Answer:
The correct answer is Decrease by $5,500.
Explanation:
According to the scenario, the computation of the given data are as follows:
First we calculate the previous operating income, by using following formula:
Previous operating income = ($8.5 - $5.25) × 10,000 units - $22,000
= $10,500
Now, we will calculate the current operating income by using following formula:
New operating income = ($7.5 - $5.25) 12,000 units - $22,000
= $5,000
So, the change in operating income can be calculated as
Change in operating income = New operating income - Previous operating income
= $5,000 - $10,500
= -$5,500 ( Negative shows Decrease)
= Decrease by $5,500.
Answer:
C. 7.81%
Explanation:
Stock A and Stock B expected Return shall be calculated using the following formula:
Stock A/B expected [email protected]*Return at [email protected]*Return at [email protected]*Return at Recession.
Stock A return=0.21*18.9%+0.74*15.8%+0.05*-24.6%
=14.43%
Stock B return=0.21*9.7%+0.74*7.6%+0.05*4.2%
=7.87%
Market risk premium=(Stock A Return- Stock B return)/0.84
Market risk premium=(14.43%-7.87%)/0.84=7.81%
So Based on the above explanation, the answer shall be C. 7.81%
Suppose GetThere Airlines increases their ticket price to $200+10n = 10(20+n)$ dollars. Then the number of tickets they sell is $40,000-1000n = 1000(40-n)$ .<span> Therefore, their total revenue is
</span>
$$10(20+n)\cdot 1000(40-n) = 10000(20+n)(40-n) = 10000(800+20n-n^2).$$
This is maximized when $n=-\left(\frac{20}{2\cdot(-1)}\right)=10$ .<span> Therefore, they should charge </span><span>$200+10\cdot 10 = \boxed{300}$</span><span> dollars per ticket.</span>
Answer:
1. $12.31
2. -11.96%
Explanation:
a) Calculation to determine the intrinsic value of a share of Xyrong stock
First step is to calculate the Required Return
Using this formula
Required Return = Risk-free Rate + [Beta * (Expected Market Return - Risk-free Rate)]
Let plug in the formula
Required Return= 5.5% + [2.7 * (17% - 5.5%)]
Required Return= 5.5% + 31.05% = 36.55%
Second step is to calculate g using this formula
g = ROE * (1 - Payout Ratio)
Let plug in the formula
g= 18% * (1 - 0.25)
g= 13.5%
D0 = EPS0 * Payout Ratio = $10 * 0.25 = $2.50
P0 = [D0 * (1 + g)] / [r - g]
= [$2.50 * (1 + 0.135)] / [0.3655 - 0.135]
= $2.8375 / 0.2305 = $12.31
b). Holding Period Return = [P1 + D1 - P0] / P0
= [$8 + $2.8375 - $12.31] / $12.31 = -$1.4727 / $12.31 = -0.1196, or -11.96%
Answer:
1. Dividends = It will be classified as <u>dividends.</u>
2. Rent Revenue = It will be classified as <u>revenues.</u>
3. Advertising Expense = It will be classified as an<u> expense.</u>
4. Stock holders pay cash into business = It will be classified as <u>Issuance of stock.</u>
<u></u>
Dividends are the share of revenue distributed to stockholders.
Revenues are income earned by the company.
Expense are the outflow of cash or bank payments for running the business.
Issuance of stock refers to collection of money by the company through issuing equity or preference shares.
