1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
SpyIntel [72]
3 years ago
14

You’ve recently learned that the company where you work is being sold for $300,000. The company’s income statement indicates cur

rent profits of $11,000, which have yet to be paid out as dividends. Assuming the company will remain a "going concern" indefinitely and that the interest rate will remain constant at 9 percent, at what constant rate does the owner believe that profits will grow? nstruction: Enter your response rounded to one decimal place.
Growth rate of: ___ percent.
Business
1 answer:
chubhunter [2.5K]3 years ago
7 0

Answer:

5%

Explanation:

Data provided in the question:

Present value of the company, PV = $300,000

Current Profits, π₀ = $11,000

Interest rate, i = 9% = 0.09

Now,          

we know,            

PV = \pi_0(\frac{1+i}{1-g})

here,

g is the growth rate        

on rearranging, we get          

g =  i - \frac{(1+i)\pi_0}{PV}

on substituting the respective values, we get

g = 0.09 - \frac{(1+0.09)\times11,000}{300,000}

or  

g = 0.05

or

g = 0.05 × 100%

= 5%

You might be interested in
Consider the market for film streaming services, tv sets, and movie tickets.for each pair, identify whether they are complements
nevsk [136]

Streaming services and TV sets: complements  

Streaming services and movie tickets: substitutes

TV sets and movie tickets: substitutes

8 0
3 years ago
Mario owns a store that sells skateboard equipment. Mario understands that people are most likely to notice his headline text in
Shalnov [3]
What Mario should do from including this in his headline is being considerate on how he is doing from knowing how the people are going to be apparently right to give note in his own headline he created by using a text ad.
6 0
3 years ago
Forey, Inc. competes against many other firms in a highly competitive industry. Over the last decade, several firms have entered
crimeas [40]

Answer:

The market that characterizes the industry in which Forey competes is a market where competition is at its greatest possible level and it is a perfectly competitive market and the reason is because its returns decrease with the entering of new firms, also four-firm concentration ratio and Herfindahl Hirschman index are both quite small, so no one has significant market power to set or even influence the market price. In the short-run Forey Inc’s profit will decrease as more and more new firms enter the market and in the long-run Forey Inc will receive only normal (zero) economic profit.

4 0
3 years ago
An owner of a corporation is known as a(n):Group of answer choicesLimited partner.Stockholder.General partner.Director.
alexdok [17]

Answer:

Director

Explanation:

8 0
3 years ago
True or false: you always want the lowest possible deductible because it means you will pay less out of pocket in case of a loss
stiv31 [10]
The correct answer is false.

The given statement is false, why? You cannot always want the lowest deductible since it may only be applied once something has happened that points out towards you, or in other words, it is your fault. An example of lowest deductible is when you get into a car accident and it was your fault, the total repair cost of the vehicle is at 1,400.00 dollars, your lowest deductible would be around 500 dollars, wherein you have to add it to the balance before your insurance company pays for the rest
5 0
3 years ago
Other questions:
  • In 2019, Jose paid the following amounts for his son to attend Big State University: Tuition $15,000 Room and board 10,500 Books
    15·1 answer
  • A young man is the beneficiary of a huge trust fund 35 years ago. If they had set aside $25,000, how much will be in the trust n
    7·1 answer
  • An authoritarian leadership style is rarely effective in business. <br> True <br> or<br> False
    11·1 answer
  • The Fabricating Department started the current month with a beginning Work in Process inventory of $10,500. During the month, it
    9·1 answer
  • The relevant range of activity refers to the_______________.
    13·1 answer
  • Testbank Multiple Choice Question 73 Sheffield Corp. issued 10200 shares of its $5 par value common stock having a fair value of
    14·1 answer
  • Strategic alliances almost always result in one company taking over the financial interests of another company true or false
    14·1 answer
  • Preparing a budget is a simple six-step process.
    11·1 answer
  • Brie has a really busy day. She has several tasks to do and she needs to get them all done by the end of the day. She’s worried
    6·1 answer
  • Scientific management is the study of work methods to improve the productivity of _____.
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!