In any field of study, people always start with the ideal scenario in order to eliminate external factors that could only add complexities. Then, when we fully understand the concepts, the calculations gradually evolve to more complex ones to cater to realistic problems.
The basic assumptions that economists do are the following
1. People always have preferences on a set of outcomes and this can be determined through the quantity and quality of their value
2. People always maximize utility or the satisfaction you get out of buying and using the product.
3. Businesses always maximize profit.
A business plan.
A business plan is a comprehensive tool to plan out aspects of your idea so that you have a smart strategy when you decide to make it a reality.
Answer:
The present value is the value today of a sum of money to be received in the future and in general is less than the future value.
Explanation:
The formula to compute the present value is shown below:
Future value = Present value × (1 + interest rate)^number of years
or Present value = Future value ÷ (1 + interest rate)^number of years
Let us take an example
Present value = $2,750
Rate = 5.25% ÷ 2 = 2.625%
Number of years = 1 year × 2 = 2 years
So, the future value
= $2,750 × (1 + 2.625%)^2
= $2,750 × 1.0531890625
= $2,896.27
It is done on semi annual basis. As we can see that the present value is less than the future value
Answer:
c
Explanation:
Additional loan incurs more debt doesn't lead to opportunities or connections
Answer:
Required rate of return is 6.97%
Explanation:
The required rate of return can be ascertained from the price formula below when the subject of the formula is changed to rate of return instead of stock price:
Stock price =dividend/required rate of return
stock price is $80.40
required rate of return is unknown
the dividend on the preferred stock is $5.60
required rate of return=dividend/stock price
required rate of return =$5.60/$80.40=6.97%
The required rate of return based on the stock price and dividend information provided is 6.97%