https://www.wiley.com/legacy/Australia/PageProofs/c02TheBusinessIdea_web.pdf
Answer:
0.11 or 11%
Explanation:
The computation of the required rate of return is given below:
Required Rate of Return is
= Next Year Dividend ÷ Current Market Price + Growth Rate
= $3.15 ÷ $52.50 + 0.05
= 0.06 + 0.05
= 0.11 or 11%
working note
Given that
Current Market Price = $52.50
As we know that
Growth Rate = Return on Equity × Retained Earning Ratio
Now
Return on Equity = EPS ÷ Book Value of Share
= $5 ÷ 40
= 12.50%
So,
Retained Earning Ratio is
= 1 - Dividend Payout Ratio
= 1 - 0.60
= 0.40
And,
Dividend Payout Ratio = DPS ÷ EPS
= $3 ÷ $5
= 0.60
Now
Growth Rate = 12.50% × 0.40
= 5%
So,
Next Year Dividend = Dividend Recently paid × (1 + growth rate )
= $3 × 1.05
= $3.15
Answer:
$47,500
Explanation:
The computation of the dollars amount for meeting the obligation is shown below:
= Expected amount to pay × forward rate
= 5,000,000 × $0.0095
= $47,500
We simply multiply the Expected amount to pay with the forward rate so that the accurate amount can come.
All other information which is given is not relevant. Hence, ignored it
Answer:
The correct answer to the following question is option D) the vertical distance between ATC ( Average total cost ) and AVC ( Average variable cost ) .
Explanation:
AFC which is know as average fixed cost , can be taken out by dividing the total fixed cost from the total number of units produced. In the earlier phase , for the given number of units produced, both AVC and AFC curve would decrease, which would ultimately lead to fall in ATC. But when the units increase , the AVC would start to rise but AFC is still falling and due to this ATC would sill fall , because fall in AFC is still greater than rise in AVC . As output further rises , the AVC would keep on rising and would finally offset fall in AFC and ATC would also start rising. Therefore AFC would be determined by vertical distance between ATC and AVC.
