Answer:
$2,100,000
Explanation:
Given:
Profit generated = $100,000
Profit growth rate = 5% per year
Discount rate = 10% per year
Now,
The present value of the future profit can be calculated using the formula as:
Present value =
or
Present value =
or
Present value = $2,100,000
The present value of all the shop's future profits will be $2,100,000
Answer: Managing for Long-Term Profits
Explanation:
When the immediate profit is given up by companies by developing quality products in order to penetrate competitive markets over the long term.
Products are priced relatively low when compared to their development cost, but the company later expects to make greater profits because of the company's high market share.
Answer:
Wagner will pay 10 million in dividends
Explanation:
The company will use their retained earnings to finance their project and distribute dividends with the remaining amount.
Thats because the investment projects expect return greater than 15% therefore the manager will decide to maximize value of the share and reinvest the earnings to get a better cashflow in the future.
retained earings= 100,000,000 income - 20,000,000 dividends =
80,000,000 retained earnings
<u>(70,000,000) investment </u>
10,000,000 available for dividends.
Answer:
C. You have more credits than debits.
Explanation:
In the financial world, certain terms are used that are understood by those in the financial world. One such word is the phrase "being in the black".
This phrase<u> "being in the black" means when someone of a company has more credits than debits</u>. This means that the inflow of money is more than outgoing. So, it is a good thing and that the company or the person is in a stable condition, not in debt, and financially solvent and safe.
Thus, the correct answer is option C.