Answer:
$13.19
Explanation:
Data given
Annual dividend = $1.48
Increase percentage annually = 2.5%
Discount rate percentage = 14%
The computation of price is shown below:-
Price = Dividend ÷ (Cost of equity - Growth rate)
= ($1.48 × 1.025) ÷ (0.14 - 0.025)
= $1.517 ÷ 0.115
= $13.19
Therefore for computing the price we simply applied the above formula.
Answer:
b-the costs incurred to process the units to this point
Explanation:
Since in the question it is given that the company want to decide whether to sell partially completed goods or should incurred extra cost in order to finished the goods and sells them as a completed unit
So there should be the decision regarding selling price for the units that are completed, the selling price for the units that are partially completed and the cost i.e to be incurred for finishing the units
Answer:
C. An explicit target is easier to understand by households and firms which makes monetary policy more transparent.
Explanation:
Explicit inflation targeting is a monetary policy used by central banks to check inflation rate is under control for medium term. However, critics target this policy as they believe that instead central bank should have monetary policy for long term inflation control and economic growth for long term. Product price targeting or nominal income targeting would create more economic stability.
False :
because a product modification occurs when changes are made in how the product functions, its quality, or some aesthetic characteristic of the product.
(Here it’s says only the aesthetic but it’s all)
Answer:
$710.84 million
Explanation:
Net income = $35 million
Depreciation = $20 million
Capital expenditures = $7 million
Tax rate = 21%
D/E ratio = 0.4
Growth rate = 6%
Equity beta = 1.25
So, firm's asset beta = Equity beta/(1 + D/E*(1-T))
= 1.25/(1 + 0.4*(1-0.21))
= 0.94985
So, Free Cash Flow to the Firm= NI + Depreciation - Capital expenditures
= 35 + 20 - 7
= $48 million
Risk free rate Rf = 5%
Market risk premium = 7.5%
So, firm cost of capital using CAPM is Rf + Beta*(MRP)
Kc = 5 + 0.94985*7.5
Kc = 12.1239
So, Firms value using constant dividend growth model:
FV = FCF*(1+g)/(Kc-g)
FV = 48*1.06 / 0.121239-0.06
FV = 50.88 / 0.061239
FV = 830.8430901876255
FV = $830.84 million
Debt = $120 million
Market Value of equity = FV - Debt
Market Value of equity = $830.84 million - $120 million
Market Value of equity = $710.84 million
