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
MrMuchimi
3 years ago
11

A firm's current profits are $400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent. I

f the firm's opportunity cost of funds is 6 percent, determine the value of the firm
(a) the instant before its pays out current profits as devidens
(b) the instant after its pays out current profits as devidens
Business
1 answer:
slavikrds [6]3 years ago
5 0

Answer:

value of the firm = 21.20 million

value of the firm =  20.80 million

Explanation:

given data

current profits = $400,000

annual rate = 4 percent

opportunity cost = 6 percent

solution

we get here value of the firm before pays out current profits as dividend is express as

value of the firm = current profits ( 1+opportunity cost  ) ÷ ( opportunity cost - annual rate ) ................1

put here value

value of the firm = \frac{400000*(1+0.06)}{0.06-0.04}  

value of the firm = 21.20 million

and

value of the firm after pays is

value of the firm = current profits ( 1+annual rate  ) ÷ ( opportunity cost - annual rate ) ................2

value of the firm =  \frac{400000*(1+0.04)}{0.06-0.04}  

value of the firm =  20.80 million

You might be interested in
Why are people engaged in business? Explain.​
Crank

Answer:

The reason why people get engaged in business is because they become more productive and people engage in business to make money and get returns on investment.

Explanation: This is the answer I hope this helped you out.

3 0
2 years ago
When the seller requires that only certain dealers carry its products and also that these dealers not handle competitors' produc
RUDIKE [14]

Answer:

exclusive dealing

Explanation:

Exclusive dealing -

It is the method , where a deal is set up between a specific supplier and the wholesaler or the retailer , where the no other distributor would be able to receive the supply , is referred to as exclusive dealing.

In this scenario no other dealer can not handle the product in any case.

Hence , from the scenario of the question,

The correct option is exclusive dealing .

3 0
3 years ago
The following errors took place in journalizing and posting transactions:
kirill115 [55]

Answer: See explanation

Explanation:

The journal entry to correct the errors is given below:

a. Dr Cash $8400

Cr Account receivable $8400

b. Dr Supplies $2500

Cr Office equipment $2500

Dr Supplies $2500

Cr Account Payable $2500

Note that the first entry that's given in (b) above reverses the incorrect entry. On the other hand, the second entry simply records the correct entry.

6 0
3 years ago
Over the last year, Eli has been working very hard and his employer has taken notice by giving him a 6% raise in his salary. Dur
ELEN [110]

Answer:

b increased by 2%. 

Explanation:

Increase in real wage = 6% - 4% = 2%

7 0
3 years ago
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of dollars): Sales
padilas [110]

Answer:

Net income = $169.2

Growth in dividend = 76.25%

Explanation:

The projected figures are as below:

Sales = $700 x (1 + 15%) = $805 <em>(15% increase in sales)</em>

Operating costs including depreciation = $805 x 60% = $483 <em>(60% of sales)</em>

Interest expense = 40 <em>(remain constant)</em>

EBIT = Sales - Operating costs including depreciation = $805 - $483 = $322

EBT = EBIT - Interest expense = $322 - $40 = $282

Net income = EBT x (1 - Tax rate) = $282 x (1 - 40$) = $169.2

Dividend = Net income x Dividend payout ratio = $169.2 x (32/96) = $56.4

Growth in dividend = $56.4/$32 = 76.25%

<em />

4 0
3 years ago
Other questions:
  • Executives at mary kay cosmetics' european operations are conducting a study analyzing why households have stopped purchasing ce
    11·1 answer
  • A company borrows 100,000 today at 12% nominal annual interest. the monthly payment of a 5 year loan is most nearly:
    8·1 answer
  • The income effect of a price change predicts that a _____ in a good's price will _____ consumer purchasing power, leading to a(n
    12·1 answer
  • Kindzi Co. has preferred stock outstanding that is expected to pay an annual dividend of $4.67 every year in perpetuity. If the
    13·1 answer
  • Identify the basic assumption or broad accounting principle that was violated in each of the following situations.
    10·1 answer
  • An investment broker wants to invest up to $20,000. She can invest in two mutual funds based on their yearly average return for
    5·1 answer
  • Four fundamental factors affect the cost of money:
    13·1 answer
  • Computing net income LO A1
    10·1 answer
  • To analyze a multiple flow process using a single flow, we must define what constitutes a ______ flow unit.
    6·1 answer
  • discuss with the accounts payable supervisor whether any amounts included on the accounts payable list are due to related partie
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!