Answer:
PV of the stock today = $115.83
Explanation:
We will use the discounted cash flows approach to calculate the price of the stock today. This approach values the stock by accumulating the present value of all the expected future cash flows from the stock/asset.
As the preferred stock pays a constant dividend after equal intervals of time and for an indefinite period, it can also be treated as a perpetuity. Thus, the formula for the present value of perpetuity will be used to calculate the price of the stock at year 10 that we will discount back to today.
Present value of perpetuity = Cash flow / expected rate of return
PV of stock at Year 10 = 10 / 0.052
PV of stock at Year 10 = 192.3076923
The value of the today will be,
PV of the stock today = 192.3076923 / (1+0.052)^10
PV of the stock today = $115.83
Answer: When a market price allocates resources, everyone who is able to pay the price gets the resource.
Explanation:
The market allocates prices to goods and services based on the scarcity of the said goods and services. This means that regardless of how scarce a good is, you can get it if you are willing to pay the price that it is being offered at.
For instance, if the price of tomatoes suddenly went up from $4 to $12 per pack, it means that tomatoes are now more scarce and not many people can afford it. If you can afford that $12 however, you will be able to get the tomatoes despite how scarce it is.
Ok let me state that if it is reduced by 25% is the same a multiplied by 0.75. Increased by 20% is the same as multiplied by 1.20. So what you need to do is multiply the two multipliers together to get the net effect. Now let me give you an example: <span>If I sell 100 things a day and sales go up 20% I sell 120 things a day. That is the same as multiplying sales by 1.20. So the formula you can use is
Gross Receipts = Sales Price * Number of units sold.
If I change Sales Price and Number of units sold each by simple multipliers, the effect on Gross Receipts will be the product of the multipliers. I hope this helps</span>
