Answer:
13%
Explanation:
the new cost of equity = old cost of equity + [(debt / equity) x (old cost of equity - cost of debt)]
the new cost of equity = 12%+ [(20 / 80) x (12% - 8%)] = 12% + 1% = 13%
Since we are in the MM world, taxes do not exist, therefore they are not included in the equation.
Answer:
Competition and consumer trends
Explanation:
The Hays company makes a variety of products including sodas like cola, diet-cola, orange soda. Initially it had less competition, but more companies have entered the market.
Due to increased competition the Hays company will need to develop strategies to gain competitive advantage and by extension market in the more competitive market.
Also consumer trends is nowoving towards speciality sodas. The company will need to reduce the variety of sodas they produce and specialise in the product the consumers prefer.
Answer: Growth stage
Explanation: In simple words, it refers to that stage of a firm in which it spends its resources for the development and betterment of the product it is offering in the market.
In the given case, the firm is improving the quality and adding new features and products.
Thus, we can recommend this strategy only at the growth stage.
<u>Answer:</u> Option A
<u>Explanation:</u>
Dividends affect the stock price in many ways. The stock price is marked down by the investors as they think the dividends paid out is a source of investment. But the company which issues the dividend to the shareholders does it as a an act of gratitude for investing in their business. They share the profits with the shareholders by paying out dividends.
Companies with substantial profits issues dividends regularly. Dividends are either paid in the form of money per share or by issuing additional shares.
