Explanation:
Concept of National Income
The National income is the total amount of income accruing to a country from economic activities in a year time. It includes payments made to all resources either in the form of wages, interest, rent, and profit.
Answer:
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Explanation:
If<em> the investment yield 6% per year</em>, each year its value is multiplied by 1.06.
After 2 years, the value is multiplied by 1.06², after 3 years it is multiplied by 1.06³, and so on.
After n years, the value is multiplied by 1.06ⁿ.
You want that <em>the investment quadruples</em>, thus the multiplicative factor is 4, meaning that you want to solve for:
If you do not know logarithms, you can solve by succesive iterations:
- 1.06² = 1.1236
- 1.06⁴ = 1.2625
- 1.06¹⁰ = 1.79
- 1.06²⁰ = 3.2
- 1.06³⁰ = 5.7
- 1.06²⁵ = 4.29
- 1.06²⁴ = 4.05
- 1.06²³ = 3.82
Thus, <em>if an investement yields 6% per years</em>, it takes 24 years t<em>he investment to quadruple in value.</em>
If you know logarithms, you can make n the subject of the equation:
Again, the solution is 24 years.
Answer:
a. How far away is the horizon date?
IV. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2.
b. What is the firm's horizon, or continuing, value? Round your answer to two decimal places. Do not round your intermediate calculations.
to determine the horizon value we can use the Gordon growth formula:
stock price = future dividend / (required rate of return - constant growth rate)
Div₀ = $3.75
Div₁ = $4.6125
Div₂ = $5.673375
Div₃ = $6.97825125
since the terminal value is calculated for year 2, we must use Div₃ in our calculations:
stock price = $6.97825125 / (9% - 6%) = $232.61
c. What is the firm's intrinsic value today, P0? Round your answer to two decimal places. Do not round your intermediate calculations.
we have to calculate the present value of:
P₀ = $4.6125/1.09 + $5.673375/1.09² + $232.608375/1.09² = $4.2317 + $4.7752 + $195.7818 = $204.7887 ≈ $204.79
Answer: decrease in demand for rackets and a decrease in quantity supplied of tennis balls. I hope this helps!!
Explanation:
Answer: a. $180,000
Explanation: Given that the fair market value of the 5000 shares of stock was $180,000 at that time; Pat should include this in information with proof of it's fair value at the time in schedule A of the form
