risk, high returns. The higher the risk of an investment, the higher the returns or losses.
Speculative stocks investment is a high risk investment. It offers the possibility of earning substantial returns to compensate for its high risk profile.
Retirement plans are investments made in preparation for retirement. These investments have minimal risks compared to speculative stocks.
Property investments are low in risk but it is still subject to risk.
A-rated bonds are bonds that are credible and are expected to give a return to investors.
Based on my understanding, the correct order of investment from the least risky to the most risky is:
1) property
2) A-rated bonds
3) retirement plans
4) Speculative stocks.
Answer:
$43.75
Explanation:
Dividend discount model with zero growth assumes that the Company shall continue to pay the same amount of dividend in infinity. The formula for calculating price of such stock is
Price = Annual Dividend / Discount rate
Price = $3.5 / 8%
Price = $43.75 / per share
Answer:
The correct answer is letter "A": analyzing potential mergers.
Explanation:
Operations managers are those in charge of planning, studying, and analyzing all the steps regarding the processes of production of a company. They supervise if the companies have enough raw materials for manufacturing, organize the labor responsible for the production, and evaluate any problem born because of the operational activities of the business.
<em>Analyzing potential mergers is an event likely to be evaluated by the Chief Executive Officer (CEO) of a firm along with the Board of Directors</em>.
