Answer:
<em>(A) Unit variable costs fluctuate and unit fixed costs remain constant.</em>
Explanation:
The <em>fixed costs</em> are the costs which have to be incurred always, irrespective of what the output produced is by the firm. For instance, a firm always has to charge depreciation on its fixed assets, pay salary to the premises staff and pay fixed salary to the managers for managing etc, irrespective of whatever output it produces.
<em>Variable costs</em> are the costs which vary with the level of output produced activity. For example, if more output is produced more will be the raw material payments, more will be the manufacturing related other expenses and more will be the wages paid to the labour etc and vice-versa.
Hence, thereby the per <em>unit variable costs fluctuate and unit fixed costs remain constant.</em>
I really want to say income statement
The answer i think is rejected because the cash flow is not stable
Answer:
The price of the stock today=$560
Explanation:
We can use the expression for calculating the required rate of return to calculate the price of the stock today:
RRR=(EDP/SP)+DGR
where;
RRR=required rate of return
EDP=expected dividend payment
SP=share price
DGR=dividend growth rate
In our case:
RRR=13%=13/100=0.13
EDP=$2.80 per share
SP=unknown
DGR=20% and 8%, the average DGR=(20+5)/2=12.5%=0.125
replacing in the original expression;
0.13=(2.8/SP)+0.125
2.8/SP=0.13-0.125
2.8/SP=0.005
SP=2.8/0.005
SP=$560
The price of the stock today=$560
