Richard Redden, the sole stockholder, contributed $71,000 in cash and land worth $132,000 in exchange for common stock to open a
2 answers:
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Answer:
option (c) $25 million
Explanation:
Data provided in the question:
The marginal propensity to consume in Frugalia, MPC = 0.60
Increase in spending = $10 million
Now,
The total increase in income
= × Increase in spending
on substituting the respective values, we get
= × $10 million
= × $10 million
or
= 2.5 × $10 million
or
= $25 million
Hence,
The answer is option (c) $25 million
Answer:
Dividend yield for W = 5%
Dividend yield for X = 15%
Dividend yield for Y = 20%
Dividend yield for Z = 4.6%
Explanation:
For a constant growth stock
If r is made subject of formula; r= = div yield + growth rate
For Stock W, given r = 15% and g= 10%; dividend yield = 15%-10%=5%
For Stock X, given r = 15% and g= 0%; dividend yield = 15%-0%=15%
For Stock Y, given r = 15% and g= -5%; dividend yield = 15%-(-5)%=20%
For Stock Z, the price of the stock today is calculated as follows:
Price of the stock today = .
where P2=
Price of the stock today = =109.57
Therefore dividend yield = =
4.6%