<span>Since real GDP goes up by 1% and price level goes up by 3%, nominal GDP must go up by 3%. This is because real GDP is measured based off a base year's prices, but nominal GDP is not encumbered by such a price basis. Since the price level goes up by 3% (and 3/1 is 3), then nominal GDP goes up by 3% as well since the real GDP level only goes up by 1%.</span>
Answer:
Miller's retained earnings on December 31, 2016 is $9,000,000.
Explanation:
Miller's retained earnings on 31 December 2016 = retained earnings on January 1, 2016 + net income - declared dividends
= $8,000,000 + $1,500,000 - $500,000
= $ 9,000,000
Therefore, Miller's retained earnings on December 31, 2016 is $9,000,000.
Answer:
a. The Geometric average return is 1.72%
b. The Arithmetic average return is 1.75%
c. The Dollar weighted average return is 2.61%
Explanation:
a) In order to calculate the time-weighted geometric average return we would have to calculate first the Holding period return as follows:
Holding period return = (200 - 190) / 190 = 5.263%
Hence, Geometric average return = (1 + .05263)^(1/3) - 1 = 1.72%
b) To calculate time-weighted arithmetic average return we have to make the following calculation:
Arithmetic average return = 5.263% / 3 = 1.75%
c) To calculate time-weighted arithmetic average return we would have to make the following calculation:
Dollar weighted average return=-190*3 + 200/(1+r) + 200/(1+r)^2 + 200 / (1+r)^3 = 0
= 2.61%
Answer:
8.43 %
Explanation:
Weighted Average Cost of Capital (WAAC) is the Cost of long term permanent sources of finance. We consider WACC on the Market Weight of sources of Finance.
WACC = ke × E/V + kd × D/V
where,
ke = cost of equity
= 11.08 %
E/V = Market Weight of Equity
= 100 % - 34 %
= 0.66
kd = cost of debt
= interest × ( 1 - tax rate)
= 5.38 % × (1 - 0.39)
= 3.2818 %
D/V = Market Weight of Debt
= 0.34
Therefore,
WACC = 11.08 % × 0.66 + 3.2818 % × 0.34
= 8.43 %
