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aksik [14]
3 years ago
5

Suppose that the MC Software Corporation earns a profit of $10 per share. If the prevailing interest rate is 12 percent and the

stock is currently selling for $100 per share, what is the current price/earnings ratio
Business
1 answer:
dsp733 years ago
4 0

Answer:

Price Earning Ratio = Price/Earnings = we use the general formula.

\frac{100}{10}

$100/$10 = 10 times

Explanation:

Price Earning ratio is calculated using the current market price of share and earnings per share of the company. In the given question there is no relevance of interest rate as this is not the cost of equity.

Price Earning Ratio tells how much earnings are required to meet the cost of 1 share.

Another formula for P/E ratio = 1/Cost of Equity. Since 12% is not cost of equity this formula cannot be used.

Also earnings per share is given assumed it is after interest cost if any.

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A profit-maximizing entrepreneur rents an apple orchard for a day. He is a price taker in both the market for labor and the mark
yaroslaw [1]

Answer:

c. 5

Explanation:

L       Q     MPL (ΔinQ/ΔinL)    VMPL

4      52  

5      60              8                       80

6      66              6                       60

7      70               4                       40

8 72               2                       20

Note: Labour hired per day = L, Total product = Q, Marginal Product of labor=MPL, VMPL =Price*MPL

A firm will maximize the profit by increasing the number of labor as long as VMPL is higher than or equal to the wage rate. In this case, we observe that VMPL ($80)>wage rate ($75) for L=5 but VMPL ($60)<wage rate ($75) for L=6. So, the optimal number of labor to be hired is 5.

7 0
2 years ago
Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the compa
Whitepunk [10]

Answer:

$110,000

Explanation:

Calculation for How much was stockholders' equity at the end of the year

Beginning balance of stockholders' equity $40,000

Add net income $90,000

Less the dividends paid ($20,000)

Ending stockholders' equity $110,000

Therefore How much was stockholders' equity at the end of the year is $110,000

5 0
2 years ago
In one year, Hitech Microdevices will pay a common stock dividend of $4.35. You predict that you will be able to sell your Hitec
Andre45 [30]

Answer:

Price to be paid now = $52.89

Explanation:

<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return. </em>

T<em>he stock would be held for just a period, hence we would use the single period return model. This is given as follows:</em>

Price now  = D/(1+r) + P×(1+r)

Dividend , r - rate of return, P -year-end price of stock

Dividend = 4.35, r-16%, P- 57

Price = 4.35/(1.16)  + 57/(1.16)= $52.89

Price to be paid now = $52.89

7 0
2 years ago
What effect will the increase in electricity price have on the manufacture industry output?
irina [24]
It will cause the price of whatever said company is manufacturing to go up to cover the extra expense. This may also invoke a decline in sales due to higher prices.
5 0
2 years ago
A strong employer-employee relationship is central to:
Reil [10]

Answer:

The correct answer is letter "D": Both A and B, but not C.

Explanation:

<em>Highly efficient companies</em> are characterized by giving<em> employees resources so they can fulfill their corporate personal achievements and align them with the overall company's objectives</em>. Firms achieve that stage when <em>employees' voice is heard, they have enough freedom to make decisions on their duties, compensation is stable,  and promotion opportunities are available. </em>

<em>All the factors mentioned above increase the corporation's possibilities of boosting their productivity levels which eventually is traduced in higher profits.</em>

5 0
3 years ago
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