Answer:
a. $ 898,750 55.63%
Explanation:
The computation of the expected dividend payout ratio is shown below:
Expected dividend pay out ratio = 100 - {(capital budget × equity ratio) ÷ (net income} × 100
= 100 - {($725,000 × 55%) ÷ ($898,750} × 100
= 100 - ($398,750 ÷ $898,750) × 100
= 100 - 44.37%
= 55.63%
The net income is
= $725,000 × 55% + $500,000
= $398,750 + $500,000
= $898,750
Answer:
(B) A reduction in risk
Explanation:
Diversification is necessary for investing. In this case, you invest your capital in different investments and you do not need to rely on a single investment for your returns and this also helps to reduce capital lost. Among saving your capital and receiving returns, reduction of capital loss is the primary benefit of diversification. If you invest your capital in one investment and the return is low or there is a poor performance, another investment might generate high returns over the same period of time and your capital loss is reduced.
Answer:
B
Explanation:
total surplus can be defined as the eagerness to pay price, less than the economic cost. Total surplus is increased in a free market competition when free market equilibrium has been attained.
Consumer surplus is the gain which is obtained by consumers when they are able to purchase a product for a price that is less than the highest amount that they would be willing to pay for that product. Producer surplus is the amount that is acquired by the producers by selling at a market price that is higher than the lowest amount that they would be willing to sell the product for.
